Attorney General Cuomo Announces Court Victory Against National Home Protection, Inc. For Home Warranty Policy Scam That Defrauded Consumers Nationwide

NEW YORK, NY (December 15, 2009) – Attorney General Andrew M. Cuomo today announced a court victory in a lawsuit his office filed against National Home Protection, Inc. (“NHP”), a now-defunct home-warranty company, for a deceptive home warranty scheme that defrauded consumers in New York and across the country.

The court found NHP engaged in false and misleading advertising, made multiple misrepresentations and violated New York consumer protection and insurance laws. Subsequently, the company and its principals, Leo Serrur, David Seruya and Victor Hakim, agreed to pay $900,000 in restitution, penalties and costs. The agreement was approved by the New York Supreme Court on December 14.

“This company lured customers into purchasing its home warranty plans with a false offer of free gift cards and advertised services that it did not deliver,” said Attorney General Cuomo.

NHP sold consumers yearly home warranty plans at an annual price of about $370.  NHP's advertising and contracts promised to repair or replace consumers’ household systems and appliances which failed to work properly due to normal wear and tear. Hundreds of consumers who purchased NHP's plans complained to the Attorney General's office and other agencies that NHP did not provide the promised services or replacements.

The court’s decision, and the agreement to pay restitution, penalties and costs, ends a lawsuit previously filed by the Attorney General in New York Supreme Court against NHP and its principals.  As part of his lawsuit, the Attorney General applied for and was granted a temporary restraining order freezing bank accounts and other assets, and preventing NHP from selling any more of its fraudulent home warranty plans out of New York pending further decision by the Court. 

New York Supreme Court Justice O. Peter Sherwood issued a decision and order in the case on December 8, 2009, upholding the Attorney General's lawsuit against NHP and finding the company liable.  The Court found that NHP engaged in false and misleading advertising, failed to register with the New York Superintendent of Insurance and establish financial responsibility in violation of the New York Insurance law, failed to offer full refunds within the time frames required by the New York Insurance law, failed to post rebate forms on its website and failed to provide timely rebates in violation of New York's rebate law.

The Court also concluded that NHP made multiple misrepresentations to consumers via its website, including that it provided “sensible protection against repair costs,” “affordable coverage that could save you thousands,” and that it “will replace your unit with the same or like model.”  The Court noted that consumers complained that claims were denied for failure to produce maintenance records and that they were offered inferior appliances or cash back offers that were a small fraction of the actual appliance cost.  The Court also ruled that the Attorney General could recover on behalf of all aggrieved consumers, including those residing outside the State of New York, since NHP used New York to complete its deceptive transactions.

Importantly, the Court’s decision makes it clear that a company cannot rely on small print terms and conditions of contracts to disclaim attractive advertising claims that lure consumers to purchase products or services.

As part of its agreement with the Attorney General's office, NHP and it principals have agreed to pay a total amount of $900,000 in restitution, penalties and costs. The company and its owners are also permanently enjoined by court order from running a home warranty business unless they first comply with the New York Insurance law on demonstrating financial responsibility and with other New York consumer protection statutes, violations of which are punishable by contempt.

Consumers who are eligible for restitution under the settlement include:

  • Consumers who were denied contracted-for, or advertised services from NHP;
  • Consumers who did not receive gift cards advertised and offered by NHP as an incentive for entering into the home warranty agreements; or
  • Consumers who were denied the right to cancel their home warranty agreements within twenty (20) days of the date of mailing of the home warranty agreement or within ten (10) days if the home warranty agreement was delivered at the time of sale, and have not received a full refund from NHP or any other entity.

Consumers who were harmed by NHP's deceptive conduct and false advertising will be able to file a claim for restitution. All NHP customers will receive claim forms by mail over the next several weeks and need not take any further action at this time.

Consumers may check the Attorney General's website at www.oag.state.ny.us periodically for updates on the National Home Protection consumer claims process. Consumers with questions may also call the Attorney General’s Consumer Helpline at (800) 771-7755.

The case was handled by Assistant Attorneys General Laura J. Levine, Harkiranjit Chahal and Ellen Fried under the supervision of Consumer Frauds and Protection Bureau Chief Joy Feigenbaum and Deputy Attorney General for Economic Justice Michael Berlin.

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