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For Immediate Release: For Further Information:
July 28, 2014

Office of The Attorney General
John J. Hoffman, Acting Attorney General

Division of Consumer Affairs
Steve C. Lee, Acting Director

Division of Law
Jeffrey S. Jacobson, Director
Media Inquiries
Jeff Lamm or
Neal Buccino
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New Jersey Division of Consumer Affairs Files Complaint Against "Home Warranty" Company That Allegedly Used Deceptive Tactics to Refuse Consumers' Claims for Repair of Crucial Home Systems and Appliances
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Newark - The New Jersey Division of Consumer Affairs has filed a Complaint against CHW Group, Inc., d/b/a "Choice Home Warranty," an Edison-based company that allegedly induced consumers to buy "comprehensive" coverage for crucial home systems and appliances, and then denied consumers' claims for repair or replacement through the use of various deceptive tactics.  As a result, consumers who paid hundreds of dollars for CHW's so-called "home warranties" – which are actually residential service contracts – were forced to pay out-of-pocket for air conditioning, refrigerator, or other repairs that allegedly should have been covered under their "warranties" with CHW.

"This company's alleged false advertising and flagrant violations of the terms of its residential service contracts affected consumers not just in New Jersey, but in at least 25 other states from here to Nevada, according to the Division's consumer complaints," Acting Attorney General John J. Hoffman said. "It is time to bring these alleged violations to a close and prevent further harm to consumers."

Division of Consumer Affairs Acting Director Steve Lee said, "The Division alleges that Choice Home Warranty refused to provide the basic services that consumers were paying for, and pocketed the money paid by consumers. Such deceptive practices will not be tolerated in New Jersey."

As set forth in the State's complaint, filed by the Division of Law on behalf of the Division of Consumer Affairs:

CHW advertises that its so-called "home warranties" provide "comprehensive" coverage and "peace of mind" by protecting consumers against the high costs of unexpected repairs or replacements of home systems and appliances.  The company's advertisements promise that, should consumers need service for their covered systems or appliances, CHW will "quickly" respond by dispatching a local technician who is duly licensed and insured.  The company's advertisements further promised that consumers will "Never Pay For Covered Home Repairs Again!"

In reality, however, CHW and its current and former principals, Victor Mandalawi, Victor Hakim, and David Seruya, all believed to be of Brooklyn (collectively, the defendants), repeatedly made it difficult if not impossible for consumers to realize the benefits of their so-called "warranties." 

CHW and its principals often denied claims based on consumers' supposed failure to properly maintain their covered home systems or appliances.  The defendants also often denied claims based on supposed pre-existing defects.   The company denied claims even when technicians declared that the covered home systems or appliances had been properly maintained, and/or had failed for reasons not related to poor maintenance or pre-existing problems.

As a way of denying claims, the defendants on many occasions demanded that the consumers provide years' worth of records to prove they performed regular maintenance on the covered items.  One consumer was told her claim could not be approved unless she could provide 12 years of maintenance records for her air conditioning unit. This denial, in addition to many others made on similar grounds, were issued despite the fact that CHW's residential service contract does not state that the company can demand maintenance records from consumers.

Additionally, when consumers requested specific explanations for their denial of claims in writing, CHW on many occasions failed or refused to provide written explanations. 

CHW also promised consumers that if covered items could not be repaired, the company would replace them.  However, when consumers needed to replace covered items, the company often required consumers to accept cash "buy-outs."  These "buy-outs" were hundreds of dollars less than the consumers' cost to replace the items.  For example, CHW offered one customer a $180 "buy-out" for a dryer that allegedly would have cost $600 to repair.  When the consumer disputed this, the company offered a $285 "buy-out."

CHW also repeatedly failed to deliver on its promises for prompt service.  In several cases this was because the company failed to pay its contracted technicians. On at least one occasion, CHW assigned three different technicians to a consumer's claim, and all three technicians told the consumer they would not do so because CHW had failed to pay them for prior services. To date, the Division of Consumer Affairs has received 16 complaints from technicians who stated CHW had not paid outstanding invoices totaling at least $21,690.92.

CHW's residential service contract states that, upon receiving a request for service, the company will contact a local technician within two days during normal business hours and four days on weekends and holidays.  However, CHW did not have contracted technicians in some areas.  Consumers in those areas had to find their own technicians, then pay the technicians directly and seek reimbursement from CHW.   On other occasions, contractors sent to consumers' homes by CHW turned out to be unlicensed and/or uninsured.

Despite these alleged failures to honor the terms of consumers' residential service contracts, CHW paid Mandalawi at least $2.6 million from January 2011 to September 2013, paid Hakim at least $3.7 million between December 2010 and September 2013, and paid Seruya at least $2.1 million between January 2011 and April 2013.

The Division of Consumer Affairs has received complaints from a total of 116 consumers, including 18 from New Jersey, seven from New York, and five from Pennsylvania. The balance of the complaints were filed by consumers from outside the tri-state area, in states such as Maryland, Texas and Nevada. The Division also has been provided with 902 complaints that were filed by individuals from various states with the Better Business Bureau.

The State's Complaint, filed in Superior Court in Middlesex County, ultimately requests that the Court, among other things, find that the defendants violated the Consumer Fraud Act and Advertising Regulations; order defendants to pay consumer restitution; declare CHW's residential service contracts with consumers to be null and void; and impose civil penalties.

Investigator Brian Morgenstern, of the Division of Consumer Affairs Office of Consumer Protection, conducted this investigation.

Deputy Attorney General David Reap, of the Consumer Fraud Prosecution Section within the Division of Law, is representing the State in this action.

Consumers who believe they may have been victimized by Moving Max or other moving companies can file a complaint online with the State Division of Consumer Affairs or by calling 1-800-242-5846 (toll free within New Jersey) or 973-504-6200.


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