Mo. AG unveils ideas on auto service contract telemarketing

Keith Loria Jan. 19, 2011, 3:00am


JEFFERSON CITY, Mo. (Legal Newsline) - Missouri Attorney General Chris Koster released recommendations on Tuesday aimed at overhauling the auto service contract telemarketing industry.

Among Koster's recommendations are requiring contract sellers to be licensed and enacting stronger protections so consumers are aware of what repairs a policy truly covers.

"The problems with this industry are well-documented, particularly the abuses against consumers," Koster said. "The recommendations we are offering give consumers the right to know what they are buying and the ability to say 'no thank you' when they've been lied to."

Last April, Koster created a task force, which included other statewide officials and representatives of entities that offer extended auto warranties, designed to address frequent problems plaguing the industry, such as the alleged fraudulent marketing of engine additives and unfair cancellation provisions.

In the past year, Koster's office has maintained 12 lawsuits against auto service contract telemarketers due to issues raised in his recommendations.

If fully implemented, Koster says, the recommendations can completely redesign the segment of the auto service contract industry that solicits consumers through direct mail and telephone solicitations.

The task force wants sellers of extended service contracts to deliver the contracts within 30 days or before the purchase if a customer requests one. It also seeks licensing for all sellers of these contracts. Additionally, it was recommended that a 20 business day "free look" period be offered to consumers so they have enough time to request a refund.

Furthermore, the task force recommended explicitly prohibiting fraud and deception in any aspect of the offer, sale and solicitation of contracts.

"Too many bad actors in the auto service contract business have taken advantage of, and actually cheated, consumers," Koster said. "It is time for this outrageous behavior to end, and for this industry to be held to the same standards as other Missouri businesses."

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