Warranty seller settles with Oregon

Nick Rees Jan. 27, 2010, 4:00pm


SALEM, Ore. (Legal Newsline) - The Oregon Department of Justice's consumer protection efforts will receive as much as $20,000 following a settlement with an extended warranty seller and its owners, Oregon Attorney General John Kroger has announced.

The settlement with the Missouri-based Dealer Warranty Services and its owners, Theodore B. Conrad and Jeffry E. Zykan, follows allegations of falsely advertising the sale of motor vehicle service contracts.

"Consumers across the country have complained about companies using shady telemarketing techniques to sell so-called extended vehicle warranties that failed to live up to their promises," Kroger said. "This settlement will force one of these companies to obey the law or quit doing business in Oregon."

Dealer Warranty Services, which has an "F" rating with the Better Business Bureau based on 150 consumer complaints of misleading sales and advertising practices, is alleged to have falsely claimed that it was associated with a manufacturer or dealer, refused to honor cancellation requests or provide refunds, consistently failed to cover needed repairs, provided poor customer service and made harassing sales calls and solicitations.

Nearly two dozen complaints made to the Oregon Department of Justice against Dealer Warranty Services alleged that consumers had received postcards and phone calls from the company informing them that their vehicle's warranty had expired and could be extended by the company. Dealer Warranty Services instead sold these consumers motor vehicle service contracts provided by an independent third-party.

Additionally, some of the motor vehicle service contracts, consumers reported, did not live up to advertised expectations, the complaints said.

Under terms of the settlement, Dealer Warranty Services and its owners will pay the Oregon Department of Justice $10,000 and provide restitution to Oregon consumers who have filed complaints.

Injunctive terms included in the settlement prohibit Dealer Warranty Services and its owners from using illegal tactics noted in consumer complaints. An additional $10,000 will be paid if the defendants fail to abide by these terms.

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