Cease and desist order issued against Lenovo

Insurance Commissioner Mike Kreidler has issued a cease-and-desist order against computer maker Lenovo, barring the company from continuing to sell illegal service contracts in Washington state.

From May 2008 to May 2012, Lenovo (United States) Inc. is believed to have sold $153,415 worth of service contracts in the state. The plans, which covered repair or replacement of damaged Lenovo products, can only be sold to Washington residents by a licensed insurer or a registered service contract provider. Lenovo is neither.

Kreidler also ordered the company to mail a copy of the cease-and-desist order to all its Washington customers within 10 days.

Nothing in the order prevents the company from fulfilling the terms of the service contracts or from issuing a refund, if requested.

The company’s unauthorized sale of service contracts was initially disclosed by Lenovo itself when it applied for registration as a service contract provider in April 2011. At that point, the company said, it had already sold 855 contracts for $90,630.

When Kreidler’s staff reviewing the application sought more information, the company failed to respond, and later withdrew its application (December 2011). Lenovo later said it had sold a total of 1,327 contracts worth $153,415 to Washingtonians (May 2012).

The company has a right to demand a hearing. The order takes effect immediately.

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