California Issues Cease and Desist for Illegal Extended Warranties

The California Department of Insurance issued a cease and desist order on Elite Integrity LLC, doing business as Auto Protection Plus, in Garden Grove, and its controlling manager, Kamisha Daniel, of Irvine, for allegedly selling illegal vehicle service contracts to at least six California consumers from 2018 to 2020.

VSCs, or extended warranties, are offered to consumers by car dealers when they purchase a car. Most VSCs typically provide coverage for repairs due to mechanical failure. Others offer coverage for routine services, such as oil changes and tire rotation, or other services such as paintless dent removal, glass or key replacement, or tire and wheel repair.

The order alleges both APP and Daniel were not licensed by the Department of Insurance to sell VSCs to California residents. Several California residents were contacted and confirmed APP made direct contact with them and completed a VSC sale.

Under the order, APP and Daniel are to immediately stop selling VSCs in any capacity and cease acting as an insurance agent or producer or in any other capacity in the State of California for which they do not hold a valid license, permit, or Certificate of Authority.

VSCs may be sold legally to Californians only when specific criteria are met:

• Every VSC must be filed with CDI before it can be sold.
• Companies responsible for paying the claims on VSCs must be licensed by CDI, unless the company is a vehicle manufacturer, distributor or dealer.
• These companies must carry CDI-preapproved backup insurance insuring every VSC they sell, unless they receive an exemption from CDI by proving their company has a net worth of at least $100 million.
• VSCs can only be sold through dealerships licensed by the Department of Motor Vehicles. Direct sales to consumers are illegal.

Topics California Auto