A Missouri company and its owners accused of falsely advertising the sale of motor vehicle service contracts have reached a settlement with the state of Oregon requiring them to pay restitution.
"Consumers across the country have complained about companies using shady telemarketing techniques to sell so-called extended vehicle warranties that failed to live up to their promises," said Attorney General John Kroger. "This settlement will force one of these companies to obey the law or quit doing business in Oregon."
The Better Business Bureau gave Dealer Warranty Services an "F" rating based on more than 150 consumer complaints. Consumers said the company used misleading sales or advertising practices; falsely claimed that it was associated with a manufacturer or dealer; refused to honor cancellation requests or provide refunds; consistently failed to cover needed repairs; provided poor customer service; and employed harassing sales calls and solicitations.
The Oregon Department of Justice received nearly two dozen inquiries and complaints about Dealer Warranty Services. Consumers complained about getting postcards and phone calls telling them that the manufacturers warranty for their vehicles had expired and that the company could extend it. Instead, Dealer Warranty Services sold motor vehicle service contracts provided by an independent third-party.
Some consumers reported that the motor vehicle service contracts did not live up to advertised expectations.
The settlement requires the company and its owners, Theodore B. Conrad and Jeffry E. Zykan, to pay $10,000 to the Oregon Department of Justice and restitution to Oregon consumers who have filed complaints.
It also includes injunctive terms that prohibit the company and owners from using illegal tactics that consumers complained about. Failure to abide by the terms of the settlement will result in an additional $10,000 payment.
Consumers should be very cautious about purchasing extended service contracts. Never sign up for an extended service contract without seeing the complete written policy.