HOUSTON - Texas Attorney General Greg Abbott today resolved the state’s enforcement action against Conn’s, Inc. In May, Conn’s was charged with failing to honor product warranties, misleading customers about the nature of its products, false advertising and other violations of the Texas Deceptive Trade Practices Act.

According to the state’s enforcement action – and information contained in more than 3,500 customer complaints – the defendant unlawfully relied on aggressive and deceptive sales tactics to increase its extended service warranty sales for appliances, electronics and other products. The agreement reached today requires Conn’s to reform its business practices and pay $4.5 million in restitution for its customers.

“Just in time for the holiday shopping season, today’s agreement fundamentally reforms how Conn’s does business,” Attorney General Abbott said. “Under its agreement with the state, Conn’s must remedy its high pressure sales tactics, refrain from misleading customers about extended warranties, and fully honor the warranty agreements that it sells to customers. By redressing of improper conduct and setting aside restitution, this agreement benefits past, present and future Conn’s customers.”

According to state investigators, Conn’s instructed sales personnel to rely on high-pressure tactics to “overcome objections” voiced by customers who declined to purchase extended warranties. The state’s May enforcement action also indicated that Conn’s failed to provide customers with a copy of the warranty agreement at the time of sale. As a result, purchasers were not adequately informed about exclusions, limitations, cancellation penalties and other provisions governing their warranty agreements.

In an agreement reached today, Conn’s agreed to provide customers a copy of the extended warranty agreement at the time of sale. Conn’s also must ensure that its sales personnel accurately represent rights, remedies or obligations contained in the extended warranty agreements.

Under today’s agreement, Conn’s must also refrain from adding extended warranty or credit insurance products to customers’ invoices without their written consent. Extended warranty agreement provisions will protect existing customers because the agreement applies to both existing and future extended warranties.

The state’s May enforcement action charged Conn’s with failing to fulfill its warranty obligations. According to customer complaints obtained by the Office of the Attorney General, Conn’s delayed repair appointments for weeks or even months, failed to repair items to working condition, ignored calls, and ultimately, refused to give refunds or replace the defective products. Today’s agreement stipulates if a product fails within 72 hours of purchase or delivery to a customer’s home, Conn’s must replace the product with an identical or similar model. If the product fails at the time of delivery, the Conn’s delivery team must remove the product and exchange it.

Finally, the agreement requires Conn’s to compensate customers who were harmed by its unlawful content. As a result, Conn’s must pay $4.5 million to establish a customer restitution fund. Today’s agreement also requires Conn’s to pay $250,000 in attorney’s fees and $100,000 to the University of Houston Consumer Law Clinic.

In the coming weeks, the Office of the Attorney General will review customer complaints and other data to determine how it will administer the restitution fund. Customers with questions should call (800) 252-8011 or visit the attorney general’s Web site at www.texasattorneygeneral.gov.

I predict near mid-month November of this year.

My analysis of the data begs the conclusion that other than low margin crap, consumer electronics sales will be at or slightly above last year. Which sucks. The U.S Department of Commerce data advises that inventories are very low. Shippers such as Union Pacific are showing shipments are 1/2 of last year’s. Which explains why dock deliveries are low. Pre-order estimates from the dealer’s buyers for 2009 at CES were abysmal. Which means that the product availability for the holidays is going to be stressed. Sales order fullfillments are also down. Low margin crap means low profitability. The last quarter Best Buy (BB) missed it’s dividend mark but they revised upwards their advisory on sales for the last quarter. I translate that to mean while sales dollars are up, profits will tank.

The greater fear is that if the consumer decides to buy electronics - and the shelves are bare by December it will be ugly in Best Buy Land. White goods is expected to be way up year-over-year. If you only have money for one - what do you spend it on. A refrigerator or a flat panel? I guess it depends on if you are married. China-Korea has maintained their manufacturing output while Japan, Inc. has scaled back to estimates to be prudent. If the dealers start to run out of product they will have to pay huge transportation costs to get the products on the shelves on short notice. The dealers will have to make a choice - jack up the prices to preserve margins or take the hit. I predict they will jack up the price. Either way for both the manufacturers and the dealers it may turn out to be a worse year than last year.

Why mid-November for our industry? My personal experience is that the consumers are edging back to quality over price as it regards to new TV purchases. They have glutted themselves on the cheap flat screens and have discovered why they are cheap. In addition I have been hearing that they are now asking to see the written warranty first in stores. I have anecdotal feedback from salesmen at BB and Conn’s. Internet search sources advise that when brand names are searched > 40% add the word “warranty” immediately after the brand name. Last year it was < 10%.

