National Home Protection, Inc., the shuttered home warranty company accused of defrauding thousands of consumers across the country, has agreed to a settlement with New York Attorney General Andrew Cuomo. NHP will pay $900,000 to settle claims that it misled consumers about its services and failed to honor legitimate warranty claims.

NHP sold a one-year "warranty plan" that promised repairs or replacements for any appliances damaged as a result of normal wear and tear. The plan typically cost around $370 per year, making it a relatively inexpensive option for homeowners worried about shelling out thousands of dollars for an unforeseen water heater or oven malfunction.

Despite its promises, however, NHP routinely denied legitimate claims and canceled homeowners' policies for no apparent reason, Cuomo said. Cuomo's office also accused NHP of engaging in "deceptive advertising," pointing to the company's statements that it would replace appliances "regardless of age, make or model," and that there was "no home inspection required to enroll" in the plan. And while the company promised consumers a $50 gift card "today" if they signed up for the warranty, that offer was in fact "a rebate offer subject to undisclosed and restrictive wait periods," according to Cuomo. Many consumers who complied with the rebate offer's terms and conditions still never received any money.

New York Supreme Court Justice O. Peter Sherwood issued a decision on December 8, finding NHP liable for, among other things, engaging in false and misleading advertising, failing to provide timely rebates under New York law, and failing to post rebate forms on its website. Justice Sherwood said that NHP's misrepresentations extended to its website, where it assured consumers that it would "replace your unit with the same or like model." In fact, Justice Sherwood said, many consumers were offered inferior products or a cash amount considerably lower than their broken appliance's value.

Under the settlement, NHP will pay compensatory and punitive damages totaling $900,000. Those eligible to receive restitution include NHP customers who were denied contracted-for or advertised services, those who did not receive a gift card offered as an incentive to buy NHP insurance, and those who were prohibited from canceling their warranty within a given time -- either within 20 days of mailing the warranty, or within 10 days of the sale if the warranty was delivered at that time.

Cuomo's office will send claim forms to all NHP customers over the next few weeks. Those seeking more information can contact his office at (800) 771-7755.

Cuomo filed the suit in April, and the Manhattan Supreme Court immediately granted his request to freeze the bank accounts and assets of the company and its principals. The temporary restraining order covered principals Leo Serrur, David Seruya, and Victor Hakim, and was aimed at preventing them from selling any more warranty plans while the case was pending.

The suit was filed in New York, where NHP is based, but the scam reaches far beyond the Empire State. At the time the suit was filed, Cuomo reported that his office had received over 340 complaints about the company from at least 32 states, New York included, and that another 950 had gone to the Better Business Bureau. has received its share of complaints as well, stretching back to August 2008. A number of complaints came from consumers who couldn't get in touch with NHP after the company shut its doors.

Such was the case with Mariana, of Lexington, Ky. "I signed a contract with NHP in OCtober 2008 for 3 years at a cost of 900," she wrote. "When my garage door broke, I tried to call them on their 800 number and got the operatior's 'this number is not in service' message repeatedly. What's going on with this company? I feel as if I've been scammed out of nearly 1000!"

Chaqueta, of Baltimore, Md., had a bad experience back in May. "I put a servie call in for my air conditioner that took about month for them to get someone to my house," she wrote. "Amazing heating and air came out to fix it on 5/20/2008 and received a authorization number NHWP to replace my thermostat. Now I am getting the portion of the bill with finance charges that NHWP will not pay. I paid to renew my policy they took two payments out and I had to send in a lot of proof that it was taken out of my account twice to get my money back."