Warranty company pays City of Phoenix to use its logo on offer letters

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PHOENIX -- Official-looking letters are being mailed to 275,000 homes in the City of Phoenix.

The envelopes display the city’s logo next to the name Service Line Warranties of America. The letter inside also shows the city’s logo at the top followed by an offer: For a small monthly fee, homeowners can sign up for a program that warranties their sewer line.

But it isn’t just Phoenix residents receiving the letters.

Homeowners in 130 cities nationwide are getting them, like Connie Shulte in Plano, Texas, who says she thought her letter was an official notice from the City of Plano.

"I felt like the City of Plano was endorsing this company that if something went wrong, they would be there to help their citizens," Shulte said.

But Plano, Phoenix and other cities won't be there to help you.

That's because despite these official-looking letters, Service Line Warranties of America is a private company that's paying cities, like Phoenix, for the right to use their logo and names.

Shulte said she didn't know that until after she signed up for the program and canceled when the truth came out.

“The City of Plano is going to make money off its residents,” she said.

The City of Phoenix was paid $216,000 by Service Line Warranties of America. The City will also get 12% of the revenue generated from homeowners who buy into the program.

Jon Brodsky is a City of Phoenix spokesman and said the offer falls under the city's marketing partnership program.

“It's a relatively new program where we're looking to partner with outside companies - mutually beneficial business partnerships - that raise revenue for city programs and services,” he said.

But Brodsky said consumers shouldn't be confused with the solicitation because the envelopes clearly indicate a "program partner" under the city's logo, and a line in the letter states the city has “no responsibility or liability for the warranty program.”

“It's an optional program and the agreement is between the company and the homeowner,” he said.

Brodsky assures homeowners that the city thoroughly researched Service Line Warranties of America before partnering up with the company and sending out those letters.

The company has an A+ rating with the Better Business Bureau.

“The important thing is for homeowners to sit, look at it, decide if it's something they think is a good fit for them. Talk to the company, ask questions and decide whether they want to do it or not,” Brodsky said. “There's no obligation.”