I predict they will fix their 3 year old Mitsubishi rather than replace their 1 year old 50 inch $995 flat screen that crapped out on them 20 days after the warranty expired. I further predict that Japan, Inc. will win out in sales and profitablity over China-Korea. Maybe not with boxes shipped, but with profitability which in this grump’s opinion is more important.

Those independant service providers who survive this devastating summer will be in a position of strength.

Sony has announce the sale of their LCD TV manufacturing to a company called Foxconn and the agreement includes the sale to Hon Hai Precision Industry Group 90% of its shares in Sony Baja California and several other manufacturing operations related to Sony’s Tijuana site in Mexico. Most of it’s production goes to manufacturing LCD TVs for the the US market. Sony will retain 10%. Why? So they can still put the Sony name on it of course, to delude the American buyer that the product is a Sony with the same quality you have become accustomed to.
Ah huh, sure it will.

In a press release Sony stated that, “by proactively leveraging external manufacturing resources Sony will also seek to reduce fixed costs, drive other cost reductions, improve profitability and achieve business expansion.” Holy cow, who wrote this? AIG?

I wonder, is this the first signal from Sony that they may join the ranks of trusted products like Zenith, Pioneer, RCA, Fujitsu and Philips that they cannot compete against Korea and China and are abandoning loyal Sony TV owners?

When is America going to remember that quality must come first, not cheap pricing? When giants like Sony capitulate their market position, we will all suffer. Your local service center is already threatened. As these manufacturers give up, their new owners will cut what they invest in service and you will have fewer TV repairman.

You might want to check where your nearest UPS or FedEx store is. Because you will have to ship it back to them at your own cost for repairs. Your local service shop will be gone.

Don’t throw out your box.

Fort Worth, TX — In response to a new service model put forth by TTE (the manufacturer of RCA televisions), NESDA (the National Electronics Service Dealers Association) has sent a reply back to TTE Executives rejecting their program, citing philosophical differences and concern for consumer satisfaction.

“Respectfully, I must inform you that the DEX concept of consumer service totally conflicts with the ideals and principles of NESDA and its membership. We are appalled that TTE has adopted this service delivery model and feel strongly that American consumers who chose to buy RCA branded products will be ill-served by the American Systems/OnForce Service Program.” Sent in a letter by Dave Thomas, CSM/MST, NESDA President.

About NESDA: NESDA is the premiere association in the consumer electronics service industry, offering the best benefits programs ROI for its members in the product service industry through value-added services that reduce a servicer’s cost of doing business and offer the opportunity to network with other similar businesses, product manufacturers, distributors, and warranty companies. For more information on NESDA and NESDA membership, visit the NESDA website at www.NESDA.com.

About TTE Technology: TTE Technology markets televisions in the United States under the RCA brand. www.RCA.com.

About DEX: As a provider of supply chain solutions since 1980, DEX offers a variety of forward and reverse logistics programs for high-tech industries. www.DEX.com

WebWireID98307

Would you purchase a vehicle from a manufacturer that required you to take your new car to your local computer repairman for warranty service? Sounds ridiculous?

Consumers who purchase RCA products do so at their own risk. The RCA product warranty as we have known it for over 60 years has vanished by corporate greed much the same as our savings have in the financial markets. Since the advent of RCA products, a nationwide network of independent servicers and RCA factory service depots have provided support to consumers who purchased the RCA brand.

Quietly, the RCA name was sold to a Chinese conglomerate (TTL) whose sole focus is flooding the American market with cheap non-repairable products. Most recently what was left of the national service network of independent businesses working to support the RCA products was disbanded. Some of these companies have been servicing the RCA brand for over 60 years, and are now barred from providing further customer support.

In a very unwise and perhaps illegal move, TTL is working to set-up a network of individuals to work for substantially low rates, many of which may not be qualified, licensed or a full service business. Technicians who agree to this model are barred from handing out business cards, or even mentioning a business name. This “ghost technician” practice implies that the technician who visits your home is an employee of RCA when in fact that they are not.  This business model is fraught with potential legal and ethical problems.

In the TTL business model, gone are the days of reputable businesses, team efforts, licensed and trained personnel. A glance at the majority of “repairmen” signed up in this venture to date, one will see mainly computer related experience. Without professional training and a professional background in consumer electronics experience, TTL is, like so many before, trying to create a service model doomed to certain failure - at the expense of the consumer and the loss of your local service company.

NISC-T joins NESDA, and other professional trade organizations to strongly OPPOSE this reckless business practice. Service companies, join us in spreading the word to consumers who may be considering a purchase of RCA Consumer Electronics products. In our opinion, the consumer will inevitably receive sub-par after sale service - or none.

Sadly when these failed business models fail and they leave the US market, it is the consumer who once again pays the price when they are left with worthless products.

Do you really want to spend $800 for a disposable flat screen?

