Auto Service Contract Seller Leaves Trail Of Unhappy Customers, BBB Warnsby Nick LaFleur on Jan. 25, 2011, under alert, Life, scam, Tips
A year after the collapse of US Fidelis, the nation’s largest seller of extended auto service contracts, the Better Business Bureau advises customers to remain extremely skeptical of any company marketing similar after-market contracts.
“We saw hundreds of complaints in 2010 involving US Fidelis and similar marketing companies. Many people felt they were coerced and manipulated into buying repair plans that had little, if any, value,” said Kim States, BBB President. “While some of these sellers appear to have made progress in reducing their numbers of complaints, many still have a long way to go.”
US Fidelis, the bankrupt Lake St. Louis, Mo., firm, continued to accrue complaints in 2010, with about 400 nationally, including eight in Tucson. Next in number of complaints is NRRM Enterprises, LLC of St. Peters, Mo., better known as Stop Repair Bills or StopRepairBills.com. More than 200 consumers have filed complaints against Stop Repair Bills since Jan. 1, 2010. Many claimed they were pressured into buying service contracts they later discovered did not cover their vehicle repairs.
Stop Repair Bills has an “F” grade with the BBB, the lowest possible. Governments in the U.S. and Canada have taken action against Stop Repair Bills and affiliated businesses.
In 2008, then-Missouri Attorney General Jay Nixon sued six companies, including National Dealers Warranty (now Stop Repair Bills), for using “misrepresentation and deception” to sell vehicle service contracts to the public. Five months later, Nixon settled that case with National Dealers Warranty, with the company agreeing to pay about $30,000 in restitution to consumers and for the state’s costs in bringing the lawsuit.
In November 2009, Missouri Attorney General Chris Koster filed a second lawsuit against Stop Repair Bills, accusing the firm, Gilman and other officers of several violations of state law. The case, amended in November 2010, is pending. Allegations include unlawful telephone marketing practices, selling contracts for unregistered providers and administrators, deceptive sales practices, unlawful merchandising practices, unfair trade practices and insurance fraud. Stop Repair Bills sells contracts nationwide.
On its website, Stop Repair Bills says it sells vehicle service contracts for other companies that administer the plans. Marketers like Stop Repair Bills maintain that they only sell the contracts and they should not be held responsible when claims are rejected.
BBB believes that because the marketer enters into the original agreement with the customer and receives payment, the marketer should have ultimate responsibility.
NRRM, which owns Stop Repair Bills, was formed in December 2009 through a consolidation of National Dealers Warranty and Auto Warranty Protection Services. At the time of the consolidation, Gilman was president of both companies. Mark Travis was listed as vice president of both firms; Nicholas Hamilton was listed as secretary of both companies. Richard Brettelle was listed as treasurer of Auto Warranty Protection Services. NRRM has not reported officers or board members.
Stop Repair Bills has advertised extensively on radio and in national TV commercials. In the 2009 baseball season, its advertisements could be seen at the top of scorecards sold at Busch Stadium, home of the St. Louis Cardinals.
“Join thousands of vehicle owners who no longer worry about costly repair bills on their automobiles,” said one of the ads. “Save thousands now on auto repair bills,” says the company’s website.
Several consumers interviewed by the BBB, however, said they did not believe the company lived up to its promises.
A man from Ontario, Canada, who purchased a contract through a Canadian firm run by Stop Repair Bills officials, said he paid about $3,400 for coverage of his Chevrolet Impala. He described his maintenance of the car as “meticulous,” but said the engine failed in November 2010, and he submitted a claim for repairs. Despite a mechanic’s claim that the car’s engine block was cracked, the claim was denied. The customer said he was told the cause of the failure could not be positively determined. He described his contract as “a piece of Swiss cheese, full of holes. In hindsight, maybe I should have known better.”
A BBB investigator who called the company posing as a prospective customer told a salesman he did not have Internet access and asked to be sent a copy of a contract before agreeing to purchase coverage. The salesman refused, insisting that Stop Repair Bills could only send out a “live” contract after receiving a down payment. He said customers had 20 days to cancel after inspecting the contract.
Michael Carter, attorney for Stop Repair Bills, said in a phone interview that he believes Stop Repair Bills is a “responsible company that tackles every single complaint that comes its way in a timely manner.” He said the vast majority of complaints with the BBB have been resolved and the company is nearing a resolution in its legal battles with the Missouri attorney general’s office.
He also said he believes the company’s “F” grade is unfair and said the grade, “at worst,” should be a C- or a D. On Dec. 27, the BBB extended an invitation to Stop Repair Bills officials to meet to discuss the pattern of complaints. The company initially said it could meet on Feb. 23 but later said it would meet “if you can assure us that our grade will be raised.” BBB declined the offer.
BBB urges consumers never to enter into any contract agreement without first carefully reading the contract and understanding exactly what is and what is not covered. Several consumers have told BBB that promises were made during telephone sales calls that they later learned were not a part of their contracts.
BBB also offers the following advice to persons trying to decide whether to purchase after-market service contracts:
- Never give personal or credit card information to anyone over the phone or via e-mail unless and until you are ready to purchase a contract.
- Do not be pressured into making an immediate decision. Beware of sales offers that require you to buy immediately in order to qualify for the best rate.
- Beware of any claims that you will receive “total” or “bumper to bumper” coverage on your vehicle. That does not necessarily mean that every problem with your car will be covered.
- Read your manufacturer’s warranty and contact your dealer or manufacturer to make sure you are not purchasing duplicate coverage.
- Check the contract seller’s Reliability Report with the BBB by going to www.tucson.bbb.org or by calling 314-645-3300. Do not be misled by marketers who suggest that you check the Reliability Report for contract administrators and not the brokers themselves.