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U.S. Fidelis Facing Another Class Action

Warranty company issues bare-bones, loophole-ridden policies, suit charges

By Jon Hood
ConsumerAffairs.com

January 18, 2010

U.S. Fidelis sells extended warranties to consumers whose factory-provided service protection has expired. Lead plaintiff Benita Bruno's suit, filed in federal court in Michigan, says that U.S. Fidelis uses “high pressure sales tactics combined with fraudulent representations and omissions” to convince consumers to buy such warranties.

According to Bruno, U.S. Fidelis's “ruthless sales techniques” include telling consumers that failing to sign up for a plan right away will cause them to “lose out on any opportunity to receive coverage for their vehicles.” Consumers who continue to resist receive additional phone calls, with better “incentives” offered each time.

Bruno also accuses U.S. Fidelis of severely misrepresenting the amount of coverage offered under its policies. According to the complaint, U.S. Fidelis uses heavy-handed techniques to convince consumers that they are buying “full coverage warranties,” a far cry from what they end up receiving.

Bruno's story is typical of U.S. Fidelis customers. After seeing an advertisement for “full coverage warranties,” she called the company in August 2009 to inquire further. A U.S. Fidelis representative told Bruno that “if she failed to purchase the warranty at that instance it would not be available to [her] at a later date.” Bruno ended up sleeping on it and, despite its previous ultimatum, U.S. Fidelis sold her a warranty on September 2, 2009.

Shortly after making her purchase, Bruno discovered that, contrary to U.S. Fidelis's representations, her warranty “did not completely cover [B]runo's vehicle for repairs.” Specifically, U.S. Fidelis's “sales representative failed to inform [B]runo of all of the terms of the [warranty], including conditions, exclusions, restrictions, and limits of liability.”

Bruno is hardly the first to point out the difference between U.S. Fidelis's rhetoric and its results. The company is infamous for providing policies ridden with so many exceptions and loopholes as to be essentially worthless. Last April, a similar class action was filed against the company in Missouri. That suit also described a pattern of high-pressure sales tactics and bare-bones warranties that left consumers out in the cold when their cars broke down.

In March 2008, a press release by then-Missouri Attorney General Jay Nixon alleged that the company sent letters to consumers warning that their factory warranties were about to expire when, in fact, most recipients had plenty of time left on their factory protection plans.

U.S. Fidelis has also cycled through several names in the past few years, never an encouraging sign. The company started as Dealer Services before morphing into National Auto Warranty Services and finally settling on its current name.

The present suit is brought on behalf of all Michigan consumers who purchased an extended warranty from U.S. Fidelis on or after April 1, 2004. Bruno's attorneys estimate that potential class members number in the thousands.

The suit says that U.S. Fidelis has “continuously and systematically established a pattern of racketeering activity through the use of [its] business plan of obtaining funds through mail, wire, radio, and television fraud,” thereby violating the Racketeer Influenced and Corrupt Organizations Act (RICO). Bruno also accuses the company of violating several Michigan consumer protection laws.

ConsumerAffairs.com has received many complaints about U.S. Fidelis, and over a half dozen this year alone. William of Chicago offers a representative account:

“Back in July 2009, I saw an advertisement for this company, and at the time, I thought that it would be a good investment to purchase one of the company's extended warranties for my Chevy Impala. Boy! Was I wrong, I put my car in the shop twice only to have most of the repairs for my car not covered for some bull reason. I have since came to the conclusion that I am better off without the US Fidelity warranty and better off buying a warranty from GMAC. I had to incur a 690.00 dollar repair bill, plus I already have paid out a total of 700.00 in payments to US Fidelis, I want all my money back.”

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