Multi-state Settlement Announced in U.S. Fidelis Vehicle Warranty Lawsuit; Owners Barred From Telemarketing or Sale of Service Contracts

HARRISBURG – Attorney General Tom Corbett announced that Pennsylvania, along with ten other states, have reached a settlement with the owners of U.S. Fidelis, a Missouri-based company accused of using deceptive and misleading tactics to sell used car warranties.  The company is also accused of disregarding ‘Do Not Call’ programs by generating an estimated one billion unwanted sales calls.

Corbett said the negotiated multi-state settlement involves Darain E. Atkinson, of Lake Saint Louis, Missouri, and Cory C. Atkinson, of Wentzville, Missouri – brothers and co-owners of U.S. Fidelis and related companies.

Corbett said that under the terms of a related bankruptcy settlement agreement, the Atkinson brothers agreed to surrender at least 90% of their assets.  As a result, the Atkinsons will surrender to the Bankruptcy estate $10.5 million in personal assets and millions in additional valuables, including Darain Atkinson’s 40,000-square-foot mansion; a 50-foot yacht and ten other boats; 11 automobiles; 14 motorcycles; and assets related to 20 different corporations.

Additionally, the Atkinsons are permanently prohibited from telemarketing in Pennsylvania, or any of the other states involved in the settlement, and they may not be involved in the mass marketing or sale of vehicle service contracts.

Corbett said the agreement also forbids the Atkinson brothers from conducting any type of business that misleads consumers or makes misrepresentations; they may not target senior citizens and they are barred from selling or providing consumer information to other companies.

Pennsylvania and other attorneys general filed suit against the Atkinson brothers and their companies in April 2010 as the result of a multi-state investigation.

Corbett noted that the states are continuing to work with the bankruptcy court to benefit consumers and noted that any recovery for consumers and creditors will come from the U.S. Fidelis bankruptcy or other sources. 

Corbett explained that U.S. Fidelis – the largest seller of extended vehicle warranties in the United States before its collapse and bankruptcy in early 2010 – was accused of numerous unfair and deceptive business practices, including:

. False statements that coverage would be the same as the original manufacturer’s warranties.
. Implying that products were associated with manufacturers or dealerships, including claims that they were authorized “factory   warranties” or “extended warranties.”
. Deceptive claims about the extent of coverage, including terms such as “bumper-to-bumper,” “Gold” and “Platinum” warranties.
. Misleading statements implying that the company had official information about consumers’ vehicles.
. Bogus claims about “limited time” or “final” offers.
. Failure to honor “100% money back guarantee” offers.
. Repeated sales calls to consumers registered on the “Do Not Call” list.
. Improper “robo-call” sales calls, including automated calls to cell phone numbers.

Along with Pennsylvania, the settlement includes Arkansas, Idaho, Iowa, Kansas, North Carolina, Ohio, Oregon, Texas, Washington and Wisconsin.

Corbett urged consumers with questions or complaints related to U.S. Fidelis to call the Attorney General’s Consumer Protection Hotline at 1-800-441-2555 or file an online consumer complaint using the Attorney General’s website, at www.attorneygeneral.gov (Click on the “Complaints” button on the front page of the website and select the “Consumer Complaint Form” from the menu list).

The settlement, in the form of a consent petition, requires court approval.  It was filed in Commonwealth Court, in Harrisburg, by Senior Deputy Attorneys General Jesse F. Harvey and John M. Abel, from the Attorney General’s Bureau of Consumer Protection.

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