$13M Multi-state Settlement Reached with US Fidelis

HARRISBURG – Attorney General Linda Kelly and 11 other state attorneys general today announced that an agreement, which provides $13 million in consumer restitution and injunctive relief, was reached with US Fidelis.

Kelly said that US Fidelis – the largest dealer 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 stemming from its deceptive junk mail, illegal telemarketing, robo-calls, and misleading TV ads.

A 2010 lawsuit filed by Pennsylvania and eleven other States against US Fidleis and its two owners, brothers Darian and Cory Atkinson, alleged that US Fidelis’s solicitations misled consumers into believing their auto warranties had expired or would soon expire and that they were being contacted by a manufacturer or other entity affiliated with their original vehicle warranty. Many consumers believed they were purchasing a warranty with “bumper to bumper” coverage but later found the contracts full of exceptions.

Kelly said that in November 2012 the states agreed to settle all claims against the Atkinson brothers, if they agreed to turn over their assets to the bankruptcy estate.

Since 2010, the multi-state steering committee has been working with US Fidelis, its creditors, and others involved in the bankruptcy case to reach a settlement that would account for consumer claims.

Kelly said that today’s settlement, along with a prior settlement with the service contract obligor Warrantech creates a $14.1 million Consumer Restitution Fund to provide compensation to eligible consumers who submit a valid proof of claim with the bankruptcy court. To be considered for restitution, consumers must file their proof of claim by Oct. 5, 2012.

For additional information about filing a proof of claim, consumers should visit the US Fidelis bankruptcy website at www.usfbankruptcy.com. Consumers may also call the US Fidelis Customer Hotline toll free at 1-877-691-8477.

In addition to Pennsylvania the following states participated in the settlement: Arkansas, Idaho, Iowa, Kansas, Missouri, North Carolina, Ohio, Oregon, Texas, Washington, and Wisconsin.

The Bureau of Consumer Protection will be filing a consent petition for court approval as part of the settlement.

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