December 30, 2011

Home-warranty companies top consumer complaint list again

It's important to research companies and read contracts carefully.

Rants, raves, reviews and resources for Dallas-Fort Worth parents

If you've ever had a cellphone company not live up to its promises, a home-warranty provider not fix a problem, or a bank add an unusual fee to your monthly statement, you're not alone. These three businesses are among the leaders in consumer complaints in 2011, according to consumer advocates.

For the seventh consecutive year, home-warranty companies were No. 1 of the worst-graded industries compiled by Angie's List, a provider of consumer reviews on local contractors and service companies. Rankings are based on an analysis of member reports submitted during the first three quarters of 2011.

At the same time, cellphone companies continue to receive the most complaints to the Better Business Bureau, according to a recent book by John Riggins, president of the Fort Worth BBB.

In his book, Lose That Ripped Off Feeling, Riggins says that the two largest sources of consumer complaints with cellphone companies are billing and customer service. He provides several examples of how sales representatives at mobile phone storefronts give one offer to customers, who later find out the companies won't honor that verbal agreement or don't spell out the terms the same way in a written contract.

One woman complained for 14 months to her cellphone provider before she was able to get an adjustment to her bill for ringtones and texts she didn't order.

"Many sales reps work on a commission basis and thus have a strong incentive to be as persuasive as they need to be to make a sale," Riggins writes. At the same time, the contract is written by "paid advocates for the mobile phone company," and emphasizes the rights of the company, not the consumer, he said.

To avoid having problems with your cellphone provider, Riggins suggests using websites like and, which compare pricing plans, or consider prepaid plans that avoid termination fees and long-term contracts.

Above all, he says, do your homework. Check out cellphone companies for free at your Better Business Bureau ( or 817-332-7585), as well as at, and

"It is imperative that you understand the importance of buying the plan first -- and the mobile phones with features second," he writes. "Don't let emotion or slick television ads affect your judgment."

Misunderstanding home-warranty contracts is also a big consumer problem, said Cheryl Reed, spokeswoman for Angie's List.

Almost half of the consumers who submitted reviews to Angie's List gave their home-warranty company poor grades -- either a D or F.

Most complaints stem from poor communication by the warranty companies on exactly what is covered, and unsatisfactory work provided by contractors.

Home warranties typically cover plumbing, electrical systems, heating, cooling and appliances for several years and are often paid for by the seller when a home is sold.

"It's almost like an extension of buying a house," Reed said. "Home sellers tell them they're throwing it in for free, and often the contract just gets filed away and the buyer never reads the document."

One specific complaint: The contract typically calls for the warranty company to choose its own third-party contractors to fix problems, Reed said.

"Consumers have little control over who comes to the house," she said. "One way to avoid this is ask the warranty company if they have a list of preferred vendors. Then you can do your own research and find out who you want and ask for them when a problem occurs."

Another problem is understanding the contract, Reed said.

"Consumers often don't understand whether the company will repair or replace an appliance or system," she said. "That is generally controlled by the home-warranty company, which can leave the consumer feeling misled."

Bottom line, she says: Read the details.

Other repeat offenders on this year's most complained-about list are Internet service providers and mobile and land-line phone service providers.

One piece of advice from Reed is to bypass the customer service department when you have a complaint and go straight to the customer retention department.

Teresa McUsic's column appears Saturdays.

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