About a week or so ago I wrote a long and detailed post (with frequent updates as I discovered new information) about my extreme dissatisfaction with my workers compensation insurance from Applied Underwriters, a Warren Buffet-owned insurance company. I also wrote a shorter, parallel review on Yelp** (where Applied Underwriters already has an abysmal rating). For reasons I will guess at in the next post, Yelp keeps marking my post as "not recommended" despite the fact that it is one of the few that is not just a rant of the sort "this company sux" but actually has real details. There is a tiny almost invisible link at the bottom to see other reviews not recommended.
Yesterday, I received a letter from Applied Underwriters (Letter here (pdf)) demanding that I take down the Yelp review and my blog post or else they will sue me for libel. Based on my understanding of libel law, the content of my posts (which are all legally protected opinion), and recent court cases, Applied Underwriters has essentially no chance of ever winning such a suit. But my guess is that this is not their intention. I presume they are hoping that the fear of legal action, and the expense of legal defense, will cause me to stop my perfectly valid public criticism of their product.
I am seeking legal advice from a well-known First Amendment attorney, so Applied Underwriters will get my final response after I have had advice of counsel. But here are a few thoughts:
You can read the attorney's letter in full if you are a fan of such things, but if you read sites like Popehat much, you can pretty much predict what you will see.
The gist of their complaint, from the only paragraph of mine quoted in the letter, seems to be the word "scam". By the text of their letter, they seem to believe that "scam" is libelous because their company is well-rated financially and that they provide reasonable claims service. I concede both these facts. However, I called it a "scam" because there is a big undisclosed cost to their product that was never mentioned in the sales process, and that could only be recognized by its omission in the contract I signed -- that there is nothing in the contract committing them to any time-frame under which to return deposits and excess premiums I have paid, which may well amount to hundreds of thousands of dollars. This fact about the contract is confirmed by their customer service staff, who have said further that the typical time-frame to return such over-collections and deposits is 3-7 years after the contract ends, or at least 6-10 years after the first of the deposits was made.
If I had gotten any descriptions of their service terms wrong, I would have been happy to correct them. Hell, given that apparently Applied Underwriters will hold over $200,000 of my money for as many as ten years before they maybe return it to me, I am hoping I somehow have misunderstood. Unfortunately, their staff is pretty adamant that I understand these terms perfectly, and you will see that the letter sent by the attorneys does not attempt to refute any of the specific issues that drive my negative review. And of course none of this was ever disclosed in the sales process. The company attorneys point to the fact that I read the agreement and signed that I understood, but in fact this issue is only in the agreement by its omission. In its 10 pages of arcane boilerplate, the agreement never includes any clause giving them any legal obligation to return your deposits and excess premiums in an defined timeframe. It is that omission that I missed. Would you have caught it? Is this a substantial enough issue that you would expect disclosure in the sales process?
So is this a "scam"? I believe that this issue is costly enough, and hard enough to detect, and far enough outside of expected business practices to be called such. You may have your own opinion, but ask yourself -- When you enter into, say, a lease and have to put down a security deposit, is it your reasonable expectation that the landlord has the right in your lease to keep your deposit for 3-7 years (or more) after you move out? Oh, and by the way, how might your evaluation of something as a "scam" be affected by the knowledge that the company is threatening to sue anyone who writes a negative review?
Anyway, I take responsibility for my own failure as a consumer here. But in a free society it is perfectly reasonable to communicate issues one has with a product or service to help others avoid similar mistakes. Which is what I have done.
** I have problems with Yelp as well. What is linked is not my original review. My original review linked to my blog post. Yelp took it down. I will tell that saga in a future post.