Multiple class-action lawsuits have been filed against Sears for deceptive practices related to warranty and service protection agreements, with the most significant being the 2015 Greene v. Sears case (amended in 2016) that alleged Sears systematically misrepresented what its service protection agreements would cover. The lawsuit claimed that Sears would sell customers coverage plans promising to repair or replace products, only to later determine that the products weren’t covered and refuse to honor the claims. For example, a customer who purchased a service protection agreement on a major appliance might find that Sears would later deny the claim, stating the issue was a “pre-existing condition” or fell outside coverage terms that weren’t clearly disclosed at the point of sale. The warranty landscape at Sears became complicated following the company’s 2019 bankruptcy.
When Sears’ assets were purchased out of bankruptcy, the new buyer successfully invoked “excluded liabilities” provisions in the sale agreement, which meant they were not held responsible for pre-closing lawsuits like the warranty class action claims that customers had filed. This left many customers wondering whether their claims would ever be resolved and against whom they could pursue compensation. Beyond the service protection agreement litigation, Sears has also faced a separate decades-old class action involving Kenmore brand washing machines that were prone to mold development. This settlement provided affected customers with reimbursement options for paid repairs, replacement costs, and compensation for service contracts. These cases highlight ongoing patterns of warranty disputes that have affected Sears customers across different product categories.
Table of Contents
- What Are Service Protection Agreements and Why Did Sears Face Legal Action?
- The Complexity of Sears’ Bankruptcy and Its Impact on Warranty Claims
- The Separate Kenmore Washing Machine Settlement
- Understanding Current Class Action Restrictions at Sears
- Common Warranty Denial Patterns and How to Protect Yourself
- Bankruptcy and Consumer Protection—The Broader Lesson
- Current Status and What Sears Customers Should Know
What Are Service Protection Agreements and Why Did Sears Face Legal Action?
Service protection agreements are extended warranty or service plans that retailers like Sears offer beyond a manufacturer’s standard warranty. They typically promise to cover repairs or replacement of products under specified conditions. At Sears, customers were sold these agreements with the expectation that coverage would be broad and reliable, but the Greene v. Sears lawsuit revealed a significant gap between what was advertised and what was actually covered. The core complaint in the lawsuit was that Sears’ sales staff did not adequately disclose the limitations, exclusions, and conditions of these service protection agreements at the point of sale.
Customers reported that when they attempted to file claims under their agreements, Sears would use vague or previously undisclosed exclusion clauses to deny coverage. For instance, a service protection agreement on a microwave might exclude damage from “improper use” without clearly defining what that means—giving Sears significant discretion to deny legitimate claims. What made this particularly problematic was that customers had no way to know about these limitations before purchasing. The agreements were sold alongside expensive appliances and home goods, creating an incentive for Sears to maximize sales while minimizing actual payout obligations. The deceptive practice claim rested on the argument that customers were not making informed decisions about whether these plans were worth purchasing.
The Complexity of Sears’ Bankruptcy and Its Impact on Warranty Claims
When Sears filed for bankruptcy and its assets were subsequently purchased in 2019, the new owner negotiated a deal that included “excluded liabilities” provisions. This legal mechanism allowed the buyer to purchase Sears’ valuable assets—stores, inventory, customer relationships, brand value—while leaving behind the company’s legal obligations, including pending class-action lawsuits. Sears’ warranty lawsuit claims from 2015 fell into this category of excluded liabilities. The bankruptcy court sided with the new buyer’s position, ruling that they had no obligation to assume responsibility for the 2015 warranty class action claims. This decision essentially left the plaintiffs in an uncertain position.
Unlike secured creditors who get paid through bankruptcy proceeds, class-action plaintiffs often receive little to nothing if the company has already liquidated its most valuable assets. The exclusion of these liabilities from the asset purchase meant there was no clear mechanism for compensation—the original Sears entity was either dissolved or deeply insolvent, and the new owner had no legal obligation to pay. This outcome illustrates a significant limitation in how class-action claims are treated in bankruptcy proceedings. Consumers who filed claims thinking they would eventually recover compensation discovered that the bankruptcy process had effectively shielded the new owner from those obligations. It’s a reminder that bankruptcy doesn’t always resolve legal disputes—it can simply shift them into a legal limbo where resolution becomes extremely difficult.
The Separate Kenmore Washing Machine Settlement
Running parallel to the service protection agreement disputes was a separate, decade-long class action involving Kenmore brand washing machines sold at Sears and manufactured by Whirlpool. These machines were prone to developing mold in their drum and internal components, causing odors, discoloration of clothes, and potential health concerns. Unlike the service protection agreement case, this lawsuit was actually resolved through a settlement rather than left hanging by bankruptcy proceedings. The Kenmore washing machine settlement provided affected customers with several compensation options: reimbursement for the cost of paid repairs, replacement of the machine in some cases, and compensation for service contracts that customers had purchased. Customers who had experienced mold issues with their Kenmore washers and had paid for repairs out of pocket could seek reimbursement.
