Pa., 7 other states target 'extended warranty' scheme

Pennsylvania was one of eight states that joined yesterday to sue U.S. Fidelis, a Missouri company they accused of making misleading pitches - some of them via illegal robo-calls, even to cell phones - that offered automobile service contracts it claimed were "extended warranties." You can read here about the lawsuits, which seek restitution for consumers who were allegedly defrauded.

Here are some of the "numerous unfair and deceptive business practices" by U.S. Fidelis cited in the lawsuit, according to an announcement from the Pennsylvania Attorney General's Office:

  • False statements that coverage would be the same as the original manufacturer's warranties.
  • Implying that products were associated with manufacturers or dealerships, including claims that they were authorized "factory warranties" or "extended warranties."
  • Deceptive claims about the extent of coverage, including terms such as "bumper-to-bumper," "Gold" and "Platinum" warranties.
  • Misleading statements implying that the company had official information about consumers' vehicles.
  • Bogus claims about "limited time" or "final" offers.
  • Failure to honor "100% money back guarantee" offers.
  • Repeated sales calls to consumers registered on the "Do Not Call" list.
  • Improper "robo-call" sales calls, including automated calls to cell phone numbers.

This is a big and persistent problem. I wrote last May about the Federal Trade Commission's efforts to crack down on several of these companies, including U.S. Fidelis (a.k.a. "USfidelis," "National Automotive Warranty Services Inc.," and "Dealer Services"), and the telemarketing evil geniuses that routed calls to them - hundreds of millions of calls, without restraint, to consumers, businesses, and government agencies, even to 911 emergency call centers. You can find one of my stories - about the cat-and-mouse game going after them - here. The FTC said then that U.S. Fidelis was cooperating with its inquiry.

One sleazy tactic in common use was an electronic trick called "spoofing" that displayed fake numbers on caller-ID systems. A single bogus number was used so often that it was listed in more than 11,000 complaints to the FTC - the proverbial tip of the iceberg, since most consumers just hang up and mutter or curse.

One of the telemarketers targeted by the FTC had a signs on its wall with the motto, "Hang Up. Next," which an agency lawyer said "epitomizes the utter contempt that defendants and their clients have for consumers' privacy and the law."

There's a lot to clean up here. Stay tuned, and I'll try to keep you posted.