Monday, February 22, 2016
Attorney General Swanson Sues Company That Used Deceptive Practices to Sell Unnecessary Vehicle Service Contracts
Warns Public About Car Warranty Scams
Attorney General Lori Swanson today filed a lawsuit against United Auto Defense, LLC, a company based in Missouri, that used deceptive business practices to sell costly and unnecessary vehicle service contracts in Minnesota. She also warned the public to be on guard against companies that pose as vehicle manufacturers to sell warranties.
UAD sent postcards to consumers suggesting their vehicles needed repairs or that their vehicle’s manufacturer warranty was about to expire. The postcards looked like they were from a vehicle manufacturer or dealership and contained the vehicle’s make and year. UAD was not affiliated with any dealer or manufacturer.
UAD sold service contracts to people whose vehicles were already covered under a warranty—even though its contracts excluded coverage for repairs covered by a manufacturer’s warranty.
“The company got people to buy warranties whose vehicles were already covered by a warranty,” said Attorney General Swanson. She added: “People should be on guard against companies posing as manufacturers or dealers to sell expensive warranties that are riddled with loopholes.”
One of UAD’s mailings was labeled a “Technical Service Bulletin.” The mailing stated that “Technical Service Bulletins…are recommended procedures for repairing vehicles. Not to be confused with a recall, a TSB is issued by vehicle manufacturers and authorized repair facilities when there are several occurrences of an unanticipated problem.” The mailing asked people to call before an “inspection cutoff date.” Another mailing, called a “Vehicle Alert Notice,” was marked “VERY URGENT AND TIME SENSITIVE” and sent “to inform you that the factory warranty on your [name of car] has expired or is about to expire.”
UAD made misrepresentations to people who called the phone number on the postcard. For example, it falsely told some callers that their existing warranty had expired. It falsely told other callers that its warranty covered “everything” on the vehicle. In reality, service contracts sold by UAD contained a long list of exclusions, including for repairs attributed to “normal wear and tear.” It falsely told one caller that “we’re the preferred broker that handles the long-term service contracts for your manufacturer” and told another that the contract would cover a vehicle with a salvage title, even though the service contract excluded coverage for salvage vehicles.
The service contracts sold by UAD cost between $2,500 and $4,750.
The lawsuit was filed in Dakota County and seeks injunctive relief, civil penalties and restitution.
People may report complaints about similar situations to the Minnesota Attorney General’s Office by calling (651) 296-3353 or (800) 657-3787. People may also download a Complaint Form by clicking here, and mailing the completed form to the Attorney General’s Office at: 1400 Bremer Tower, 445 Minnesota Street, St. Paul, MN 55101-2131.
Extended Auto Warranty Offers
Many people report receiving postcards and mailings that claim that their manufacturer's auto warranty is about to expire. Some of these warranties, however, are issued by companies that may become insolvent or don't provide coverage for needed repairs.