Mark Fischenich: Ask Us: Deceptive home warranty letter targets local credit union clients

Feb. 5—Q: Mr. Ask U. Guy,

Why did your parents name you "Ask"?

A: Although that question was printed on the envelope to Ask Us Guy, the reader's real question was focused on an enclosed copy of a letter from "Home Warranty Services." The letter included the reader's name, his Main Street address and a "customer ID" number, even though the reader was not a customer of "Home Warranty Services."

The letter stated that his property's home warranty "may be expiring or may have already expired," even though the reader had never had a home warranty with the company.

The letter stated that the Mankato retiree could be facing between $5,322 and $14,623 in repair and replacement costs if his air conditioner, hot water heater, furnace and refrigerator went kaput. His only hope to avoid potential financial calamity was to call a toll-free phone number.

"Our records indicate that you HAVE NOT CONTACTED us yet to get your Home Warranty up to date," the letter chastised. "... However, you still may have time left to activate a Warranty on your home before it's too late."

The letter generously stated that "no inspection will be required" and that "no finance charges apply to this offer."

The letter didn't include any address for "Home Warranty Services," though, just the toll-free number to call and a heads-up that the offer was "EXTREMELY URGENT & TIME SENSITIVE" and the company has the "right to revoke your eligibility" after five days.

The letter also included near the top "Lender Info: MINNESOTA VALLEY FEDERA."

The Minnesota Valley Federal Credit Union in Mankato might well have been the mortgage provider for the property, but it is in no way affiliated with "Home Warranty Services," said Nick Meyer, CEO of MVFCU. And the credit union, when issuing a mortgage, never requires or encourages mortgage holders to get home warranties.

Recipients of the letter, though, might be susceptible to confusion about that when they see their mortgage-holder's name at the top of the letter. After all, mortgage providers require private mortgage insurance if the borrower's down payment doesn't reach a certain threshold. And mortgage providers typically require homeowners to insure the property to protect its value if there's a fire or a natural disaster.

"That's totally unrelated (to a warranty on home appliances)," said Meyer, who was perturbed that MVFCU's name was being used to imply an association with Home Warranty Services. "... Credit unions are member-owned financial cooperatives so we take even more personally when some entity misleads our member."

So how did the credit union's name — or at least the first two words of its name and most of the third — end up on the letter?

Public real estate records list the mortgage company associated with a property, something that was once available only by visiting a courthouse, said Trent Talley, an executive vice president for MVFCU who oversees loan programs. Now the information can be obtained online, something Home Warranty Services is apparently doing.

"We really do a lot of mortgages," said Meyer, estimating that nearly 1,200 have been issued in the six counties around Mankato in the past three years. "So if you were phishing, we'd be a pretty good catch."

The credit union and other financial institutions have seen scammers use those public records in the past, including one where MVFCU mortgage recipients received a postcard "regarding your mortgage" that instructs the recipient to call "about an important matter regarding this loan ... as soon as possible."

"Be wary of any solicitation you get," Talley said.

Consumer watchdogs suggest that the letter sent to the Main Street homeowner included multiple red flags: the hard sell, the pressure to act fast, the false implication that he may have an existing warranty that's in danger of expiring, and the attempt to imply a nonexistent relationship with a legitimate local institution like a bank or credit union.

Interestingly, Ask Us Guy found reports of identical letters, right down to the exact dollar on the appliance repair estimates, being sent to different parts of the country in different years involving variations of the company name. In 2019, "Home Warranty Division" was sending the letter to homeowners in Michigan. In 2021, the same letters were sent by "US Home Guard" in Missouri and Texas, by "Home Warranty Direct" in Massachusetts and by "New Home Warranty" in Maine.

The letters were all interchangeable with the one received by the Main Street homeowner from Home Warranty Services, other than using a different local lender to imply validity.

"Home Warranty Services" was also the name at the top of letters sent to homeowners in Rochester last month, according to a Jan. 23 story by KTTC-TV.

Ask Us Guy called the toll-free number on the letter sent to the Mankato homeowner. The sales associate who answered the phone wasn't interested in discussing the company's marketing tactics and said he didn't know if anyone at Home Warranty Services was authorized to talk to the media. He said he would pass Ask Us Guy's number on to his manager.

Not feeling confident about the odds of a return call, Ask Us Guy looked up Home Warranty Services on the website of the Better Business Bureau.

Listing the company as being based in Newport Beach, California, the Better Business Bureau stated it has received 22 complaints in the past three years about Home Warranty Services, commonly involving elderly folks allegedly pressured into purchasing warranties.

In more than one case, the adult children of the company's customers said their parents had memory issues when they were sold the warranties.

The company provided a written response to most of the BBB complaints, generally offering refunds and promising to cancel service as the disgruntled customers had requested.

While there were three positive comments about Home Warranty Services, most were something short of a testimonial.

"HORRIBLE COMPANY! These people called a 90-year-old woman who has Dementia and lives on a fixed income and sold her an expensive Home Warranty," wrote one woman, giving Home Warranty Services one star out of five. "... I would not recommend them to anyone. If I could have submitted this with negative stars, I would have done so."

A company representative responded to the complaint with an apology and a statement: "Our company policy is to sell to individuals who call in to us inquiring about our home warranties and nothing is sold without multiple stages of verification."

Contact Ask Us at The Free Press, 418 S. Second St., Mankato, MN 56001. Call Mark Fischenich at 344-6321 or email your question to; put Ask Us in the subject line.