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U.S. Fidelis Sued By Maryland A.G. Over Extended Warranties

1999 Toyota Corolla LE

1999 Toyota Corolla LE

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Maryland’s Attorney General has filed suit against U.S. Fidelis, an auto warranty marketer for violating the state’s Telephone Solicitation Act. According to the Legal Newsline, this act prevents companies from charging Maryland consumers for contracts until the business has signed contracts in hand.

The company, formerly known as National Auto Warranty Services, is based in Missouri and did business under the name Dealer Services. In the suit Douglas Gansler, Maryland’s AG, alleges that the warranty marketer and its owners used deception and unfair trade practices in their sales program.

The Maryland suit also alleges that the defendants led the consumers to believe that their products extended the car manufacturers’ warranties and contained bumper to bumper features. Only the car manufacturers have the ability to extend the warranties on the cars they sell. Prices for the U.S. Fidelis’ products ranged from $500 to $2,000.

The suit alleges that the contracts that were sold did not extend manufacturer warranties and provided only limited coverage from third party insurers. When claims were filed exclusions in the contract were used to deny the coverage, Gansler claimed.

U.S. Fidelis is no stranger to consumer complaints and controversy. NBC’s Today reported in the Spring of 2009 that the company’s practices were suspect and that the Better Business Bureau of St. Louis had received over 1,100 complaints, a volume of complaint activity that the president of the bureau said was unparalleled in her 35 years of experience.

A check of the company’s website indicates that U.S. Fidelis filed for relief under a Chapter 11 Bankruptcy proceeding on March 1, 2010. But that proceeding has raised more questions about the company’s dealings, since creditors have brought suits alleging that U.S. Fidelis had used real estate transactions to protect substantial net worth from the court and its creditors.

The company’s site indicates that customers should submit claims as usual and can count on their claims being processed and paid “by the top rated provider US fidelis represents.” It is not uncommon for the marketing function of the service contract business to be separated from the claims operation. An administrator, which is usually a different company, handles the claims on policies the sales company generates.

AllCarAdvice considered auto service contracts in its June 16, 2010 post and cautioned readers about an industry “which is populated with some bad players and merits extensive research.” Refer to What Do You Want From An Extended Warranty? for tips on how to select an auto repair service contract which is commonly referred to as an extended warranty.

[Legal Newsline]

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