Businesses may close unexpectedly, leaving consumers uncertain about their rights concerning warranties, refunds, and service contracts. Understanding the legal protections that may be available might help you navigate these challenges.
Warranties and Service Contracts
Service contracts (sometimes referred to as extended warranties) should include specific provisions to protect consumers:
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- Cancellation Rights: The cancellation rights section should specify how you can cancel a service contract and the pro-rata refunds you are entitled to. You should read this provision when considering purchasing a service contract.
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- Assignment Rights: If you purchase a contract, can you assign it to a buyer of the product, like a car you may want to sell with the service contract? Make sure you understand this provision, especially if it is a service contract for a number of years, such as you might have with an air conditioner unit for the home.
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- Business Closure: If a business closes before fulfilling its warranty/service obligations, consumers may face challenges obtaining services or refunds. In such cases, it’s advisable to: So again, review the service/warranty agreement and check for any information about business closure. If you don’t find anything, ask the seller of the product what happens if they go out of business and ask them to add that to the warranty or service agreement.
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Contact the Manufacturer: Some product manufacturers honor warranties directly or can refer you to another authorized service provider.
Consult your state entity that regulates warranties or service contracts. In Arizona, the Arizona Department of Insurance and Financial Institutions oversees service contract/extended warranty companies and can provide guidance on your rights and possible remedies.
Refunds and Cancellations
State law may not mandate businesses to have a specific refund or cancellation policy. However, if a business fails to deliver goods or services as agreed, consumers could have recourse under a state’s consumer fraud statute. The enforcing entity that investigates consumer complaints involving deceptive or unfair practices in the sale or advertisement of goods or services often has helpful information and may help you enforce your legal rights.
Steps To You Can Take if a Business Closes
- Document Everything: Keep records of all transactions, communications, and any warranties or service contracts.
- Contact the Business Successor: If possible, reach out to the business or any entity that has taken over its operations to request fulfillment of services or refunds. The successor entity may have legal obligations under the service or warranty agreement.
- File a Complaint: Submit a complaint to the regulating state entity if you believe you’ve been subjected to unfair or deceptive practices.
- Seek Legal Counsel: Consulting with a legal professional who focuses on warranty enforcement can provide guidance tailored to your specific situation and help you determine the best course of action.
Conclusion
While a business’s unexpected closure can present challenges, staying informed and proactive can help mitigate potential problems arising from such events.
Disclaimer: This article provides general information and should not be construed as legal advice. For specific concerns, always consult with a qualified legal professional. This information may not constitute the most up-to-date information. Links provided are only for the convenience of the reader, A. Ferraris Law, PLLC and its members do not endorse the contents of the third-party references.
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