SquareTrade Class Action Says Extended Warranty Plans are Fake

A class action lawsuit accuses warranty service provider SquareTrade of deceptively marketing its protection plans on Amazon.com.

The lawsuit states that SquareTrade sells extended warranties and service plans for numerous consumer goods, such as electronics and appliances. The complaint claims that SquareTrade markets its plans through many different companies, but its largest partner is Amazon.com.

Consumers can either purchase SquareTrade protection plans from an advertisement after purchasing an item from Amazon.com, or they can go directly to the SquareTrade product page on Amazon.com.

In either case, the protection plans are priced according to the length of the plan and the type of items under warranty, and could cost anywhere from $1 to $6,000 for the plan.

The complaint asserts that SquareTrade violates New York consumer protection law because it does not provide potential customers access to the terms and conditions of their protection plan before buying it.

Not only is a link to the terms and conditions buried at the bottom of the webpage after scrolling through unrelated advertising, but it isn’t even the correct terms and conditions for the protection plan, the lawsuit claims.

According to the complaint, the terms provided pre-sale are “drastically different and more generous than the post-sale Terms and Conditions that SquareTrade enforces against the customer after she purchases a Protection Plan.”

Separately, the class action contends that SquareTrade sells protection plans for items it knows are not covered by the plan—namely, items not bought from Amazon.com. The complaint argues that SquareTrade does not provide sufficient notice on the Amazon sales pages that the items must be purchased through Amazon for the plan to be effective.

The class action states that SquareTrade is provided purchase information if an item is bought from Amazon.com, so the company knows which customers did not buy their items there. However, SquareTrade does not void the contract unless a customer actually makes a claim on such an item.

In addition, the company does not provide a refund for the protection plan unless the consumer takes extra steps to ask for it. The complaint contends that through these tactics SquareTrade receives and keeps money that it should never have obtained.

“This scheme is as simple as it is profitable,” the class action states.

Plaintiff Adam Starke says he purchased a CD player from Staples in December of 2015, and several days later he purchased a SquareTrade 2-year electronics protection plan for it from Amazon.com. Starke claims that at no point was he informed that the protection plan only covers good purchased from Amazon.com.

Starke was contacted via email after purchasing the plan, and submitted a copy of his Staples receipt to SquareTrade. In October, Starke claims he contacted SquareTrade to cover necessary repairs for his CD player, which SquareTrade refused because the CD player was not bought from Amazon.com.

The complaint asserts that SquareTrade has not refunded the price of the protection plan to Starke.

The deceptive marketing lawsuit requests certification of a Class of “All residents of the United States who purchased a SquareTrade Protection Plan on Amazon.com within the [past] four (4) years.”

The class action seeks restitution, treble damages under consumer protection laws, and an injunction stopping the deceptive marketing practices.

Starke is represented by Mark Schlachet of the Law Offices of Mark Schlachet, Bradley J. Nash of Schlam Stone & Dolan LLP, and Solomon N. Klein of the Law Office of Solomon N. Klein.

The SquareTrade Protection Plan Class Action Lawsuit is Adam J. Starke v. SquareTrade Inc., Case No. 1:16-cv-07036, in the U.S. District Court for the Eastern District of New York.