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Class Action Filed Against U.S. Fidelis

Fraud, high-pressure sales tactics alleged in auto warranty sales

By Jon Hood
ConsumerAffairs.com

April 10, 2009

The company offers extended vehicle protection for consumers whose original warranties have expired. Many consumers who pay for the extra coverage assume that it will cover most if not all repairs, as dealer-provided warranties generally do. The problem, according to the suit, is that U.S. Fidelis includes so many exceptions in its fine print that consumers are usually left out in the cold when their cars break down.

The suit also alleges that U.S. Fidelis misrepresented the level of coverage consumers would receive, and pressured them to sign up quickly or risk losing special benefits. Many consumers were told that they were eligible to receive special rates, which never materialized. On top of everything else, customers who asked to see the conditions of the contract were ignored.

The company has had plenty of prior warnings.

In March 2008, former Missouri Attorney General Jay Nixon filed a complaint against U.S. Fidelis for deceptive marketing and violation of telemarketing laws. The suit alleged that, among other things, the company contacted consumers whose numbers were on the federal Do Not Call list. Several other attorneys general followed suit, and a settlement is now reportedly being negotiated with Missouri Attorney General Chris Koster’s office.

Consumers haven’t exactly given the company two thumbs up, either. The Better Business Bureau has received over 1,000 complaints about U.S. Fidelis and its affiliates over the past three years, leading the Bureau to give the company a failing grade.

According to the BBB’s website, that grade is based on the total number of complaints received, how many of those complaints went unresolved, how long the eventual resolution took, and “advertising issue(s),” which presumably refers to the company’s allegedly deceptive marketing methods.

A press release issued by Jay Nixon in March 2008 alleged that the company sent consumers letters warning them that their factory warranties were about to expire, when in fact many had warranties that wouldn’t run out for months. The release further says that consumers who asked for a refund got either nothing or only a fraction of what they originally paid. The company advertises on late-night TV and through direct mailers.

The company was founded in 2003 and is run by Cory and Darain Atkinson, brothers who live in Missouri. It has already cycled through three names, first calling itself Dealer Services and then National Auto Warranty Services, before settling on its current name within the past year. The company’s switch to the U.S. Fidelis name came after Nixon’s complaint was filed, possibly in an effort to disassociate itself from the allegations.

U.S. Fidelis seems to still hold itself in high esteem, despite the overwhelming number of complaints against it. The company’s website touts it as “one of the largest auto warranty companies in the United States” and “a warranty company that is committed to honesty ... and delivers peace of mind.”

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