BALTIMORE (Legal Newsline) - Maryland Attorney General Douglas Gansler announced on Monday that he has filed a lawsuit against an auto warranty marketer for allegedly violating Maryland's Telephone Solicitations Act.
The Missouri-based U.S. Fidelis, formerly known as National Auto Warranty Services and having done business as Dealer Services, and the company's owners, Darain Atkinson and Cory Atkinson, allegedly utilized deceptive and unfair trade practices.
Under Maryland's Telephone Solicitations Act, businesses that sell services or products over the phone must have contracts with all terms of the sale signed by the consumers before they can be charged.
Gansler's lawsuit alleges that the defendants claimed their auto warranties extended a consumer's existing manufacturer's warranty and that they contained comprehensive "bumper-to-bumper" coverage. Manufacturers' warranties, however, can only be extended by vehicle manufacturers on the vehicles they sell. The company sold these warranties for a fee of $500 to $2,000.
The lawsuit also alleges that these warranties did not extend manufacturer warranties as promised, providing only limited coverage from a third-party insurer. When consumers filed claims using these warranties, they were often denied, as the insurer claimed their repair issue was excluded in the contract, Gansler claimed.
"Before purchasing an extended warranty, consumers need to be armed with all the facts," Gansler said. "Auto repair warranties can be costly and may provide very little coverage in return for their expense."
Gansler is seeking an injunction to stop the deceptive advertising and sales practices of the company. He is also seeking restitution, penalties and costs.