Marketers hawking extended auto warranties of dubious value are increasingly coming under scrutiny by law enforcement. Since many of these campaigns are aimed at senior citizens, many state attorneys general have stepped up their efforts to prevent fraud.
In Missouri, Attorney General Chris Koster has sued four more companies he says were selling bogus auto warranty products.
Koster said the businesses he has filed suit against today used misleading telemarketing, letters, and postcards to market what appeared to be "extended auto warranties" to consumers, but actually were "service contracts" or "automotive additives."
He said the businesses would lead consumers to mistakenly believe their current vehicle warranties were about to expire and that they would not have another opportunity to purchase an extended warranty unless they acted immediately. Many potential customers were not informed that the businesses were not affiliated with the dealership or manufacturer from whom the customers bought their vehicles.
Many consumers were unaware they were not actually purchasing auto warranties until they received an auto additive in the mail. The companies sold the products as auto additives to avoid Missouri's service contract laws, which provide some minimal protection for consumers. Consumers did not realize the limited value of the products they were purchasing.
"This extended warranty scam is nothing but a 'bait and switch' scheme that preys on consumers' fears having inadequate vehicle warranty coverage," Koster said. "The 'bait' is to lure vulnerable consumers into extending or purchasing 'auto warranties.' Then the 'switch' is to sell them service contracts, or worse, auto additive warranties with inferior or negligible repair coverage, then making it almost impossible for the consumers to cancel the contract or get refunds.
"I believe this warranty business is rampant with fraud, and Missouri continues to be at the center of this deception," Koster said. "This office will continue to pursue and prosecute businesses such as these that target unsuspecting, innocent consumers."
Koster filed lawsuits against six companies using these scams in November.
The four businesses Koster sued are:
• Carhill Enterprises, Inc., d/b/a Consumer Protection Services, St. Louis
• CarSafe, LLC, d/b/a Dealer Preferred Warranties, LLC, St. Charles
• Dealership Services, St. Louis
• Dealership Warranties, Inc., St. Louis County
Koster is asking the court to issue preliminary and permanent injunctions requiring the companies to comply with Missouri's Merchandising Practices Act; provide full restitution to victims and to the state; and pay civil penalties and court costs.
