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Car warranty offers under investigation

06:44 PM PDT on Thursday, May 21, 2009

By KYLE IBOSHI and RICH KURZ, kgw.com

Tired of offers about a car warranty?  Those pesky offers warning that your auto warranty has expired or is about to expire?  Thousands of customers have already complained.

 Several companies including USFidelis are pushing extended car warranties.  Their national ads promise a great deal.  But angry customers warn, the company's sales tactics are unethical and misleading. 

   An urgent notice sent to consumers across the country claims to be from the "Dealer Warranty Division."  The letter warns, "The factory warranty on your vehicle has expired or may be expiring soon."  Customers complain they're pressured into buying expensive and unnecessary service contracts with little or no benefit. 

   "The amount of complaints is what is shocking.  There have been 33,000 inquiries nationwide about USFidelis," said Kyle Kavas of the Better Business Bureau.  Kavas said that an inquiry means someone has sought information on a company, either on the Better Business Bureau website or by calling the BBB.

  The Better Business Bureau has received 971 complaints about USFidelis in the past 36 months; 517 have been closed in the past year.  Because USFidelis is headquartered near St. Louis, that chapter of the BBB compiles the bureau’s reliability report.  The most recent report gives USFidelis an “F” rating, citing a number of factors, among them:

- Number of complaints

- Number of complaints that were not resolved

-Government action(s) against business

-Advertising issues found by BBB

-Length of time to resolve complaints

-Failure to resolve underlying cause(s) of a pattern of complaints.

  Additionally, USFidelis is one of five extended warranty providers now under investigation by Attorneys General in 40 states including Oregon for unfair and deceptive practices.

  When asked about his company, USFidelis CEO Chris Riley told our sister station in St. Louis, KMOV, "There's a lot of miscommunication with regards to coverage of a vehicle, we constantly work at improving our products and services to make sure those miscommunications are resolved."

 After reading our story, Ken Fields of Fleishman Hilliard, a PR firm hired by USFidelis, contacted Newschannel 8 with the following statement.

   “USFidelis has always been committed to treating each of its customers fairly and honestly. That is how the company has developed long-term relationships with more than 270,000 current customers.  With regard to complaints made to the Better Business Bureau, the total number of complaints represents less than ½ of one percent of the company’s current customer base. In addition, we have worked to resolve all but a handful of those customer concerns.”

   Field also said USfidelis stopped phone solicitations 10 months ago.

   Now the FTC is going after companies that continue making them.

   Last Thursday and Friday, a federal judge issued a temporary restraining order designed to stop what officials describe as a wave of deceptive "robo-calls" trying to sell people these warranties.

  The two companies affected by that injunction are Transcontinental Warranty Inc. and Voice Touch Inc.  The injunction is in effect until May 29th, when the judge has scheduled a hearing on the case.

"There's a lot of miscommunication with regards to coverage of a vehicle, we constantly work at improving our products and services to make sure those miscommunications are resolved," CEO Chris Riley explained.

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