Some have the reimbursements under below the Servicers cot of doing business. He must make more than that to stay in business. The smart ones say “NO” and won’t do the repairs. Then the providers - Warranty or Extended Contract outfits - (TPS’a) have to scramble for anyone that will go out to your home or business. Quality of repairs may suffer. Delays may result.

Worse still , even if they agreed to pay that price , some of the TPA’s will cut that price to a lower figure after the job was done. Then parts that were obtained for warranty service from these 2nd party providers is not credited for a long period of time (if at all) while the service sompany has to pay the parts bill right now. These parts are very expensive!

What to do if the Parts sent is defective and the TPA, often the seller of the parts do not want to pay for the repeat efforts? Another way is “Administrative Costs” of following up on more paperwork wanted which is a delaying tactic in the reimbursement. Maybe even going to a House Call to find out that the TPA’s had sent someone else out there and who is going to pay for that 50 Mile round trip ? Look at what a Taxicab will charge !

Do not be surprised if you are asked to sign an assurance that the servicer will be paid by you instead of the TPA. You might even get a bill later on for the service done which you would have to pay unless you can get the TPA to hold up his end that he was supposed to do! It is like the Hospitals - they come after you for the money if the insurance doesn’t pay and for any shortfalls too! You may end up contacting the Attorney General of your State for resolution.

The State of Texas thinks that something is smelly in those service contract sales; How they are administered, how they are serviced and where the money is going. Conn’s stock, which had been recovering after the most recent hurricane, has hit an East Texas oil slick on the highway to recovery. It is expected to drop more on the Monday opening.

We are now getting a peek behind the curtain of Greg Abbot’s case against Conn’s Appliance. There have been some question on why a Texas native regional retailer was singled out instead of national chains such as Sears Holdings (Sears and K-Mart), Target or Best Buy. They are just closer to Greg Abbot’s office in Austin.

In response to inquiries, the Attorney General’s office on Friday shed more light on a possible time line for the lawsuit and some of the concerns the state has going into court and said a hearing should take place within the next two weeks to determine if a temporary injunction is issued against Conn’s to prohibit it from engaging in what the state claims are inappropriate business practices under the consumer protection laws.

Tom Kelly, a spokesman for the Texas AG, stated that one of them is the apparent deliberate obfuscation of the relationship between Conn’s, it’s own service companies and the hidden relationship of a second or third party from the consumer at the time of purchase. Another of the state’s concerns is that Conn’s actually is not a party to the warranties sold with its products, giving it the ability to “carve itself out of liability,” although the lawsuit indicates the retailer still collects commissions from the sale and administration of the warranties.

In other words, if the consumer who purchases a service contract from Conn’s has problems with the honoring of that contract; Conn’s could say it’s not their problem. Talk to this other company. Your contract is with them not us. And Conn’s apparently has done that - to the tune of over 2000 complaints. There is also some question on what the BBB in Beaumont played in this. The Houston BBB apparently started keeping their own records. The largest reported complaints are  delays in service due to parts availability, lengthy delays with scheduling in-home calls and requiring repeated calls to resolve the consumer’s repair problem.

To be fair to Conn’s, this is a service industry-wide problem across the country involving much more than one large regional dealer. The Grump has sent a months-in-the-works detailed flow-chart displaying the incestuous interrelationships between these ESP companies, parts suppliers and dealers to the AG’s office.

Apparently one of Conn’s problems is communications. They ignored requests for information by The Texas AG’s office. Two calls placed to Conn’s officials for comment Friday on the the lawsuit were not returned. In fact we were hung up on a third attempt when asking about their parts suppliers.

You would think that Texas native Conn’s Appliance would know better -  “Don’t Mess with Texas”.

This issue is larger than it actually appears. Off the record, discussions with several key players in the Texas Legislature have indicated that results of this and potentially other possible AG lawsuits over the next two years may determine increased consumer protection laws regarding service contracts and how they are administered. One promising potential bill addresses the right for the consumer to choose who services their product, especially big ticket HDTV’s.  A health insurance company has their own “preferred providers”, but a consumer can still go out of network if they pay the difference. Auto insurance has the same consumer protections and choice. Perhaps these extended service contracts should regulated for what they are - insurance products.

While California may lead the country in cultural pop and New York in design and fashion - Texas usually leads in those mega-lawsuits. Remember the Tobacco and Asbestos cases?

Stay tuned to the Texas vs Conn’s Appliance suit. You can betcha an armadillo or two that Best Buy, Encompass Group and N.E.W are. They better.

Get ‘er done Greg.

