Fred’s Appliance ordered to pay for illegal service contracts and back taxes

Fred’s Appliance has paid $448,627 in back taxes and a $10,000 fine over its service contracts to customers in Washington state.

The company is based in Spokane and has a store in Kennewick.

Fred’s Appliance failed to register with the state insurance commissioner as it sold service contracts for 11 years and collected $13.2 million in premiums, according to the state Office of the Insurance Commissioner.

Selling service contracts in Washington is illegal without registering with the state.

The payment includes interest in addition to back taxes on premiums collected.

Fred’s Appliance also has agreed to register as a service contract provider no later than Aug. 21 and develop a service contract that complies with state law.

Fred’s Appliance told the Office of Insurance Commissioner that it thought its “Protection Blanket Plus” product was an extended warranty and did not know that it fit the state legal definition of a service contract.

It was cooperative during the investigation, said state officials.