CBC report sparks probe of furnace company
Last Updated: Thursday, June 18, 2009 | 3:37 PM CT
- Alex Freedman reports on Part 1: Consumers Bureau investigates furnace company's sales and repair practices (Runs: 2:25)
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- Alex Freedman reports on Part 2: Consumers Bureau investigates furnace company's sales and repair practices (Runs: 2:09)
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One of Winnipeg's biggest furnace retailers is being investigated by the provincial consumers' bureau following a series of stories by CBC News.
The CBC series, which ran earlier this month, raised questions about the repair practices and sales tactics of Furnasman's One Hour Heating and Air Conditioning.
The series was prompted by several complaints CBC News received about the company regarding advertising claims and work performed by service technicians.
During the month of April, CBC asked three homeowners to call Furnasman to inspect and clean their natural gas-burning furnaces.
CBC News then hired industry experts — including a retired inspector with the Manitoba Department of Labour — to double-check the work done by the company.
In all three cases, the Furnasman repairmen said the homeowners needed to buy new furnaces. However, the experts said two of the three furnaces did not need to be replaced, and that problems Furnasman had identified were not present.
The third furnace, which was 43 years old, legitimately needed to be replaced because of a fire hazard. But instead of telling the customer to call Manitoba Hydro to shut off the gas, the technician launched into a sales pitch that played on the customer's fear.
The Manitoba Consumers' Bureau is examining a number of aspects of the company's operations, including a training manual that advises service technicians to push for a sale.
The manual, obtained by CBC News, states that people are cautious of in-home salespeople and have been conditioned to seek other quotes and take their time in making a decision to spend money on a major purchase such as a furnace.
The manual, from the Success Academy — which provides sales training for people within the plumbing and electrical industries — encourages the technicians to "assist them in making the decision the first night."
It goes on to remind technicians: "You get paid for getting the order, not visiting and informing." The company states its goal is to "achieve a one call close."
Some of the company's aggressive advertising made promises of a free furnace with the purchase of an air conditioner, half-price deals and other offers that resulted in customers paying thousands of dollars for installations.
Since the CBC series ran, the company's ads have changed.
For example, one newspaper ad made no mention of the interest on financing a purchase through the company. A week after the CBC series, the ad included the example of a $5,000 purchase financed at an annual interest rate of 19.9 per cent. On a 10-year repayment plan, that would add $8,956 in borrowing costs to the original purchase, for a total of $13,956.
Another ad has since been updated with fine print containing information about the expiry date of the offer and limitations on warranties — details not included in the original ad.
The revised ad also notes the company's "Always on time" promise may not apply to every job.
Widow handed bill for $11,000
Winnipeg senior Jean Lindsay, the widow of a Second World War veteran, gave Furnasman a call last month when her furnace fan was giving her problems.
Although she had the 16-year-old furnace inspected annually, the Furnasman technician told her there were eight cracks in her heat exchanger. The problem could result in a lethal gas leak, the technician told her.
'I said that's funny, my carbon monoxide detectors didn't go off, and I have two of them," Lindsay said. "And he said, 'Well, you could have just slipped away in the night.' So that scared me."
'That's a lot for me. That was taking my life saving. I need that money. I mean, I don't know what's ahead of me.'— Jean Lindsay
The technician was the same one that CBC's hidden cameras caught trying to convince another homeowner that he, too, had a crack in his heat exchanger.
In that case, industry experts hired by CBC News to double-check the work found no cracks whatsoever.
But Lindsay didn't have anyone else check her furnace and she agreed to buy new unit as well as an air conditioner and filter. The total bill was $11,000, taxes included.
"That's a lot for me. That was taking my life saving," she said. "I need that money. I mean, I don't know what's ahead of me."
After seeing the CBC News stories, Lindsay contacted Furnasman to demand a refund. They offered to extend her warranty but she refused to settle for that. Then they offered her a $500 refund but Lindsay argued and finally persuaded the company to honour their money-back guarantee.
But they told her they intended to remove the furnace, the air conditioner and all the pipes and connections.
"I said, 'do you think I'm crazy?'" Lindsay said.
Finally she took her complaint to the provincial consumers' bureau, which discovered that her allegedly cracked heat exchanger was still under warranty — to Furnasman, which had installed the unit.
That was a detail the technician never told her.
CBC News has tried repeatedly to contact Furnasman to talk to them about this case. They have refused all requests for information.
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