AGs sue car warranty firms

Chris Rizo Apr. 29, 2010, 5:01pm

Rob McKenna (R)

OLYMPIA, Wash. (Legal Newsline) - A group of state attorneys general are suing two extended auto warranty companies over alleged nefarious business practices.

The ten attorneys general alleged that U.S. Fidelis and Credexx Corp. engaged in unfair business practices that mislead consumers into purchasing vehicle service contracts.

U.S. Fidelis was formerly National Auto Warranty Service, based in Wentzville, Mo., and Credexx is based in Irvine, Calif.

U.S. Fidelis declared bankruptcy March 1. Several states are asking that an independent trustee be appointed to manage the company's assets during bankruptcy proceedings.

Officials said the two companies also misrepresented themselves as offering products on behalf of auto manufacturers indicated to consumers falsely that their existing warranty was set to expire.

"If you own a car, there's a good chance you've received a phone call or official-looking postcard claiming that your auto warranty has expired or will soon," Washington Attorney General Rob McKenna said. "The marketing companies behind these pitches have tricked hundreds of thousands of consumers nationwide into buying expensive service contracts that often don't cover promised repairs. Their illegal marketing practices have to stop."

In addition, U.S. Fidelis and Credexx are accused of violating the Kansas No Call Act by robo-calling consumers. U.S. Fidelis is alleged to have instructed consumers to "push eight to be removed from our lists," which simply disconnected the call instead.

"Every time a company tricks consumers into purchasing a phony product, it sheds a negative light on the business community," Kansas Attorney General Steve Six said.

Credexx is being sued by the attorney generals from Idaho, Kansas, Ohio, North Carolina and Washington. U.S. Fidelis faces court action from Iowa, Idaho, Kansas, Pennsylvania, Texas, Ohio, North Carolina, Wisconsin and Washington.

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