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November 20, 2009 Jay Finegan, 287-1445
Rep. Thibodeau Bill Offers Warranty Options for Consumers

AUGUSTA – State Rep. Mike Thibodeau hopes to give Maine consumers more options when it comes to buying service contracts on computers, appliances, electronic equipment and numerous other items.

His bill, “An Act to Increase Consumer Choice Regarding Service Contracts,” has been accepted by legislative leaders for the second session of the 124th Legislature, which begins in January.

“Maine law currently prohibits the purchase of product warranties from second party insurance companies,” said Rep. Thibodeau (R-Winterport). “Maine is one of only two states where residents cannot buy extended service contracts from companies other than the manufacturer or the retailer. This bill would put us on par with the rest of the country, and it could save consumers significant amounts of money.”

The bill, still being drafted, will be modeled in part on legislation proposed in 1999, which also aimed to expand consumer choice in service contracts. That bill failed; but it provides the legal framework for Rep. Thibodeau’s legislation, especially the insurance provisions intended to protect consumers from insolvent or undercapitalized insurance companies.

“At a time of economic hardship, this law seems long overdue,” said Rep. Thibodeau. “Independent warranty providers claim their service contracts are 40 percent less expensive than contracts sold by retailers.” He added that some Maine residents purchase service contracts from second-party insurers when they buy products over the Internet from Amazon.com and other popular sites. They discover too late that those contracts are invalid in Maine.

The issue has grown in importance as Internet sales have taken off, Rep. Thibodeau said. A company called SquareTrade, the largest independent warranty provider, claims to work with more than 10,000 merchants who refer their buyers to SquareTrade for their extended warranty needs. The company’s website said its service contracts average 40 percent less than most retailers’, receive five-star consumer ratings and are backed by an insurer with assets of more than $1 billion.

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