More than 9 thousand Florida customers who thought they had a valid extended warranty on their car are out in the cold. The state has closed First Warranty Group of Florida because it was no longer financially able to pay its claims. The company will be liquidated and the first cash will go to pay claims already submitted. Wayne Johnson from the office of Rehabilitation and Liquidation says customers who financed their extended warranties should contact their lender.
“They should stop paying premiums if they are, in fact, still doing so,” Johnson said. “If they are paying those to a premium finance company, they should probably contact the premium finance company.”
Why should they stop?
“Their warranty is canceled, so they’re going to receive no further benefit from it,” Johnson said. “If they’re paying through a premium finance company, this may be tied to their auto loan and they want to be careful about that.”
In a related move today, the state ordered four other companies, who are unlicensed, to stop selling the extended warranties. The companies are: National Automotive Services Inc.; Warranty Financial Inc. a/k/a Warranty Financial O.R.G. Inc.; Warranty USA; and Warranty Services
More information is available on the states web site. http://www.myfloridacfo.com/Receiver/
From the Daily American Newspaper/Online Site - July 28, 2007
http://www.dailyamerican.com/articles/2007/07/28/news/news966.txt
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Warranty company goes bankrupt, leaving car owners to foot repair bills
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When the airbag cracked on Pat Miller's 2004 Ford Focus, she expected her five-year 100,000-mile warranty would cover the repairs. But when the Boswell woman tried to make a claim, she found out the warranty was no good. In Somerset County, the warranties were sold by Kenny Ross and Mardis Motors, where Miller bought her car. The company has since been sold to Tri-Star Motors. Muffet Mardis, the former owner of Mardis Motors, said the price of the warranties varied from $800 to $1,000, depending on what the customer wanted the policy to cover. She said not that many people bought the warranties. Kenny Ross refused to discuss the bankruptcy. Attorney General Tom Corbett said the civil lawsuit was filed against The Eagle Warranty Corporation in Corbett said the company sold warranties for used cars through a network of car dealerships in 12 states, including "Consumers paid anywhere from $400 to $2,500 for up to four years of coverage, believing that they were protecting their vehicles and guarding against future repair expenses," Corbett said. "Instead, consumers have been met with unanswered calls, unpaid claims, bounced checks, unrepaired vehicles and worthless warranties." In conjunction with the consumer protection lawsuit, Corbett said the Attorney General's Office has obtained a special preliminary injunction, freezing any bank accounts, business records and other assets belonging to Eagle Warranty Corporation, along with Charles and Edmund Yaskulski. A hearing was scheduled for December 22 to determine if the asset freeze and special preliminary injunction should be continued. Corbett said the Attorney General's Bureau of Consumer Protection requested the asset freeze in order to identify and preserve any funds that might be used for future consumer restitution, as well as to secure financial and business records that would be helpful to this ongoing investigation. According to the lawsuit, Eagle Warranty failed to honor auto repairs that it had authorized, resulting in consumers receiving bills or demands for payment from auto repair shops. In some instances, checks that were sent to consumers or repair shops by Eagle Warranty were returned by banks because of insufficient funds, resulting in additional fees or expenses for consumers and repair shops. Corbett said that Eagle Warranty, along with Charles and Edmund Yaskulski, continued to market and accept payment for used-car warranties until the business suddenly closed on December 11, when they knew or should have known that they would be unable to provide continuing coverage. In many cases, consumers still have several years remaining on the repair plans they had purchased, but the company is now unable to fulfill those warranties. The lawsuit seeks restitution for all consumers who have not received the services or products that they have paid for, along with civil penalties of up to $1,000 per violation of the Consumer Protection Law (or up to $3,000 for each violation involving a senior citizen). Additionally, the lawsuit asks the court to prohibit the defendants from operating as a used-car warranty business, or other similar capacity, until all consumer restitution and other penalties have been paid. Corbett noted that the Attorney General's Office has so far received more than 160 complaints from consumers throughout From F&I & Showroom Magazine/Website - January 11, 2010 When I saw reports on the recent “Tires for Life” fiasco, I came across a good example of one of these “word moats.” This particular tire-replacement program was offered by a company called Millennium Protection Group. Millennium offered the program to dealers to sell to their customers, and promised customers a new set of tires every 35,000 miles, plus some other bennies. There turned out to be nothing backing the program other than the resources of the company. When the company went bust, “millennium” turned out to be the time it took to get a claim honored. Customers who signed up for Tires for Life and whose claims against the defunct Millennium were worthless, turned their sights against — guess who — the dealers who sold them the contracts. But when they did, they encountered one of those “word moats.” It seems the contracts the customers signed stated that Millennium would be liable for claims, and that customers would “hold harmless” the dealers who sold them the Millennium product. That language didn’t deter