Eight states and the District of Columbia have filed lawsuits against a pair of extended auto warranty companies, alleging an array of deceptive advertising, marketing, and sales practices used to mislead consumers into purchasing motor vehicle service contracts.
The filings allege US Fidelis, formerly National Auto Warranty Service, of St. Louis, MO, and Credexx Corporation of Irvine, CA, dba Auto One Warranty Specialists (Auto One), made false and misleading statements in connection with the sale of extended auto warranty plans in violation of several state statutes, including state and federal no-call laws.
Consumers have filed hundreds of complaints against the companies, saying the consumers did not actually need the service contracts for their vehicles, the contracts did not cover needed repairs and/or that the consumers wanted to cancel their contracts but were unable to get refunds.
"These companies misled consumers by marketing and selling 'extended warranties' that were actually service contracts," Ohio Attorney General Richard Cordray said. "Service contracts are not warranties as defined by law and do not have to meet the same standards. Consumers spent hundreds and thousands of dollars under the false belief that they were buying comprehensive warranties, when that was not the case."
According to the lawsuits, the companies represented to consumers they were selling extended warranties to cover just about anything mechanical that can go wrong, when in fact they offered and sold service contracts covering only certain repairs. The suits also allege the companies falsely represented themselves as offering products on behalf of the manufacturer of the consumers vehicle and falsely indicated the consumers existing warranty was about to expire.
Every time a company tricks consumers into purchasing a phony product, it sheds a negative light on the business community, said Kansas Attorney General Steve Six. The Attorney Generals office is committed to protecting consumers and giving Kansans confidence in knowing they are dealing only with reputable firms. If youre breaking the law in the name of making the sale, we will come after you.
In addition to the multi-state cases, Attorney General Cordray filed a lawsuit in the Cuyahoga County Court of Common Pleas charging Auto Repair Warranty, Inc. (ARW), a Cleveland-based company, with misrepresenting its products.
ARW charged consumers up to $2,500 for its service contracts, which it claimed included "bumper to bumper" coverage. But the company failed to explain that certain repairs were excluded and denied claims for repairs that should have been covered. ARW has since gone out of business, leaving consumers with service contracts that they have paid for, but which have no value.
States suing US Fidelis include Iowa, Idaho, Kansas, North Carolina, Pennsylvania, Texas, Washington and Wisconsin. The attorneys general of Idaho, Kansas, North Carolina and Washington filed lawsuits against Auto One.
Kansas is also alleging US Fidelis and Credexx violated the Kansas No Call act with aggressive telemarketing techniques and robo-calling. In addition, the US Fidelis suit alleges US Fidelis instructed consumers to push 8 to be removed from our lists but would instead simply disconnect the call.
Violations of our No Call act demonstrate how important it is to strengthen this law, said AG Six. That is why my office introduced the Robo-Call Privacy Act this year to establish a comprehensive restriction on robo-calls in Kansas, including both commercial and political calls. Unfortunately, the Legislature has failed to act on this much needed bill.
The Attorney Generals Office is asking for restitution for all Kansas consumers, investigative fees and over $75,000.00 in civil penalties for violations of the Kansas Consumer Protection Act. The cases were filed in Shawnee County District Court. As many as nine states filed lawsuits today, and more states are expected to file in the near future.
