Furniture-warranty company Stainsafe has plenty of blemishes on its record

Consumer Reports News: December 31, 2006 04:57 PM

Extended warranties can be big moneymakers for retailers. While such warranties are more closely associated with electronics and appliances, they are also a mainstay of the furniture industry. Extended warranties--essentially service contracts that are supposed to cover fabrics and manufacturing defects--are often seen as a sucker's bet because their cost can approach or even outstrip the actual cost of repairs.

One of the major names in furniture extended warranties is Stainsafe, based in Palm Beach Gardens, Florida. Its warranties and fabric-, leather-, and wood-protection products are sold at hundreds of furniture stores nationwide. "We deal with millions of customers," says Anita Mitchell, a Stainsafe spokeswoman. But the company's reputation doesn't match the promises in its warranties. Just ask Carrie Colarusso.

When Colarusso, a 31-year-old x-ray technician from Rocky Hill, Connecticut, bought a sofa and ottoman from a Seaman's Furniture store in February 2004, selling her a $110 five-year extended warranty was easy. She had just gotten two cats, and the salesman "said the warranty was good for all pet stains or tears," recalls Colarusso. "It was perfect for me."

So when one of her cats, suffering from a bladder infection, soiled the sofa last summer, Colarusso figured the warranty would cover the damage. But from the time she first tried to file a claim, she realized getting service would be a problem. What she did not know then was that Stainsafe has a long history of customer dissatisfaction. Colarusso couldn't find out about the status of her claim for weeks and then--after asking the Better Business Bureau in her area to intervene--she finally got her answer.

Claim denied. To date, Colarusso has not resolved the issue.

While it is not clear how many Stainsafe customers have no issue with their warranties or never try to use them at all, the company has frustrated many customers. The difficulties that consumers have experienced with Stainsafe became so acute that the Economic Crimes unit of the Florida Attorney General's Office began an investigation into the company's practices earlier this year. Among the problems the agency said it found was Stainsafe's failure to issue checks in a timely fashion to consumers offered cash settlements and use of language in its warranties that gave the company overly broad discretion to reject claims.

Stainsafe reached an agreement with the Florida attorney general in December. The company admitted no wrongdoing in a document called an Assurance of Voluntary Compliance but agreed to pay the state $300,000. What's more, 574 customers who had been offered settlements but had not been paid for up to 11 months after the offer were issued checks totaling $175,309. The agreement also states that Stainsafe must change its warranty language, shorten the waiting time for settlements to less than 45 days, and give the attorney general full access to its records of dealings with consumers for seven years after the record is made. You can see a copy of the agreement here.

The Better Business Bureau, which rates Stainsafe's conduct as "unsatisfactory" for its failure to respond to or resolve consumers' issues, processed 1,913 complaints against the company in the last three years and 1,004 complaints in the last year, significantly more than its closest competitors. Guardsman generated 330 BBB complaints in the last three years and 126 in the last year; Guardian, 161 and 76; and Ultrashield, 38 and 18. "Obviously, complaints that are not responded to at all are not acceptable," says Al Polizzi, vice president of communications for the BBB of Southeast Florida and the Caribbean. "We don't believe that companies can maintain good businesses by ignoring complaints and ignoring consumers."

The vast majority of customers who file warranty claims with Stainsafe don't lodge complaints, according to Mitchell, who says that the company takes complaints seriously and resolves those it deems legitimate. "There are some people you are never going to satisfy," she says. "They don't read the warranty right. They read what they want to read." The company also is trying to do a better a job of showing the BBB when consumer complaints have been satisfied, Mitchell says.

Consumer Reports recommends against buying an extended warranty for most products (see "Skip the extended warranty," below). But the issue with Stainsafe is not whether it pays to buy a warranty but rather what happens when consumers have a problem product. One provision in the warranty, for example, states that if the damage is not reported within five days, the warranty is void.

Laurie Sheaffer, 35, of Woodbridge, New Jersey, learned the hard way why it's important to read the fine print. Like Colarusso, she didn't need much convincing to buy a warranty when she was shopping for furniture at a Levitz store in January 2004. When the salesman asked her if she had kids, Sheaffer, who had one child and was pregnant, envisioned the damage her kids might someday inflict on the furniture. She paid $380 for five-year warranties for two couches and a loveseat. "He was telling me, anything wrong with the couches, all I have to do is call and get it fixed," Sheaffer says. "It sounded so easy."

With three kids now and a fourth on the way, Sheaffer noticed a hole in her leather sofa in October. She immediately contacted Stainsafe to report the damage, and the customer-service representative asked when it happened. Sheaffer replied that she contacted the company as soon as she saw the hole. But according to Sheaffer, that answer didn't suffice. Customer service insisted on knowing when the leather got punctured, not when Sheaffer saw it.

"I have a five-year warranty," Sheaffer says. "Why should it matter when it happened? Why did I get a warranty? I noticed the hole, and I can't get it fixed."


SKIP THE EXTENDED WARRANTY

Consumer Reports believes that extended warranties generally are not worth the expense. Most products don't fail enough to make a warranty a good investment. The warranty for a flat-panel TV, for example, costs about $200 to $400, yet only 3 percent of TVs needed repair during a two-year period, according to our surveys. The average cost of those repairs? About $200.

If you are considering buying a warranty, do the following before you pay anything:

  • Negotiate the cost of the warranty. And never buy a warranty that costs more than 20 percent of the purchase price of the item.
  • Determine whether your credit card offers warranty coverage. Why pay twice?
  • Understand the terms. Considering how large some furniture is, ask whether the extended warranty includes in-home repair or pickup. Also find out if there's a lemon clause: After a few repairs, will the product be replaced?

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