Missouri AG, Insurance Chief Target Auto Warranty Firms

Missouri Attorney General Chris Koster said he is amending his lawsuits against three companies that sold bogus auto warranty products by including the allegation that the companies have been selling insurance without a state license through the sale of additive contracts.

The amended petitions, developed with the Missouri Department of Insurance, allege the companies violated 15 different state laws.

Koster alleged that the companies engaged in the “additive scam,” whereby the telemarketers sell an auto additive product – such as a bottle of fluid, radiator tablets, battery caps, and air conditioner spray – and promise repair coverage.

According to Koster, consumers were unaware they were buying an additive or device until they received it in the mail.

He said that by offering additive contracts, the telemarketers have been selling insurance without a state license by selling the transfer of risk. The companies sold the products as auto additives to avoid Missouri’s service contract laws, which provide some minimal protection for consumers, according to the complaint.

The companies targeted by the lawsuits are:

• National Dealers Warranty, now operating as Stop Repair Bills (stoprepairbills.com);
• Dealer Warranty Services, now out of business;
• Dealer Preferred Warranties, now operating as CarSafe.

Koster is asking the court to require the companies to refund any money they received for any illegal contract sold by the telemarketers and to order the companies to stop engaging in the unfair and deceptive practices alleged.

Koster earlier this year held meetings with legislators, car dealers, and representatives of the service contract industry.

“During our task force meetings, it has been made clear that these additive contracts and the limited coverage they provide were developed for the very purpose of evading insurance department regulation and the consumer protections that go along with it,” Koster said.

Topics Auto Missouri