the customers’ lawyers from filing a class action lawsuit against a number of dealers. Now we will get to see whether the moat will protect the castle. Now there are several ways to deal with a real moat. You can toss a bridge across it, fill it with dirt or, perhaps, drain the water from it. I haven’t seen the plaintiffs’ complaint in the Tires for Life lawsuit, but I can guess at some of the ways the plaintiffs will try to drain the water from this particular moat. Let’s look at three possible attacks against the dealers. · Unconscionability: It wouldn’t surprise me to see the plaintiffs argue that the attempt to require customers to indemnify the dealers who sold them the Tires for Life program is unconscionable, and thus unenforceable. Unconscionability claims are more successful in consumer-business cases because of the difference in sophistication — and sometimes bargaining power — between the consumer and the business. The claim that the provision is unconscionable will be stronger if the contract the customer signed did not set the provision out in a way (big, bold type, separately signed, and the like) that would make it noticeable. · An Unfair and Deceptive Trade Practice: Most states have an “unfair and deceptive acts and practices,” or “UDAP” law that prohibits various sorts of overreaching in consumer transactions. Look for the plaintiffs to claim that the indemnification provision is at least unfair, and if the provision wasn’t conspicuous, perhaps deceptive, as well. Plaintiffs’ lawyers are particularly fond of UDAP laws because most provide that a successful plaintiff is entitled to damages that are some multiple (usually two- or threefold) of the plaintiff’s actual damages, plus (you guessed it) attorneys’ fees and the costs of suit. · Negligence: These plaintiffs might argue that the dealers who sold them these contracts had a duty to provide a legitimate program that would perform as advertised. They would say the dealers breached that duty by failing to investigate the bona fides of Millennium to determine whether the program had adequate backing to withstand claims. I’m not at all sure that the negligence count would fly, but plaintiffs’ lawyers have a habit of throwing as much as they can against the (castle) wall, hoping that some will stick. Dealers aren’t the only potential targets for these plaintiffs. The Federal Trade Commission’s Preservation of Consumer Claims and Defenses Trade Regulation Rule requires that retail installment sales contracts contain a provision that makes any holder of the contract subject to claims and defenses that the consumer could assert against the dealer. With so many dealerships out of business, and with plaintiffs’ lawyers always on the lookout for additional deep pockets, look for the plaintiffs to widen these claims to include those who bought contracts from dealers reflecting the Tires for Life program. Will those moats hold back the attackers, or will the angry mob be successful in draining the water and scaling the castle walls? Stay tuned!
The following article brings up some excellent points regarding "Lifetime Warranties" in this case, it pertains to exercise equipment - heck, we have all Lifetime Warrenty For Tire Replacement Well, it seems Walmart Automotive is the leader in the old bait and switch scam..one year ago I bought 4 brand new tires for my car and then was talked into the "lifetime guarantee" for each tire I purchased. I made sure and asked repeatedly does this mean if anything happens to my tires they will be replaced free of charge" I was told everytime "yes Mam".. well, two months ago I had a flat tire so I called and again asked about my lifetime guarantee will my tire be replaced free of charge? the Woman I spoke to look up my info and said "yes Mam according to your lifetime guarantee contract it will be free of charge" so I went in and that's where the song and dance began..all they kept saying (once they had me there in person) was "you'll have to pay a fee if more then 25% of your tire has been used" they called it a "25% usage fee"..funny, that fee was never mentioned when I was conned into pay alot more for the "lifetime replacement guarantee" for each of my new tires had they told me that I would NOT have paid that extra money and they knew it! What really made me mad was when the mechanic said "if you pay for another lifetime guarantee on this replacement tire I will let you have it for free" I said hell no.. What good is a lifetime guarantee when you still have to pay for service they are allegedly guarantee for a lifetime..when I pointed this out to him he finally relented and gave me my free tire as per our agreement..well, now it's (flat tire) happened again (btw different tire) so I again called them this time they flat out refused to honor their "lifetime guarantee" for my new tires..so basically they have my money for a guarantee they refuse to honor and I have a flat tire I cannot afford to fix..thank God we have a spare I can use until I get up the money to buy a new tire or have this one fixed, but I swear to any God you name I will NEVER do Automotive business with Walmart again and I WILL warn my Friends to steer clear of them as well! Walmart Automotive employees are con artists and thieves and the only way they can prove to me they are not is to either start honoring the lifetime guarantee for each tire I paid extra for or refund that money I paid initially! So beware of Walmarts' "lifetime warranty" on their tires that you pay extra for..it is WORTHLESS! Also keep in mind I bought 4 brand new tires about 1 year ago and now 2 out of 4 have gone flat therefore beware of quality of tires from Walmart in general! Lifetime Warranties Not Always A GuaranteeConsumers Urged To Read Fine Print CarefullyPosted: 8:20 pm CST February 5, 2010 MADISON, Wis. -- Many people might think a lifetime warranty will protect against product failure as long as they live, but there are some gray areas when it comes to certain warranties.
