Thursday, January 8, 2015

Charleston isn’t the first town where HomeServe USA received bad press

Private warranty company that signed marketing agreement with local water system has caught heat coast to coast

Posted by Paul Bowers on Thu, Jan 8, 2015 at 5:00 AM

  • Scott Suchy photo illustration

In an e-mail last week to the Charleston Water System’s Board of Commissioners, the public utility’s CEO, Kin Hill, wrote about the "less-than-optimal press coverage" of CWS’ marketing agreement with private warranty seller HomeServe USA. 

For more than a year, CWS has been receiving a 12-percent commission on each warranty plan that Connecticut-based HomeServe sells to a local resident on his or her exterior water service line, a pipe that generally runs to a house from the water meter in the front yard. In exchange, CWS is allowing HomeServe to use the public utility’s logos on advertisements that it sends to residents in the utility’s service area.

"The City Paper web article had a total of 3 responses on their blog, so I don’t think it can be classified as a major news story by any stretch of the imagination," Hill wrote in his e-mail to the board. (Click here to read the original article.)

But across the continent, as a simple Google News search will reveal, HomeServe’s controversial marketing techniques are a major news story. HomeServe has reportedly entered about 50 "partnerships" with public utilities and municipalities, and in towns where no such agreements exist, the company has been mailing out solicitations that many people see as deceptive.

In news stories about HomeServe, residents and public officials often complain that letters from the private company look like they were sent out by a government entity. In some towns, utility representatives say that exterior water service line breaks are very rare.

"It confuses senior citizens especially, and they call because they’re worried about it." —Hillsboro (Ore.) Water Department spokesperson Tacy Steele

Another common complaint is that the language in HomeServe’s mailers could frighten or confuse the elderly. HomeServe signed an "affinity agreement" in November with the AARP, formerly known as the American Association of Retired Persons, and HomeServe’s stock shot up 3 percent the same day.

Hill has told the CWS Board of Commissioners that representatives of the utility plan to meet with HomeServe to "improve the perceptions of their future mailing to our customers." The next public Board of Commissioners meeting is scheduled for Tues. Jan. 27 at 9 a.m. at 103 St. Philip St.

Here’s a look at the "less-than-optimal press coverage" that HomeServe received around the U.S. and Canada in 2014:

Dec. 24, Jackson, Miss. (Clarion-Ledger): "Water insurance letters not tied to city of Jackson"
Jackson Public Works Director Keisha Powell says of letters that HomeServe mailed out to homeowners, "It appeared to look like it was connected to the city. We want to make sure it’s clear that it’s not."

Dec. 18, Hays, Kan. (Hays Daily News): "City officials set record straight on mailings to residents"
Hays city attorney John Bird says of exterior water line breaks, "They make it appear it’s a big problem. But this is not something we have recommended." Assistant City Manager Paul Briseno adds, "It is uncommon to have citizens contact the city due to private water line breaks ... Very seldom does the city manager’s office have contact from homeowners regarding private water line issues."

Dec. 5, Cordele, Ga. (Cordele Dispatch): "City Commission approves liquor and map ordinances"
City Manager Edward Beach warns residents at a public meeting that letters from HomeServe USA are in no way affiliated with the city. "I have received numerous calls and questions regarding this service and felt the public should be made aware that while this insurance is available from the company, it is not related to the City’s water system," Beach says.

Dec. 4, Huntsville, Ala. (Huntsville Times): "Better Business Bureau warns north Alabama to be on guard about HomeServe USA solicitation"

The BBB of North Alabama issues a warning about HomeServe mailers that have been showing up in area mailboxes: "The letter provides an 800 number and a deadline to enroll in their Water Service Line Coverage. Some consumers have stated the mailing appears to be from a government or parish agency. The BBB is advising consumers to read these notices very carefully."

Dec. 4, Baltimore, Md. (Baltimore Brew): "Water service line repairs are less costly than mayor, DPW say"
A pastor tells a public committee he received a letter from HomeServe bearing the city seal and the signature of Public Works Director Rudy Chow. "It was frightening," the pastor says. "I thought it was an official action from the city. I saw Mr. Chow’s name and mailed $74 [to HomeServe] out of fear." In response, a city councilman says, "Really, it looks pretty official. Why such a seal? Has Baltimore done this [co-branding] for any other service?"

Nov. 21, Cherokee, N.C. (Cherokee One Feather): "Consumer alert for Cherokee residents"
Eastern Band of the Cherokee Vice Chief Larry Blythe "expressed concern that citizens, particularly the elderly, might provide money and personal financial information to this entity without any verification that ‘Homeserve’ is a legitimate business." EBC Attorney General Hannah Smith says she has attempted to contact HomeServe and tell the company to stop mailing advertisements to tribal members.

