TOPEKA, Kan. (Legal Newsline) - Kansas Attorney General Derek Schmidt announced a multi-state settlement on Wednesday with a vehicle service contract seller to resolve allegations that the company used illegal marketing tactics.
Schmidt and 11 other attorneys general reached an agreement with U.S. Fidelis, a now-defunct company that was the largest seller of vehicle service contracts in the country before ceasing operations and filing for bankruptcy in 2010. Under the terms of the settlement, the Missouri-based company will pay $14.1 million in consumer restitution.
The other states participating in the agreement include Wisconsin, Washington, Texas, Pennsylvania, Oregon, Ohio, North Carolina, Missouri, Iowa, Idaho and Arkansas.
"Kansas consumers were misled to believe these service contracts would be beneficial to them and in fact, the extended warranties were not," Schmidt said. "We will not allow out-of-state companies to mislead Kansans and violate our consumer protection laws."
U.S. Fidelis and owners Cory and Darain Atkinson allegedly advertised service contracts through prerecorded, automated telephone calls in addition to using misleading television commercials and deceptive mail.
The company allegedly misled consumers into believing their auto warranties had expired or would soon expire and that they were being contacted by a company connected with the original vehicle warranty. Consumers thought they were purchasing a warranty with bumper to bumper coverage but allegedly found the contracts were full of exemptions.