Kathleen G. Kane - Pennsylvania Office of Attorney General - Protecting Pennsylvanians

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April 29, 2010

Attorney General Corbett announces lawsuit against U.S. Fidelis over deceptive vehicle warranty sales

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HARRISBURG - One of the largest used car warranty sales companies in the country, Missouri-based U.S. Fidelis Inc., along with the co-owners of that business, are the subjects of a lawsuit filed today by the Attorney General's Bureau of Consumer Protection.

Attorney General Tom Corbett said the lawsuit was filed against U.S. Fidelis Inc., formerly known as National Auto Warranty Services Inc. and doing business as Dealer Services, of Wentzville, Missouri.  The consumer protection suit also names company President Darain E. Atkinson, of Lake Saint Louis, Missouri, and Vice-president Cory C. Atkinson, of Wentzville, Missouri - brothers and co-owners of the company. 

"U.S. Fidelis allegedly used deceptive, misleading or false information to convince thousands of Pennsylvania consumers to spend thousands of dollars on used car warranties that may not have provided the protection they were seeking," Attorney General Tom Corbett said. "The company is also accused of disregarding 'Do Not Call' programs and other restrictions on telemarketing, flooding homes and cell phones across the country with an estimated one billion unwanted sales calls."

Corbett said U.S. Fidelis is accused of numerous unfair and deceptive business practices, including:

  • False statements that coverage would be the same as the original manufacturer's warranties.
  • Implying that products were associated with manufacturers or dealerships, including claims that they were authorized "factory warranties" or "extended warranties."
  • Deceptive claims about the extent of coverage, including terms such as "bumper-to-bumper," "Gold" and "Platinum" warranties.
  • Misleading statements implying that the company had official information about consumers' vehicles.
  • Bogus claims about "limited time" or "final" offers.
  • Failure to honor "100% money back guarantee" offers.
  • Repeated sales calls to consumers registered on the "Do Not Call" list.
  • Improper "robo-call" sales calls, including automated calls to cell phone numbers.

"Drivers across Pennsylvania were bombarded by calls and letters loaded with misleading statements about 'factory warranty coverage' and 'last chance' offers," Corbett said. "These confusing and high-pressure sales pitches urged consumers to spend up to $4,000 for service contracts that were supposed to protect them against costly repairs."

Additionally, Corbett said that U.S. Fidelis allegedly failed to adequately inform consumers that they were not involved in the processing of warranty claims.  Instead, they were only marketing and selling services for third-party companies that were actually providing the warranty coverage.

"Based on deceptive ads, mail solicitations and sales calls, many consumers falsely believed that they were buying vehicle warranties directly from U.S. Fidelis," Corbett said.  "In reality, U.S. Fidelis was simply re-selling service contracts that were offered by other warranty companies, and had no direct authority over the payment of consumer claims or other decisions about coverage."

Corbett said the lawsuit seeks full restitution for all consumers who suffered losses as the result of unfair trade or deceptive business practices, along with civil penalties of up to $1,000 for each violation of Pennsylvania Consumer Protection Law and Do Not Call program (up to $3,000 for each violation involving senior citizens). 

Additionally, the lawsuit asks the court to order Darain and Cory Atkinson, along with their businesses, to forfeit all money generated by their illegal practices and to permanently prohibit them from doing any business in Pennsylvania.

Corbett urged consumers with questions or complaints related to U.S. Fidelis to call the Attorney General's Consumer Protection Hotline at 1-800-441-2555 or file an online consumer complaint.

The lawsuit was filed in Commonwealth Court, in Harrisburg, by Senior Deputy Attorneys General Jesse F. Harvey and John M. Abel, from the Attorney General's Bureau of Consumer Protection.

Corbett said today's consumer protection lawsuit in Pennsylvania is the result of a multi-state investigation that also includes similar lawsuits filed in Iowa, Idaho, Kansas, North Carolina, Ohio, Texas, Washington and Wisconsin.

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