St. Louis, Mo., Nov. 12, 2009 – Today’s announcement of lawsuits against six Missouri-based auto service contract companies sounds a “new and very clear warning” to the troubled industry, said the president of the St. Louis Better Business Bureau (BBB).
“This is a signal that Missouri and the rest of the nation simply will no longer tolerate the kind of tactics that have been common in this business for far too long,” said BBB president and CEO Michelle Corey. “It is a significant step for consumers.”
“This is a good day for every customer who has been frightened or tricked by misleading solicitations and high-pressure sales tactics into buying insurance coverage that, in many cases, he or she didn’t need,” Corey said.
“And it is a good day for every consumer who tried to use a service contract to pay for repairs, only to find out he had bought little more than an empty promise.”
Attorney General Chris Koster announced the suits against
National Dealers Warranty, Inc. of St. Peters (also known as StopRepairBills.com);
Warranty Activation Headquarters, Inc. of South St. Louis County (Nationwide Automotive Protection);
Extended Warranty Corporation, Inc. of St. Peters (Key Protection Group);
Dealers Warranty, LLC of St. Charles (MOGI);
U. S. Auto Warranty of St. Peters, and
Dealer Warranty Services of St. Charles.
Consumers across the United States have filed more than 1,400 complaints and reports with the BBB against the six companies.
Corey will speak at a news conference in downtown St. Louis announcing the suits.
BBB records show that National Dealers Warranty has received 504 complaints and reports. It has an F grade with the BBB. The remaining companies, their numbers of complaints and reports in the past 36-month period, and their BBB grades are: Warranty Activation Headquarters (314, F), Extended Warranty Corporation (173, F), Dealers Warranty (176, F), U. S. Auto Warranty (65, F) and Dealer Warranty Services (253, F).
Koster’s announcement comes on the heels of a lengthy investigation by the Missouri attorney general’s office. The BBB has been working closely with the office since this spring, turning over thousands of complaints to investigators. The work culminated with a three-hour meeting Sept. 17 at BBB offices, attended by more than 20 investigators and attorneys, as well as BBB representatives.
Koster criticized companies who were involved in what he called an “oil additive scam” in which customers were sent a bottle of fluid with instructions to immediately add it to their vehicle to validate their warranties. Once the fluid was added, however, it nullified their chance for a refund, Koster said.
He also said some companies had used misleading letters, postcards and telemarketing techniques, some in violation of Missouri’s No-Call law.
The suits charge the businesses with unfair and deceptive practices violations.
Since April, the St. Louis BBB office has issued a series of news warnings to the public regarding auto service contract companies, the majority of which are headquartered in the St. Louis area. The office has been at the forefront in alerting the public through local and national media to problems within the young industry.
In April, the BBB issued a news release keying on the practices of US Fidelis, which operates a huge customer service center in the old Belz Factory Outlet Mall in Wentzville. US Fidelis remains a defendant in a previous suit filed by the attorney general’s office.
Three months after its first warning, the BBB issued a second news release, saying that despite promises to “clean up everything,” the numbers of complaints against the company were actually increasing.
The BBB also issued releases this year keying on two other St. Louis-based companies -- Service Protection Direct (also known as Protection Direct and TXEN Partners) and Consumer Protection Services.
The BBB has received nearly 1,900 complaints and reports concerning US Fidelis, which previously has used the names Dealer Services and National Auto Warranty Services. Recent complaints claim the company has been unresponsive to consumer concerns, stalled in making legitimate refunds and rejected repair claims that should have been covered under contracts.
The BBB offers the following tips for dealing with brokers selling extended auto service contracts:
- Never give personal information, including Social Security, bank or credit card numbers, over the phone to an unknown telemarketer.
- When considering an extended service contract or any other type of telephone solicitation, insist on getting a contract that clearly explains all terms and conditions before signing up or providing credit card or other payment information.
- Read your manufacturer’s warranty and contact your dealer or manufacturer to ensure you are not purchasing duplicate coverage.
- Consumers can place their phone number on the state or federal do not call list by visiting www.donotcall.gov. If the consumer is already on the list but continues to receive telemarketing calls, he or she can use the same Web site to report the incident to the Federal Trade Commission.
- Consumers should always check out the company with the BBB at www.bbb.org or 314-645-3300.
Contacts: Michelle Corey, President & CEO, 314-645-3300, mcorey@stlouisbbb.org or Bill Smith, Trade Practice Investigator, 314-645-3300, tpc1@stlouisbbb.org
