JEFFERSON CITY, Mo. (Legal Newsline) – Missouri Attorney General Chris Koster announced on Monday that his office has reached a settlement with an extended vehicle service contract seller and its owner.
The consent judgment with the St. Charles, Mo.-based Dealers Warranty LLC, doing business as Mogi, and its owner, Brian Marino, settles a lawsuit brought by Koster and Department of Insurance, Financial Institutions and Professional Registration Director John Huff.
Koster alleged that Dealers Warranty marketed vehicle breakdown coverage through direct mail cards and by telephone that enticed consumers to call a toll-free number by deceptively implying that the consumers’ warranty was about to expire. The lawsuit alleged that the company used robo-dialing to contact consumers through the United States. Once on the phone, salespeople would allegedly sell vehicle breakdown coverage with a generalized and deceptive description of the coverage. The company began operating under the name “Mogi” in early 2009, before closing its doors.
Missouri law requires that motor vehicle extend service contracts with consumers be written and that those issuing or providing these contracts be registered with the Department of Insurance. In addition, Missouri law requires that these contracts must clearly and conspicuously describe the consumer’s right to cancellation along with other rights.
The lawsuit alleged that Dealers Warranty and Brian Marino ignored these requirements and that if a consumer asked about cancellation, sales managers were instructed to check a box in the computer system that would delay the delivery of a written contract document until the refund window had passed.
“I want to emphasize to consumers their right to see a written service contract and agree to its terms,” Koster said. “Under Missouri law, the failure to contract in writing is a violation of Missouri’s Motor Vehicle Extended Service Contract law. This company used a ‘bait and switch’ scheme and preyed on consumers’ fears of not having adequate vehicle breakdown coverage. I believe these telephone sales centers have been rife with fraud, and Missouri continues to be at the center of this deception. This office will continue to pursue and prosecute businesses that target unsuspecting, innocent consumers.”
Consumers who attempted to cancel a policy or receive a refund were either denied the refund or made to go to great lengths to obtain a partial refund. As part of the agreement, Marino must pay the state $125,000 in restitution and civil penalties and is prohibited from further violation of Missouri’s No-Call laws, Merchandising Practices Act, Motor Vehicle Extended Service Contract law and insurance laws.
The consent judgment establishes a restitution fund intended to give a full refund to any Missouri consumer who was sold this coverage.
Koster said that the Missouri Senate had recently approved legislation that would improve oversight to this industry.