Missouri AG Reports $399K Settlement with Auto Warranty Firm

Missouri Attorney General Chris Koster announced a $399,400 settlement with NRRM LLC, a St. Peters-based seller of vehicle breakdown coverage over misleading practices and claims delay tactics. The settlement was announced jointly with state Insurance Director John M. Huff.

NRRM has been doing business under the name “StopRepairBills” since late 2009, and is now advertising under the name, “Vehicle Protection Center,” according to the AG’s office. The settlement requires that the company reform its business practices.

According to Koster, NRRM was formed in the merger of National Dealers Warranty and Auto Warranty Protection Services. The settlement resolves allegations that in operating a call center to offer vehicle breakdown coverage, NRRM:

• Marketed the vehicle breakdown coverage throughout the United States, primarily through television commercials and radio advertisements designed to induce consumers to call a toll-free number by deceptively implying that NRRM pays 100 percent of consumers’ repair claims;

• Trained its salespeople to sell the vehicle breakdown coverage with a generalized and often misleading description of the coverage; and

• Taught its staff to subject consumers seeking a refund to delay tactics and to give them only a partial refund. Consumers were subjected to these delay tactics when, after realizing that the coverage they received was less than what they had been led to believe during the sales process, the consumer called NRRM to cancel and ask for a refund. Some consumers realized they were receiving less coverage when they read the contract; others did not realize it until a repair claim was denied.

The AG’s announcement noted that the injunction requires the company to reform its business practices in the offer and sale of vehicle service contracts. It also completely prohibits the sale of “additive contracts,” which were sold as though they were vehicle service contracts but were structured as “product warranties” to try to avoid being regulated under insurance and service contract laws.

NRRM sold this contract by arranging for the delivery of a bottle of ordinary oil additive; the accompanying contract provided very limited breakdown protection and had no relationship to the performance of the product in the bottle, the AG’s office reported.

The consent judgment establishes a restitution fund of $187,200 intended to provide a full refund to Missouri consumers who were sold this additive coverage.

The settlement also provides the state $25,000 in costs that will be used for consumer law enforcement.

The judgment imposes civil penalties and forfeitures in the amount of $187,200 and allows for potential future recovery for other complaints.

Missouri law now requires that both motor vehicle extended service contract sellers and providers of such contracts be registered with the Department of Insurance. Missouri law also requires that motor vehicle service contracts made with consumers clearly and conspicuously describe the consumer’s right to cancellation, among other rights.

“Most sellers of these extended service contracts must have a license from the Missouri Department of Insurance,” said Insurance Director John M. Huff. “We encourage consumers to contact our department to make sure the seller is licensed and authorized to do business in Missouri.”

Source: Missouri AG’s Office