Last week, a local real estate brokerage settled with the state attorney general’s office over allegedly deceiving clients about the performance of a $540 home warranty. The product is offered to both buyers and sellers on an optional basis. Every client who does business with the broker signs a disclosure about the affiliated nature of this business, as well as other businesses such as mortgage providers, title company services, and so forth.
The settlement was for $3.5 million. A paltry amount when it comes to engaging the legal profession. The option of going to court to be exonerated from such a ridiculous claim would cost the brokerage a figure in the multiples of this, and the continued press coverage predictably tilted as anti-business. Take for instance, this quote from the attorney general:
“Today’s settlement will put this money back in the pockets of Edina’s customers who were misled into purchasing HSA warranties without ever being told that Edina was being paid handsomely to promote these problematic home warranties,” Attorney General Ellison said.
Explain how a spiff off a $540 home warranty can be considered handsome in the total expense to purchase a home. Even the full $540 falls, perhaps between .1-.2% of the average total home sale cost. The spiff might be a tenth of that- hardly a game changer for any worker in the chain of events.
There’s more from the Bring Me the News article. There’s the part where government makes claims about consumers’ abilities to determine value:
The investigation by the AG’s office also alleged that HSA “confused consumers” into believing its home warranty was a valuable product that contained benefits that it didn’t actually have.
Many consumers purchase warranty products through utility providers and home warranty insurance providers to have the peace of mind that if the mechanicals in question fail, they have some sort of repair or replacement coverage. I’m not sure how offering an accepted open-market product at a relevant point of another transaction confuses the general public.
Maybe the government is confused, and consumers are actually much more intelligent than they are.
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