LITTLE ROCK, Ark. (Legal Newsline) - A multi-state agreement was announced on Thursday with a now-defunct vehicle service contract seller that allegedly used illegal marketing tactics.
Under the terms of an agreement between 12 state attorneys general and Darian and Cory Atkinson, the former owners of the Mo.-based U.S. Fidelis, a $13 million consumer restitution fund will be created.
U.S. Fidelis was the largest seller of vehicle service contracts in the United States before it closed down and filed for bankruptcy in 2010.
The states participating in the agreement include Wisconsin, Washington, Texas, Pennsylvania, Oregon, Ohio, North Carolina, Missouri, Kansas, Iowa, Idaho and Arkansas.
The agreement resolves charges filed in April 2010. Darian and Cory Atkinson allegedly peddled service contracts through automated and prerecorded telephone calls known as robocalls, misleading television advertisements and deceptive junk mail.
The company allegedly misled consumers into thinking their auto warranties expired or that the warranties would soon expire. U.S. Fidelis allegedly led consumers to believe that they were being contacted by an entity affiliated with their original vehicle warranty.
Consumers thought they were buying a warranty with bumper to bumper coverage but allegedly found that the contracts were full of exemptions.
"This company duped Arkansas consumers into buying service contracts that were of no help to them," Arkansas Attorney General Dustin McDaniel said. "Even those Arkansans who did not buy contracts were subject to the company's aggressive and intrusive marketing calls."
In November 2010, McDaniel and other attorneys general reached an agreement with Darian and Cory Atkinson to make sure the brothers would never sell again over the phone. The settlement required the brothers to turn over their assets to the U.S. Bankruptcy Court in Missouri. Since then, the states have worked with U.S. Fidelis, its creditors and others connected to the bankruptcy case to reach an agreement that would account for all consumer claims.
Consumers affected by the matter must submit a valid proof of claim with the bankruptcy court by Oct. 5.