Article: The New York Times

Sellers Woo Shoppers With Guarantees to Address Layoff Worries
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By STEPHANIE ROSENBLOOM
Published: April 19, 2009

First, retailers enticed struggling consumers with deep discounts. Then they dangled buy-one-get-one free deals.

The latest recession tactic? Guaranteed financial help in the event of a job loss.

With countless workers hoarding cash and fearful of joining the swelling ranks of the unemployed, American companies are trying to stimulate demand with a new twist on an age-old retailing strategy: money-back guarantees.

In the last couple of months all kinds of companies — car manufacturers, home builders, airlines, apparel chains, cellphone carriers — have started promising their customers financial assistance, refunds, even free services, if they lose their jobs.

JetBlue will refund plane tickets. Virgin Mobile USA will waive up to three months of cellphone service charges. Walgreens will allow members of its in-store clinics to stay enrolled free if they lack health insurance.

The Minnesota Timberwolves basketball team will refund season tickets for games not yet played. And the builder Bigelow Homes will pay the mortgage while the homeowner is out job hunting.

Last month, Bigelow mailed 15,000 fliers to Chicago-area residents promoting its "recession-proof" homes in Aurora, Ill.

"I saw the flier and thought 'Hmm, that is interesting,' " said Desiree Miller, who lives about 20 minutes outside of Aurora and has been renting for about a decade.

She had no intention of buying a house, but the words "recession-proof" tempted her enough that she took a tour of the development. A day after stepping inside a home with three bedrooms, two bathrooms and a two-car garage, Ms. Miller plunked down a deposit.

She figured home prices were unlikely to go much lower, after falling more than 20 percent statewide in the year that ended in February. Also, beyond the job-loss guarantee, Bigelow promised that if the value of her home did decrease, it would pay her the difference.

"It really is a good time to buy a house, and with everything else they put behind it, it just made it a good decision," Ms. Miller said, referring to depressed prices and low interest rates. "Those guarantees just helped solidify that decision."

The recession-proof home pitch has not unearthed throngs of buyers, but Michael Venetis, Bigelow's vice president for sales and marketing, said, "we sold six homes that we can attribute directly to that promotion."

Companies offering these extreme guarantees — which typically require documentation to verify a job loss — said they were a direct response to research showing that a growing number of consumers were worried they might lose their jobs.

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