Koster adds charges in auto warranty case

Keith Loria Nov. 9, 2010, 2:34pm


JEFFERSON CITY, Mo. (Legal Newsline) - Missouri Attorney General Chris Koster announced on Monday that he is amending three lawsuits against companies that allegedly sold bogus auto warranty products.

Koster's amended complaint will include an added allegation that the companies sold insurance without a state license.

Koster partnered with the Missouri Department of Insurance in filing the amended suit against National Dealers Warranty, now operating as Stop Repair Bills; Dealer Warranty Services, now out of business; and Dealer Preferred Warranties, now operating as CarSafe.

The suit alleges that the three companies violated 15 different state laws. Koster earlier amended a lawsuit against US Fidelis alleging similar violations.

The companies allegedly engaged in an "additive scam," which involves telemarketers selling an auto additive product and promising repair coverage without consumers realizing they were purchasing an additive or device. Items such as radiator tablets, battery caps, air conditioner spray and bottles of fluid were often named in the alleged scam.

Koster alleges that although the companies sold the products as auto additives to avoid Missouri's service contract laws, by offering additive contracts, the telemarketers were selling insurance without a state license by selling the transfer of risk.

"During our task force meetings, it has been made clear that these additive contracts and the limited coverage they provide were developed for the very purpose of evading insurance department regulation and the consumer protections that go along with it," Koster said.

Koster is seeking a court order to require the companies to refund all money that was received for any illegal contract sold by the telemarketers. He also wants the companies to end all unfair and deceptive practices.

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