]]> http://www.nisc-t.com/public/?feed=rss2&p=63 http://www.nisc-t.com/public/?p=22 http://www.nisc-t.com/public/?p=22#comments Thu, 07 May 2009 20:20:15 +0000 The Grump http://www.costofservice.com/public/?p=22 You have to pick and choose your battles – and you better do it soon. 

As the song went, you got to have the courage to know when to hold em, and know when to fold em.  Most of us as independent service companies and technicians have a hard time telling someone no.  A consumer calls you instead of the manufacturer and asks how to hookup their DVD or TV. Why? We are the only people they can get on the phone. A manufacturer wish you to go 100 miles to service their product and they want you to do it for a loss. Why? They undercut their prices so much they have no funds for professional service. Do you do their service? Are you afraid they will cut off your referrals? Have you ever tried telling someone “No.”  The phone goes quiet.  They are dumb-founded, speechless. 

When I first started in this industry, I would go home very upset out of frustration when people would just hammer me during the day.  I was too nice. I tried to be all things to everyone.  You can’t do it.  I was thrown into this nightmare back in the day when filing warranty claims on NARD forms by hand.  At that time, we had 4 technicians, doing gobs and gobs of products, from car radio, telephones, mini-audio recorders, we did everything.  We were just about everything to anyone in electronic repair.  I think back to those days, which keeps me going, and allows me to be stronger, and too, because I am a woman in this business, it was and still is a challenge.

It has to become a science within you. 

My point was never to denigrate who does what within their own businesses, I have no authority to do or say that, and if I have offended anyone, I am sorry. You have to do what is right for you.  However, my opinion is that you technicians are paid well below what your are worth.  I find it rare that there are some technician/business owners who rate themselves above the best and make sure that he and his business are compensated appropriately.  Pride is a wonderful thing.

Part or all of what was being said in this long drawn out thread is that the VALUE of the technician diminishes when you fall short of your own expectations and your own actions.  Whatever reason or excuse you can come up with is your doing.  

VALUE YOURSELF AS A TECHNICIAN; VALUE YOUR BUSINESS WITH YOUR LIFE EXPERIENCES.

The following is a snippet from a fellow servicer in the LA area:

“It seems some shops are so busy they can boot any job that does not pay well or make them happy, I think those shops/days are shrinking. Some days you may make great $$ some days maybe not. Hopefully you can come out ahead in the end. It must be GREAT to say NO all day. But I have to say I DO HAVE FRIENDS in the Business, I do bust butt at times because they take care of me sometimes. Not as much as it use to but still happens .To me this is not war, hopefully I will not fight with every customer. Some may push hard; hopefully I will have a bit extra patience for them. ”

What I think he represents is the vast majority of business owners who have taken pride in another direction. That direction was forming “friendships”. I by no means discourage friendships, they are important in developing who that business owner is and where that business will grow. However, the term was also used in context with a saying, “there are no friends in business”. Now, what do you suppose that could mean? For me, you cannot have your customer your friend, they will eat you alive. Every turn, every request, they will be expecting something for nothing. My “friends” in business, give and take from me and I reciprocate in like fashion. This is my meaning. Customers only take for the most part. When reading this and particularly in large Metro areas as LA, I just have to wonder how many “friends” in the consumer can you or will you have? If you don’t give it away to them, you might probably lose their loyalty. What has that loyalty provided you? Did loyalty pay that large parts bill? No. Did it pay the utility bill? No. I can go on, you get my point.

My point in this Grumpy report is that the value of your technical ability and knowledge should never be undermined or confused with friendship. We all have responsibilities to take care. We can only take care of business if we are here tomorrow. My grump is that too many of you have given it away too freely. It has become expected and the norm. Why have the manufacturers, TPA and your “friends” keep beating you up with low rates and all that that implies?

I would like to see resurgence in your pride to a point of arrogance. You can be kind, you can be understanding, and you can be your customer’s psychologist if necessary, but never, ever give away your knowledge, your talent and your education for free or even cheaply.

These are tough times, and tough decisions come with a price and you just may rise above the norm, and excel over the rainbow.

]]> http://www.nisc-t.com/public/?feed=rss2&p=22 http://www.nisc-t.com/public/?p=12 http://www.nisc-t.com/public/?p=12#comments Thu, 02 Apr 2009 18:52:07 +0000 Unknown http://publog.costofservice.org/?p=12 Are we being screwed?? Are the manufacturers pitting us against one another? Are they looking for the lowest bid?

]]> http://www.nisc-t.com/public/?feed=rss2&p=12 http://www.nisc-t.com/public/?p=10 http://www.nisc-t.com/public/?p=10#comments Mon, 30 Mar 2009 01:26:45 +0000 Administrator http://publog.costofservice.org/?p=10 Who is going to pay for the disposal fees. I don’ty know about you other guys but in San Diego the fee is 48 a CRT! 

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