BBB Flooded with Complaints on U.S. Fidelis, Similar Firms

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FOR IMMEDIATE RELEASE

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


St. Louis, Mo., April 9, 2009 - A 6-year-old St. Charles County company that touts itself as “America’s leading provider of extended auto warranties” is facing a storm of criticism from consumers across the U. S. who say they felt misled and pressured into buying unnecessary vehicle service contracts from which they received little benefit, according to the  Better Business Bureau (BBB).

U. S. Fidelis, based in Wentzville, Mo., describes itself as a “faith-based company” with a “commitment to treating every customer with honesty and integrity.”  Its logo, topped by a shining halo, is appearing on everything from national TV commercials to the NASCAR racing circuit.

But there appears to be some tarnish on U. S. Fidelis’ halo these days.  Complaints from customers and others solicited by the company have been streaming into the offices of the BBB and states’ attorneys general in recent months – most expressing anger over what they believe to be unethical and misleading business practices.

In the past 36 months, the BBB received more than 33,000 inquiries and more than 1,100 complaints and reports expressing dissatisfaction with the company or its services.  

The company – which previously has been known by the names Dealer Services and National Auto Warranty Services – is headed by brothers Darain and Cory Atkinson of St. Charles County.  Recently, Chris Riley was named chief executive officer of the company. The headquarters is about 40 miles west of St. Louis.

Records show the company, founded in early 2003, sells extended vehicle service contracts throughout much of North America.  U. S. Fidelis runs TV and internet commercials, inviting car owners to call an 800 phone number for information.  The company has solicited customers by direct mail.

Also, it had solicited business by phoning potential customers, but Riley said that practice has been discontinued.

The BBB has received complaints about the company from all 50 states.  The largest number of complaints and reports has come from Texas, with more than 130 in the past 36 months.  Illinois has logged more than 80 complaints and reports during the period, Florida more than 50 and North Carolina, Virginia, Georgia and New York at least 40 each.

At least 30 complaints and reports each have come from Arizona, California, Maryland, Ohio, Pennsylvania and Tennessee.

Michelle Corey, president and chief executive officer of the St. Louis  BBB says the sheer volume and ongoing complaint patterns involving U. S. Fidelis, as well as complaints against numerous other St. Louis area extended vehicle service contract companies, is “nothing short of astonishing.”

 “We continuously are receiving reports from consumers saying they  have been pressured or misled into buying warranty contracts they either don’t want or don’t need, or have been left holding the bag when the claim processing company refuses to pay for costly repairs.”

Some of the most difficult cases involve senior citizens or persons on fixed incomes who feel they were misled or pressured into signing up for plans often costing thousands of dollars.

Customers are especially critical of what they see as misleading letters and postcards sent by U. S. Fidelis and similar companies that appear to be associated with their car’s original manufacturer’s warranty.

A U. S. Fidelis letter mailed earlier this year to a Westerville, Ohio man is headed “2003 Buick Regal Owner Notification” and opens by saying:

“Dear Martin: Our records indicate that the factory warranty on your vehicle has expired or may be expiring soon.  As a loyal Buick owner, you qualify for extended vehicle coverage of up to six additional years or 140,000 miles.  Only your vehicle qualifies for this program.”

The letter urges the recipient to “Call immediately” and says “it is important for you to take advantage of this direct purchase program to protect your investment.”  The letter lists a series of expensive repairs it says would be covered under an extended repair contract and says, “due to the nature of this program, we can only authorize your vehicle for 72 hours from the receipt of this notice.”

Most other companies operate similarly.  They send out large numbers of letters and postcards, urging vehicle owners to call a toll free number for information on extended service contracts.  Others also continue to solicit through telemarketing.

In some cases, the mailings are uncanny in their similarities.  They say they can save drivers thousands of dollars in needed repair work.

Complaints against U. S. Fidelis cover a variety of issues.  Several described the company’s phone workers as rude and uncooperative.  Many said they felt misled by the company’s mailings and salespeople. Others said the company refused to send them a copy of their coverage contract until they purchased a policy, while others said they had difficulty canceling contracts.  Still other complainants said it appeared that the contracts were written in such a way as to make it extremely difficult to obtain payment for repairs, or said they felt betrayed when repairs they thought should have been covered were not.