This settlement demonstrated that when Sears remained solvent enough to negotiate settlements, affected customers could actually recover some of their losses—though often only for direct, documented expenses rather than compensation for inconvenience or time spent dealing with the problem. The distinction between this settlement and the service protection agreement litigation is important. The Kenmore case involved a tangible defect in a specific product line—a problem that could be objectively verified through inspection. The service protection agreement case involved alleged deceptive sales and marketing practices, which are more difficult to prove and typically result in lower per-person payouts if resolved. Both cases nonetheless highlight that Sears customers have faced repeated warranty and coverage disputes across multiple product categories.
Understanding Current Class Action Restrictions at Sears
In response to past litigation and changing legal standards, Sears’ current terms of service now include class action waivers that limit customers’ ability to band together in lawsuits. Under these terms, customers with claims valued under $1,000 retain the right to participate in class actions and collective proceedings. However, if a customer’s claim exceeds $1,000, they are required to waive their ability to participate in class actions or representative actions to receive Sears’ service. This threshold creates a significant practical disadvantage for customers with larger claims. A customer with a $1,200 defect claim might be forced to choose between accepting individual arbitration (which is expensive and time-consuming for such a case) or waiving their right to compensation through a Sears service.
The incentive structure pushes customers with larger claims toward arbitration, which typically favors large companies over individual consumers. Class actions are powerful precisely because they make it economical to pursue claims that are individually too small to justify legal costs—this waiver provision undermines that mechanism. What this means for current Sears customers is that the old dispute patterns may be harder to challenge collectively. If multiple customers experience issues with a product line or service, they can no longer easily band together in a class action if their individual claims exceed $1,000. This makes it more important than ever for customers to document their purchases, warranty terms, and service denials carefully, since individual claims may be their only avenue for recovery.
Common Warranty Denial Patterns and How to Protect Yourself
Based on the Sears litigation history, several common warranty denial tactics have emerged. Sears has been known to deny claims based on alleged “pre-existing conditions” that were not clearly explained to customers before purchase. Another common tactic involves citing “improper use” without providing customers with documentation of what specific misuse supposedly occurred. Customers are sometimes told that damage falls under an exclusion that was printed in small text in the warranty agreement—text that many customers never read or fully understood at the point of sale. To protect yourself when purchasing a Sears warranty or service protection agreement, request a complete copy of the agreement before you commit to the purchase. Read through it carefully, noting exclusions and limitations.
Ask the sales representative to explain what is not covered, and if they cannot give you clear, specific answers, that’s a red flag. Documentation is critical—keep your proof of purchase, the original warranty agreement, any emails or letters discussing the coverage, and detailed records of any problems you experience with the product. When filing a claim, document everything in writing. If Sears denies your claim, request a written explanation of the specific reason for denial and ask them to cite the exact clause in the warranty agreement that supports their decision. Keep copies of all correspondence. If you believe the denial is unjustified, you can file a complaint with your state’s Attorney General’s office or your state’s Department of Consumer Affairs, which may be more effective than pursuing individual legal action given Sears’ current class action waiver policies.
Bankruptcy and Consumer Protection—The Broader Lesson
The Sears bankruptcy experience illustrates how consumer protection lawsuits can be left unresolved when a company files for bankruptcy and sells its assets. Many consumers assume that a company’s legal obligations are resolved through bankruptcy court, but that’s not always the case. When assets are sold to a new owner, that owner can negotiate to exclude specific liabilities from the sale, leaving customers with claims against an entity that no longer has the resources to pay. If you filed a claim in the Greene v.
Sears warranty lawsuit before or during the bankruptcy, your claim may not have been resolved. Bankruptcy proceedings typically prioritize secured creditors (like banks) and operational claims over consumer class-action suits. The remaining assets are often insufficient to compensate all class members. For Sears customers specifically, this means that even if you participated in the class action, you may never receive compensation. The best approach is to pursue individual claims with state consumer protection agencies, which can sometimes pressure companies even post-bankruptcy or help you recover through other channels.
Current Status and What Sears Customers Should Know
As of 2026, Sears continues operating under new ownership with modified terms of service that limit class action participation for claims over $1,000. The company’s warranty offerings remain available, but the history of litigation surrounding these products warrants consumer caution. If you’ve had issues with a Sears warranty in the past and never pursued a claim, you may still have options through individual state-level consumer protection complaints, though statutes of limitations will apply.
For customers considering purchasing Sears extended warranties or service protection agreements today, the lesson from past litigation is clear: these agreements have significant exclusions and limitations that are not always apparent at the point of sale. The value of any warranty depends entirely on what’s actually covered, not on how it’s marketed. Given Sears’ history with warranty disputes and current class action restrictions, individual diligence—reading agreements carefully and maintaining thorough documentation—is more important than ever. If issues arise, pursuing complaints through state consumer protection agencies may be more effective than attempting class action or arbitration routes.
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