Oct. 15, Brattleboro, Vt. (The Commons Online): "Town seeks to clarify water line responsibility"
A public utility issues a warning: "This mailing is a solicitation to purchase insurance from HomeServe and is not associated with any utilities furnished by the Town of Brattleboro Water Department."
click to enlarge screen_shot_2015-01-02_at_5.48.10_pm.png

Oct. 8, St. Albans, Maine (Morning Sentinel): "St. Albans, Canaan residents warned about water insurance mailing"
HomeServe mails solicitations to a town where the residents get their water via wells, not municipal lines. Town Manager Rhonda Stark says, "I’m afraid that the elderly or other residents will get sucked in. It reads like there is a benefit to get if you pay, and I’m just concerned that someone will actually end up paying for it." HomeServe spokesman Myles Meehan responds, "We are hardly a fraud."

Oct. 7, Portsmouth, N.H. (Seacoast Online): "Residents warned about plumbing insurance mailing"
Police issue a warning about HomeServe solicitation letters: "This letter looks official. The company tries to sell insurance for your water pipes. A quick Internet search shows that they have been investigated for deceptive business practices in several states, including Massachusetts, Ohio, and Kentucky. Please pass this information along and inform your elderly relatives and neighbors." (A thread of comments on the newspaper's Facebook page shows that the mailer has been sent to many towns across New Hampshire and Vermont — and a lot of homeowners are skeptical.) HomeServe spokesman Myles Meehan responds with a letter to the editor: "Homeowners may need protection for water lines"

Sept. 18, Baltimore County, Md. (Baltimore Brew): "Kamenetz says water pipe insurance is not needed"
Baltimore County Executive Kevin Kamenetz says that exterior water service line breaks are "extremely rare" and issues a warning to county residents: "I am very disappointed that some companies are trying to scare people into purchasing insurance plans that they do not need. These solicitations have even been sent to homeowners who are on well and septic, and therefore will not be subject to installation of electronic water meters."

July 27, Cincinnati, Ohio (Cincinnati Enquirer): "Don’t be fooled by faux water line service bills"
Cincinnatians receive a "bill-like letter" from HomeServe that, a columnist notes, "looks an awful lot like a bill." One resident of a nearby town complains that "the ‘act fast’ language is misleading, and that elderly people might miss the fine print in the solicitation and pay for insurance they don’t want."

June 6 (InsuranceNewsNet): "Ominous mailer on water-line troubles cites Giuliani"
"With an ominous black-and-white photo of a backhoe tearing up a residential front yard, [former New York Mayor Rudy] Giuliani is quoted on the front of the mailer as saying, ‘Failing water systems can quickly become a very real threat to homeowners.’" The fine print states that Giuliani’s consulting business Giuliani Partners is "an advisor to HomeServe." (London’s The Sun, reporting on HomeServe’s U.K.-based parent company, describes the partnership less charitably: "Scandal-struck drains insurer HomeServe has signed up 9/11 New York Mayor Rudy Giuliani to save it from disaster.") 

May 5, Calgary, Alberta, Canada (Global News): "Is water line insurance worth the cost? What experts say"
"It’s a very infrequent problem for a water line to become an issue," says Ryan Hansen of Hansen Plumbing, in response to HomeServe ads that have been circulating in Canada. "A lot of time it will be an act of God, or the pipe has a manufacturer’s defect. If the integrity of the pipe is good, it should last many, many years."

April 30, Orlando, Fla. (WFTV): "Action 9: Should you avoid this warranty?"
HomeServe tries to sell warranties on water heaters using solicitations that bear the logo of Duke Energy. Bill Newton of Florida Consumer Action says, "I absolutely would not buy it." He adds, "The power company is not worried about your water heater. They hand over the list and they get paid."

"It's not exactly a scam, but some homeowners feel duped." — KSPR, Springfield, Mo.

April 24, Hillsboro, Ore. (Portland Tribune): "Hillsboro issues ‘consumer alert’ on insurance letters"
After the Hillsboro Water Department issues a warning about HomeServe solicitations, Water Department spokesperson Tacy Steele says, "It’s not totally fake, but it is deceptive advertising. It confuses senior citizens especially, and they call because they’re worried about it."

March 27, Springfield, Mo. (KSPR): "It’s not exactly a scam but some homeowners feel duped"
"Typically because they are at such a depth for regular installation, we don’t see a lot of problems with [exterior water service lines]," says Joel Alexander, a City Utilities spokesperson.

March 25, Racine County, Wisc. (Journal Times): "Water letter raises concern"
The general manager of Racine Water and Wastewater Utilities says the odds of a water service line failing are low.

March 24, Madison, Wisc. (WMTV): "Water Utility: Lateral insurance offer not affiliated with the City of Madison"
"These letters are making [residents] worried, and that’s what they’re meant to do," says Madison Water Utility spokeserson Amy Barrilleaux.

March 4, Birmingham, Ala. (Birmingham News): "Watch your assets. The Birmingham Water Works want to sell you."
After singing a marketing partnership with the Birmingham Water Works, HomeServe begins advertising on water bills. "The Birmingham Water Works is looking out for you again," writes columnist John Archibald, later adding: "Looking out for you means selling you — via a spot in your own water bills — on a private company that has been challenged for questionable ad practices in several states, that was hit last month with a record-setting fine in the UK for, among other things, misleading and overcharging customers. Thanks, Birmingham Water Works!"

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