May 16, 2008 5:23 am US/Mountain
Appliance Factory Outlet Accused Of Racketeering
DENVER (CBS4) ―
The Denver District Attorney is conducting an investigation of one of Colorado's biggest appliance retailers. The inquiry comes after one of the retailer's major suppliers accused the company of organized crime and racketeering practices that cheated consumers.
CBS4 investigator Rick Sallinger reports the case involves Appliance Factory Outlet which has nine locations around the state.
Among it's biggest brands were those belonging to Whirlpool. The company claims the retail chain defrauded at least 10,000 customers by not registering extended warranties.
Appliance Factory Outlet boasts savings of up to 40 percent on name brand appliances. But customers won't find Whirlpool, Maytag, or its related brands at the stores any more.
One salesperson told a CBS4 employee acting as a prospective customer, "They were having problems with customer service, so we decided to do away with them."
But Whirlpool is claiming a very different story.
Whirlpool sent a letter to Appliance Factory Outlet in March. It alleges the stores engaged in serial number tag swapping, Internet sales fraud, resale of recalled units, and warranty fraud.
Joe Morales, the head of the Denver District Attorney's Economic Crimes unit, is looking into claims that worthless warranties were sold to consumers.
"If they called into Whirlpool and said could you come fix my refrigerator they would say we don't even know that you have an extended warranty and not be protected," Morales said.
Whirlpool says Appliance Factory Outlet would sell the extended warranties, pocket the money and not register the sale with Whirlpool. The company denies that.
A search warrant was executed at several locations and documents seized.
The investigation is also focusing on a north Denver warehouse and claims that one department served as a chop shop and created what's being called "Frankenstein machines."
Whirlpool says non-certified technicians would piece together whole units from parts of damaged units.
At one store it found a washer-dryer pair switched from gas to electric, which Whirlpool says can be dangerous for whoever buys it.
Among those who have spoken with investigators are employees of Appliance Factory Outlet.
Chuck Ewing is the president of that company. His attorneys issued a statement calling the matter a "business dispute" caused in part by Whirlpool acquiring Maytag and its extended warranty program.
But that's not what customers are being told. Another salesperson at an Appliance Factory Outlet store told a CBS4 employee a different story.
"Whirlpool and Maytag wanted 60 percent of our floor and we sold only 20 percent of them last year," he said.
Appliance Factory Outlet declined to provide anyone to be interviewed on camera. An attorney wrote letters to CBS4 stating it will continue to cover any warranty issues until this matter is resolved. It says it has received no customer complaints and it never sells used products and only makes cosmetic changes to "out of box products".
Whirlpool says it will honor all extended warranties that were sold by Appliance Factory Outlet even if they were never registered.
Additional Resources:Whirlpool brands include Whirlpool, Maytag, KitchenAid, Jenn-Air, Amana, Brastemp, Consul and Bauknecht.
From Whirlpool Corporation:
For consumers concerned specifically about Maytag Dependability Plus extended warranties purchased through AFO, please call: 866-665-3991.
For consumers with questions about Whirlpool appliances purchased at AFO, please call the number that corresponds to the brand:
Whirlpool Brand Products: 1-800-253-1301
Maytag Brand Products: 1-800-462-9824
KitchenAid Brand Products: 1-800-422-1230
Jenn-Air Brand Products: 1-800-536-6247
Gladiator Brand Products: 1-866-342-4089
Amana Brand Products: 1-800-843-0304
(© MMVIII CBS Television Stations, Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
