Missouri AG Reaches Settlement With Vehicle Extended Service Contract Seller

The Missouri attorney general’s office has reached a settlement with Dealership Warranties, Inc., a company that is now doing business as National Vehicle Protection Services, to restructure the way the company sells vehicle service contracts. Dealership Warranties will also pay $18,500 to the state in restitution and costs.

The consent judgment against Dealership Warranties prohibits deceptive sales techniques in the sale of vehicle repair coverage. The judgment also requires the company’s sales people to describe the details of the written contract during sales phone calls.

These important terms and conditions include information about:

• The identity of the service contract provider (the party responsible for paying claims under the contract, which is not Dealership Warranties);
• Information about what is not covered and the limits of coverage provided;
• Any deductibles under the contract;
• Requirements for prior approval of vehicle repair;
• Obligations of the consumer to perform and document past or future maintenance;
• The procedures for canceling and the consumer’s right to cancel the contract within a certain period of time and receive all of his or her money back; and
• The consumer’s right to a pro rata refund if the contract is canceled before the full term of the contract.

“Missouri law says consumers have a right to see a written service contract and agree to its terms,” Koster said. “Customers who purchase vehicle repair coverage by telephone often later realize the significant limits to coverage in the written contract. It is important for Missouri consumers to protect themselves by carefully reviewing vehicle service contracts to make sure they contain the provisions promised.”

If Dealership Warranties completes the contract in a telephone transaction, it is required under the consent judgment to record the transaction electronically and to mail the written contract within 3 business days.

Dealership Warranties will continue in business under the injunction issued today by St. Louis County Judge Barbara Wallace, while using the name National Vehicle Protection Services.

“A new state law protects consumers by requiring an insurance license for most sellers of these extended service contracts,” said Missouri Insurance Director John M. Huff. “I encourage Missouri consumers to check with our department to verify that sellers are properly licensed before buying a service contract.”

Dealership Warranties has applied for a license with the Department of Insurance.