St. Louis Firm Mailing Suspect Auto "Recall" Notices Has History with Attorney General's Office

For Immediate Release

Contact:
Michelle L. Corey, 314-645-3300
Bill Smith, 314-645-3300



St. Louis, Mo., May 6, 2009 -- A year after it agreed to settle allegations made as part of the Missouri attorney general’s “Operation Taken for a Ride” investigation, a downtown St. Louis business is looking at a novel new way to lure extended auto service contract customers -- vehicle recall and warranty notifications.

Carhill Enterprises, which does business under the names Consumer Protection Services, CPS and Warranty Division has been mailing “Motor Vehicle Recall and Warranty Notification” postcards to car owners in recent weeks, warning them that their vehicles may be part of a “manufacturers recall” due to a “safety-related defect or requirement.”

But an investigator with the Better Business Bureau (BBB) who called the toll- free phone number on the postcard was told he could not get any information on a recall or safety problem until he first purchased an extended service contract from the company.

“Let’s take care of your down payment first,” the salesman said. “Then we’ll take care of that (the safety recall information).”

Michelle Corey, president and CEO of the BBB of St. Louis, said the postcards represent “a new low for an industry that is rapidly gaining a national reputation for trickery.  To try to scare people into calling a sales office by sending out safety recall notices is despicable. We consider these tactics to be a bait-and-switch and, of all the bait-and-switch cases we have seen, this has to be one of the worst examples.”

 The BBB’s code of advertising says that “advertising should not create a false impression about the product or service being offered in order to lay the foundation for a later ‘switch’ to other, more expensive, products or services.”
                                      
At a time when St. Charles County-based US Fidelis is capturing the lion’s share of the attention from law enforcement officials and national media, several other St. Louis area companies that sell extended service contracts have managed to avoid the public spotlight.

Even so, those companies have been the focus of hundreds of complaints to the BBB and attorneys general offices across the U. S. over the past year.  Carhill and Consumer Protection Services have received more than 200 BBB complaints and reports from consumers over the past 36 months, 27 thus far in 2009.  The complaints cover a variety of issues.  Some reference the “recall” notices, others said they or their family members felt pressured or misled into buying coverage and still others said that repairs that should have been covered were not.

Carhill Enterprises’ 2008 annual registration report with the Missouri secretary of state – the most recent report available – lists Andrew J. Hillin of Ballwin chief executive officer of the company.  John J. Carroll of Coconut Grove, Fla. is listed as president.

Hillin, founder of Jacob Development Group, is a developer who has been involved in several major redevelopment projects in the downtown St. Louis area.  Jacob Development Group’s Web site said Hillin relocated to St. Louis from Burleson, Tex. in 1994 and later became a founding partner in Carhill Enterprises, a St. Louis-based “automobile warranty business.”  State records show the company originally incorporated under the name Millennium Marketing, Inc. in 1998, changing its name to Carhill Enterprises three months later.  In 2003, state records show, Consumer Protection Services was registered as a fictitious name, with Carhill Enterprises as 100 percent owner.

Carhill Enterprises and Consumer Protection Services list an address at 1232 Washington Avenue, St. Louis. In recent weeks, the BBB has received complaints from consumers who say they received “recall” postcards from Consumer Protection Services.  A typical postcard carries the message: “2004 HONDA NOTICE.  MOTOR VEHICLE RECALL AND WARRANTY NOTIFICATION.” A boxed alert on the front of the card says: “IMPORTANT SAFETY NOTICE.”

The back of the postcard also reads “MOTOR VEHICLE AND WARRANTY NOTIFICATION” and says that the vehicle may be part of a manufacturers recall “due to a safety related defect or requirement to comply with federal motor vehicle safety standards.  We have the information at hand, and can inform you of any manufacturers’ recall that may be applicable to your vehicle.  Call us immediately.”

A BBB investigator identifying himself as a postcard recipient and owner of a 2007 Cadillac asked a salesman five times during the course of a phone call for the recall and safety information noted on the postcard.  Each time, the salesman declined to supply any recall information. Instead, the salesman told the caller repeatedly that the caller needed to sign up for an extended service contract.  “You’re almost out of coverage,” the salesman said.  “You’re going to let your Cadillac warranty expire?  A Cadillac is a very expensive car to repair.”

The salesman said the cost of the service contract would be $2,681 over four years, including a $268 down payment and payments of $134 over the next eight months.

When the investigator balked, the salesman replied, “we’ll cancel the coverage out and let your dealer know that you will be taking care of the repair costs yourself.”

The original recipient of the card, a man from St. Louis, told the BBB that he knew immediately that the card was not an official recall notice.  He said he had worked for General Motors more than 30 years and “I know what a recall notice looks like.”  Still, he said, others who received similar notices might easily be misled.

“It’s absolute misrepresentation, just a way to get me to call them,” he said.  He said he is aware of no official recall notices issued on his car.

A man from Manhattan, Kan. who received a similar postcard recently said he phoned the 800 number on the card and was told by a company representative that the recall involved an “air bag problem” but he was given no details.  The company, he said, “seemed more interested in selling me an extended warranty on our Chevrolet than letting me know why our vehicle was on a recall list.”  The man said after he got off the phone, he contacted his Chevrolet dealer and was told there was no recall on the car.                                              

Carhill Enterprises and Consumer Protection Services was one of eight St. Louis area extended auto service contract companies cited in “Operation Taken For a Ride,” an effort by then Missouri Attorney General Jay Nixon to crack down on “misrepresentation and deception” in the industry in March 2008.

Carhill was one of two companies that agreed to an Assurance of Voluntary Compliance with the state and was not a party to lawsuits filed against the other six companies.  In that assurance, Carhill agreed to pay $7,209 to eight consumers and an additional $4,000 to the state to cover the costs of investigation and enforcement.

The company also agreed to stop offering a “guaranteed price refund” in its marketing, include additional explanatory information in a “rider” mailed to buyers of extended service contracts and work “in good faith” to resolve complaints.

The BBB urges that anyone receiving notice of a recall first contact their dealer or auto manufacturer to determine whether the recall is legitimate.

The BBB offers the following advice for dealing with a firm selling extended auto warranty contracts:

• Never give personal information, including Social Security, bank or credit card numbers, over the phone to an unknown telemarketer.
• When considering an extended service contract or any other type of telephone solicitation, insist on getting a contract that clearly explains all terms and conditions before signing up or providing credit card or other payment information.
• Read your manufacturer’s warranty and contact your dealer or manufacturer to ensure you are not purchasing duplicate coverage.
• Consumers can place their phone number on the federal do not call list by visiting www.donotcall.gov. If the consumer is already on the list but continues to receive telemarketing calls, he or she can use the same Web site to report the incident to the Federal Trade Commission.
• Consumers should always check out the company first with the BBB at www.bbb.org.

Media Note: To interview a victim or for a copy of the postcard, contact Bill Smith at 314-645-4636.