Friday, April 6, 2018
Attorney General Lori Swanson Sues AutoAssure Over Deceptive Car Warranty Sales
Attorney General Lori Swanson today filed a lawsuit against AutoAssure, LLC, a Texas company, for deceptively selling costly and often unnecessary car warranties to nearly 1,000 Minnesotan residents, in some cases falsely telling people the factory warranty on their vehicle had expired, the company or the contract was affiliated with the car’s manufacturer, or that the service contract covered “everything” despite containing dozens of exclusions.
“These contracts are expensive and may contain dozens of exclusions for everything from mechanical problems resulting from normal operation of the car to a list of non-covered parts,” said Attorney General Swanson.
To get people to call the company, AutoAssure sent mass mailings to Minnesota residents under the name “Vehicle Services Department,” claiming that the manufacturer’s warranty on the consumer’s vehicle was about to expire and that they must contact AutoAssure to “update” their repair coverage, even though some people had years or thousands of miles of repair coverage remaining.
When people called the company, AutoAssure often made a number of deceptive statements to sell people a warranty. For example:
- AutoAssure falsely told some people that their existing manufacturer’s warranty had expired.
- The company falsely told some people that it was “extending” the manufacturer warranty; that its service contracts were “simply a re-activation of the coverage that came with your [car] when it was a brand new vehicle”; or a “one-time extension to put the coverage back on your [car].” In fact, the contracts sold by AutoAssure were a new policy, not an extension of existing coverage.
- AutoAssure falsely described the scope of the repair coverage, in some cases claiming the contract covered “everything” when some policies contained more than 40 paragraphs of exclusions. For example, AutoAssure told one person that the contract covered “everything from A to Z” and told another person its contract covered “everything from the front of your [vehicle], all the way to the rear.”
- AutoAssure falsely led some people to believe it was associated with their vehicle manufacturer or dealer. For example, in response to a consumer’s question of “are you Chevrolet people,” it responded, “Yeah, we’re on direct pay with the Chevrolet dealership, sir, yes”.
- AutoAssure falsely claimed its offer was only good for the duration of the sales call so as to pressure consumers to purchase a service contract immediately.
The service contracts sold by AutoAssure cost about $3,200 on average. The lawsuit includes examples of the company’s sales tactics, such as:
- AutoAssure falsely told a 76-year-old Blaine woman in early 2016 that “with your policy as of right now, you are expired. You have nothing.” The Kia Sorento she purchased in July 2011, however, was still covered by its basic warranty for another five months and by its powertrain warranty for many more years. Yet, the company sold her a service contract for $3,433.
- In early 2016, a 59-year-old Cambridge woman received a mailer from “Vehicle Services Department” that she believed came from Ford. When she called in, AutoAssure told her “I don’t like to be the one to tell you, but your car is out of factory warranty.” Yet, she still had another 18 months or 45,000 miles left on an existing service contract. Nevertheless, AutoAssure sold her another contract for $3,791.
The lawsuit was filed in Hennepin County and seeks injunctive and monetary relief.
People may report complaints 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: 445 Minnesota Street, Suite 1400, St. Paul, MN 55101-2131.
Motor Vehicle Service Contract 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.