Among those filing complaints against U. S. Fidelis with the BBB in recent months were:    

• A woman in Madison, N. J. who called the company in May 2008 after she received a letter warning that the factory warranty on her 2007 Pontiac Vibe was about to expire, told the BBB that the salesman told her he could offer her a special, one-time-only deal of $2,300.  She said the salesman told her the contract would cover the car up to 100,000 miles after the expiration of her factory warranty.  But, she said, the salesman told her she would have to act immediately and could not take time to think about the offer. “I was 22 years old, it was my first car and I was scared,” she said.  She said she signed up for the service contract, ultimately paying out several hundred dollars before a mechanic friend convinced her she was wasting her money.  She said that after a lengthy delay and after filing a complaint with the BBB, she ultimately was able to recover all but about $340 of her money.
• A prison guard from Philadelphia who said she received a telephone call informing her that the warranty was about to expire on her Hyundai said she bought an extended warranty for her car only because she was convinced she was speaking with a representative of the car’s original factory warranty.  “They acted like they were my car company,” she said, echoing a complaint of many consumers.  The woman said she learned the truth two years later when she was contacted about extending her original factory warranty.  “I already paid you,” she said she told them.  After the BBB interceded on her behalf, she said, she ultimately recovered most of her money.  Still, she says she is owed more than $500 for what she feels was a “worthless” warranty.  “This taught me a lesson,” she said.
• The owner of a construction company in Eureka, Mo. reported he received phone calls and direct mail solicitations from U. S. Fidelis to insure his Ford F250 Super Duty Truck.  He said he told the salesman at the time that the truck was titled in his company’s name and asked whether that would be a problem.  The salesman told him it would not, he said.  He said he paid $2,175 for the warranty in September 2007 and about a year later the truck experienced transmission problems, with repair bills totaling $9,500.  The insurer refused to pay when a company representative noted that the name of the man’s business was on his truck.  An inspection of the contract’s “fine print” said that any commercial use of the truck would void the extended warranty, the man’s wife said.  “I thought it was totally awful,” she told the BBB. She said her husband eventually got back most of his payment for the warranty, but had to pay the $9,500 for the repairs.
• In a similar case, a man from Amarillo, Tex. said $3,500 in transmission repair costs were not covered because he had kept only hand-written records of oil changes; the company said it needed computer records.
• A woman from Mission, Tex. said she received a mailing in November 2008 that the factory warranty on her 2006 Chevy Malibu was about to expire.  She said when she called a company representative with U. S. Fidelis, she asked only that she be sent some information and “I’ll look it over.”  Soon after, she said, she noticed the company had made two separate unauthorized withdrawals from her bank account, totaling about $650.  She said the money ultimately was refunded.  She said she reported the incident to her local police department.  The woman told the BBB the company contends that she ok’d the warranty purchase, but she says that is untrue.  “I don’t give my bank number to anyone,” she said.

While U. S. Fidelis may be the target of the lion’s share of customer complaints, many other extended service contract businesses in the St. Louis area are facing similar attacks.  For the industry, BBBs received 143,027 requests for reports and processed 4,073 complaints last year.

The roots of U. S. Fidelis can be traced to a company called Big Time Productions, Inc. which was first incorporated in Missouri in July 2001.  Among the listed purposes of the company was “to engage as a professional actor and/or entertainer within and without the State of Missouri, for television and cinema.”

The company was renamed “National Auto Warranty Services, Inc.” in February 2003.  Darain Atkinson was listed in state records as president and secretary.  Brother Cory Atkinson was listed as vice president and treasurer.

Complaints about U. S. Fidelis and other Missouri-based warranty companies have continued despite a lawsuit filed in March 2008 by the Missouri attorney general’s office.

That suit targeted six companies, including National Auto Warranty Services (U. S. Fidelis), TXEN Partners and Service Protection Direct, National Dealers Warranty and Dealer Warranty Services.  It alleges the companies “used misrepresentation and deception” to sell contracts.

While some cases have been settled, the suit against National Auto Warranty Services (U. S. Fidelis) remains pending in St. Charles County.  In papers filed with the court, the firm denied it did anything to misrepresent their products or deceive customers.

In the past year, U. S. Fidelis and the Atkinson brothers have not been shy about seeking publicity for their business. The company is a key sponsor of a Rusty Wallace Racing team NASCAR car. On New Year’s Eve, the brothers opened a new $2.5 million Christian nightclub called Exodus in the same mall building where their company is headquartered.  The company closed the club just a month after it opened.  Also last year, the brothers donated a portion of the building to The Element Church.

Riley, who told the BBB the company currently employs 1,100 people at its Wentzville headquarters, told the BBB that he believes U. S. Fidelis may have deceived customers in the past, but has turned over a new leaf.  “It was ignorance,” Riley said of past activities.  He said he hopes that U. S. Fidelis can take the lead in setting up a set of rules that will change the extended auto contract industry for the better.  

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.