The Housing Scene by Lew Sichelman

Consumer Groups Turn Up Heat on Warranties, Angie’s List

Many homeowners believe they can’t do without these two perks: home warranties that promise to replace appliances that cannot be repaired, and Angie’s List, the popular website that recommends contractors and repair specialists.

But both have come under fire recently by key consumer organizations, which say neither is as valuable as people think.

The Consumer Federation of America, a national organization made up of more than 250 nonprofit consumer groups, took Angie’s List to task for, among other things, “always” listing advertisers first and granting only those businesses that advertise on its site a “top rated” designation. Angie’s List “is subject to conflicts of interest because it is supported almost entirely by payments from the businesses it evaluates,” the CFA report said.

It also faulted the site for granting “A” ratings to businesses with less than five reviews -- and sometimes only one -- and not providing reliable information about which charge the lowest prices. Furthermore, it found “circumstantial evidence” of fake reviews posted by some service providers.

Meanwhile, warranties were blasted by Consumers’ Checkbook, a branch of the independent nonprofit consumer group called Center for the Study of Services. Consumers’ Checkbook publishes regional magazines in seven cities, and these publications carry no advertising and accept no referral fees from the outfits evaluated.

The group found that warranties are not worth the money, and are often rip-offs.

“These warranties are terrible deals and simply aren’t worth their price tags or hassle,” its latest report said.

Even the biggest player in the field, a spokeswoman told me, has had more than 10,000 complaints lodged against it over the last three years.

A major fault with warranties, which are actually service contracts as opposed to guarantees, is that you don’t get to decide which contractors come to your house to repair your appliance and determine whether it must be replaced. Indeed, the study found that the best repair services “overwhelmingly disdained these types of warranties” and won’t work for home warranty companies.

Case in point: air-conditioning contractors. Checkbook randomly queried 20 that received its top rating for quality, and discovered that not one participated in any warranty plan.

There are other issues, too. Contracts are loaded with numerous “fine-print gotchas” that could be used to deny your claim, the report warned. Also, you’ll be responsible for paying a fee for the repair technician’s initial visit. Replacement appliances could be limited to certain brands, colors and manufacturers. And you could be strung out for months before a decision is made about whether an appliance will be replaced.

In my own personal experience, my warranty company waited almost six months to rule that my double oven could not be salvaged, even though the repairman who tried three times to fix it had said so three months earlier. And then, if I wanted the company to cover the replacement cost, I was required to buy the new one from a certain store that is nearly bankrupt, and from a limited list of options that did not include the original brand.

Checkbook says it finds no fault with warranties offered by builders of new homes. But if you are buying an existing house on which the seller offers a one-year warranty, you’re better off asking the seller to give you a credit at closing for the warranty’s price.

As for Angie’s List, rather than rely solely on the site, CFA says you need to do some extra legwork on your own. Don’t take the site’s recommendations at face value, it suggests. Look beyond those, and read reviews posted only on A-rated businesses with at least 25 recent testimonials, paying close attention to comments and negative reviews. The site “can provide value to those who utilize the website appropriately,” the report says.

It also says the site shouldn’t be the only source you use to select a service provider. Consumers should rely on nonprofit groups that evaluate local business and are not funded by the companies they study, says lead author Stephen Brobeck, a CFA senior fellow and its former executive director.

It might be better to ask others directly about their experiences. And try searching the web by a company’s name paired with such terms as “consumer complaints,” “bad service,” “rip-offs” or “sucks.”

CFA chose to assess Angie’s List as its first investigation into online review services “because of its longstanding popularity and reputation.” Founded in 1995, Angie’s List is visited by more than 20 million people a year to access information from some 10 million individual ratings and consumer comments.

The site stopped charging an annual subscription fee in 2016, and is now funded almost entirely by advertising, referral fees and payments from the companies it evaluates. Also in 2016, it became part of a holding company that includes HomeAdvisor, a similar service that connects homeowners with local service providers, including home improvement and remodeling contractors. But the two remain separate for now.

“Angie’s List looks as if it is becoming HomeAdvisor, but it is not there yet,” Brobeck told me in an email. “Both aggressively push advertisers, but AL continues to maintain a huge database of customer comments on individual businesses. There may be other differences as well, but we haven’t studied HA closely enough to be sure.”