Complaints Continue Against Vehicle Service Sales Firms, Consumer Fraud Task Force Warns

  
     
Consumers report many difficulties after buying vehicle service contracts.
April 16, 2014

The Consumer Fraud Task Force LogoSt. Louis, Mo. – The Consumer Fraud Task Force is advising car and truck owners in Missouri and Illinois to remain cautious when contacted by companies offering to sell vehicle service contracts.

Consumers are continuing to complain about what they describe as misleading advertising, unethical sales practices, problems obtaining payments for repair work, difficulty canceling contracts and difficulty receiving refunds, the Task Force says.

Marketing companies sell vehicle service contracts on behalf of other firms that administer the plans. Car and truck owners hope to use the plans to save on repair costs after mechanical breakdowns.

While some companies have made improvements in the way they market the contracts, the Task Force says that there are still too many cases of consumers being victimized by unscrupulous businesses or sales people.

Among the most common complaints:

  • Questionable direct mail ads. Consumers have said that the mail solicitations from some marketing companies seem to instill a false sense of urgency or make it appear that the mailings came from a government agency, car dealership or vehicle manufacturer. Some of the solicitations never identify the soliciting company by name.
  • High-pressure sales tactics. Some consumers report that once they call to inquire about a solicitation, the salespeople go to extreme measures to get them to agree to contracts and commit to initial payments. Task Force members have heard from several consumers who say salespeople have refused to mail them information on coverage until after they have entered into an agreement.
  • Inability to get repair costs paid. Consumers say that they have been unable to get claims paid, even though they strongly believe the repairs were covered by their agreements.
  • Difficulty canceling agreements or getting payments refunded.  Despite promises from salespeople that consumers can cancel their contracts at any time, complainants describe phone conversations in which company representatives scold, badger and belittle them in attempts to get them not to cancel. The consumers also describe long delays in getting prorated refunds.

A consumer from Arlington, Texas, who filed a complaint with BBB, said of one auto service marketer in the St. Louis area: “This company would not allow me to cancel my contract and refund my money. I’ve never received such poor customer service.”

A customer from Upper Holland, Pa., summed up his issue with another local company: “They take your money and promise you everything, then never deliver.”

A consumer from High Ridge, Mo., complained that he was unable to obtain payment for repairs that he says clearly were covered under a contract sold to him by a California sales company. “All of the repair items are the same items the warranty salesman guaranteed me would be covered,” the man said.

The auto service contract industry attracted national attention several years ago when local industry giant U.S. Fidelis and several smaller marketing companies came under scrutiny from consumers, BBB and law enforcement.  The Missouri attorney general’s office and the U.S. attorney’s office prosecuted U.S. Fidelis owners Darain and Cory Atkinson for fraud and other charges. The men were sentenced to prison and the company filed bankruptcy. Other companies, under pressure from law enforcement, agreed to make changes in their marketing and sales practices.

Also, a Florida company that used illegal robocalls in its sales was sued and closed after action by the Federal Trade Commission.  Two of the executives from the company later were prosecuted by the U.S. attorney’s office for the Southern District of Illinois.

St. Louis BBB complaint numbers for the industry have risen dramatically in the past 12 months, growing to more than 870. That compares to about 660 for the previous 12 months.

The Task Force advises consumers to research any company carefully before agreeing to a service contract. It also suggests asking for references and scrutinizing vehicle coverage contracts  before agreeing to terms and authorizing any payments. 

The Task Force is a coalition of local, state and federal government agencies and nonprofit business and consumer groups in Missouri and Illinois that work together to protect consumer and donor rights and guard against fraud.

 The group has tackled predatory payday loan offers, tax scams, timeshare reselling fraud, credit repair and foreclosure scams, bogus sweepstakes, Internet sweetheart scams, home remodeling and a variety of other issues.

To obtain information, or to report a scam, you may contact members of the Task Force:

Better Business Bureau Serving Eastern Missouri and Southern Illinois –   (314) 645-3300; www.bbb.org.

Federal Trade Commission – (877) FTC-HELP (382-4357); www.ftc.gov.

Illinois Attorney General – (800) 243-0618; www.illinoisattorneygeneral.gov.

Missouri Attorney General – (800) 392-8222; www.ago.mo.gov.

U.S. Attorney, Eastern District of Missouri – (314) 539-2200; www.usdoj.gov/usao/moe.

U.S. Postal Inspection Service – (877) 876-2455; postalinspectors.uspis.gov.

U.S. Secret Service – (314) 539-2238; www.secretservice.gov.

Better Business Bureau in Greater Kansas City – (816) 421-7800; www.bbb.org.

 

Media Contact: Michelle L. Corey, President and CEO, Better Business Bureau, (314) 584-6800,  mcorey@stlouisbbb.org 

Chris Thetford, BBB Vice President-Communications, (314) 584-6743 or (314) 681-4719 (cell), communications@stlouisbbb.org

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