There is no single legal definition of "lifetime warranty," and that could cause issues for consumers trying to collect on the promise. When Don Roane's Craftsman ratchet broke, the Sears clerk made good on its lifetime warranty. "He went and got me a replacement without any question," Roane said. But that's not always the case, according to Consumer Reports. Nicole Van Scoten and her fiancé said when they bought their used car, the limited lifetime warranty was the deciding factor. Six months later the transmission blew, but their $7,000 claim was denied. "We were really angry that they would not honor this warranty," Van Scoten said. The warranty lists many things that are not covered, including, "damage or failures resulting … from … alteration." The original owner had made some changes to the car. But the couple said the sales team assured them those changes wouldn't affect the warranty -- something the dealership denies. "You should never depend on spoken assurances. You have to read that fine print carefully. And don't assume that lifetime necessarily means your lifetime; it may simply mean the expected lifetime of the product," said Greg Daugherty, Consumer Reports money advisor. And when a warranty says "limited lifetime warranty," it means limited. A piece of furniture, for instance, might be under warranty only for the original purchaser, so the warranty would be void if the furniture is resold. As for paint, many carry a limited lifetime warranty, but only for the paint itself -- not the much bigger cost of repainting. One treadmill model has a frame and motor that are covered under a limited lifetime warranty, too. But if a repair is needed, the warranty "does not include … freight charges," and that can get expensive. The key is to read any lifetime warranty carefully and get oral assurances in writing -- something Van Scoten and her fiancé learned the hard way. For more information on possible warranty issues, people can check out the Web site consumerist.org, which gets a lot of complaints from consumers about lifetime warranties and follows up on them. As of March 29, 2010 - Another Warranty Company Goes Bankrupt!The following article is from the March 29, 2010 Edition of Automotive News. This is in regards to a famous warranty company that is now bankrupt. The trail of bankrupt warranty companies continues:
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Chapter 11 for service-plan provider FidelisAutomotive News | March 29, 2010 - 12:01 am EST |
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| US Fidelis, a large direct marketer of independent vehicle service contracts, filed for bankruptcy this month with more than $25 million in debt, court records show. In December Fidelis said it had stopped selling vehicle service plans and issuing refunds for canceled contracts. The St. Louis marketer promoted its plans on national TV and through telemarketing campaigns. Fidelis did not sell vehicle service contracts directly to dealerships, and no dealerships were affected by the bankruptcy filing. A notice on the company's Web site said the service contracts remain valid and are backed by third-party insurance and administration companies with funds to cover customer claims. Some providers of competing plans fear the bankruptcy of the well-known provider will taint any business selling vehicle service contracts, including car dealerships. "This gives the entire industry a black eye," says Larry Dorfman, CEO of Automobile Protection Corp., a provider that offers its service contracts only through dealers. The Missouri Attorney General's Office charged that Fidelis "used misleading, deceptive and unfair sales tactics and refund practices as a regular part of its business." In a document, the attorney general urged the U.S. Bankruptcy Court in St. Louis to appoint a trustee over the company. Fidelis' owners, brothers Darain and Cory Atkinson, borrowed nearly $49 million from the company to spend on themselves and their families, court records show. Fidelis used about a dozen administrators that managed the program by insuring and processing claims. Some administrators also provide service contracts through car dealers. Administrators include Warrantech Corp., of Bedford, Texas, and Administration Plus USA Inc., of Dublin, Ohio. Both companies said their plans are properly insured. Richard Baldini, president of Administration Plus, said his company did little business with Fidelis. "We controlled their profit and set aside reserves to handle potential refunds," he said. Warrantech CFO Richard Gavino said his company represented less than 20 percent of Fidelis' business. Warrantech's vehicle service contracts are insured by A-rated carriers capable of paying repair claims under the program, and his company has set aside money to make refunds for canceled plans. Gavino said: "It's not an issue for Warrantech or the consumers who bought the contracts." The following will take you to the website of US Fidelis. http://www.usfidelis.com/ CUSTOMER UNHAPPY WITH EXTENDED WARRANTY; FORMER OWNERS OF COMPANY INDICTED! June 28, 2011 If you purchases an extended warranty for your car from Dealer Services or U.S. Fidelis, you may have already had problems in utilizing that warranty. The company filed for bankruptcy last year (see above) and now the two former owners have been indicted in St. Louis on numerous charges including theft and unlawful merchandising practices. Kenyetta Hemier thought the offer to extend her car warranty was a good one, but about a year and a half later, when she went to use the warranty for engine repairs, she wasn't happy. It turns out that Kenyetta wasn't the only one person having trouble with "Dealer Services" also known as "U.S. Fidelis". Reanna Smith-Hamblin with Louisville's Better Business Bureau says they've received close to a dozen compliants in Louisville alone. The two former owners of U.S. Fidelis, brothers Darain and Cory Atkinson, were indicted in Missouri on June 15th. Missouri Attorney General, Chris Koster, announced a fourteen count indictment against Darain and a thirteen count indictment against his brother Cory. Charges included theft, unlawful merchandising practices and insurance fraud. According to the Associated Press, U.S. Fidelis folded in 2009 following a string of consumer fraud allegations. The company filed for bankruptcy in 2010. |
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