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Van Hollen Files Consumer Enforcement Action Against U.S. Fidelis, Inc. -- Marketer of Motor Vehicle Service Contracts

 

MADISON - The Wisconsin Department of Justice has filed a consumer protection enforcement action against U.S. Fidelis, Inc. and its owners, Darain Atkinson and Cory Atkinson.  The Missouri-based company, until it ceased operations in late 2009, marketed extended motor vehicle service contracts to consumers throughout the United States, including Wisconsin.  It formerly operated under the names National Auto Warranty Services, Inc. and Dealer Services.  Last year, the company reportedly generated revenues in excess of $250 million.

 

According to the lawsuit, U.S. Fidelis fraudulently solicited customers through telephone solicitations and mailed marketing pieces.  The telephone solicitations included robo-callsnamely the use of automatic dialers with a pre-recorded message to solicit potential customers.

 

The lawsuit alleges that U.S. Fidelis engaged in a widespread pattern of false and misleading representations in the course of marketing vehicle service contracts, including that the consumer's vehicle was unsafe or subject to recall; that the consumer's original vehicle warranty had expired or was about to expire; that the service contract was an extension of the manufacturer's warranty; that the service contract was comprehensive in scope; and that consumers could obtain refunds by terminating the contract.  

 

The complaint also alleges that U.S. Fidelis used high-pressure sales tactics, such as falsely asserting that the service plan was being offered for a limited time, or on an exclusive basis.  In addition, the state alleges that U.S. Fidelis also violated state law by ignoring the state's do-not-call list, and by failing to register as a telemarketer.

 

U.S. Fidelis has filed for reorganization under federal bankruptcy laws, but the state's lawsuit also seeks recovery against brothers Darain and Cory Atkinson, who own and operate the company.  The state seeks forfeitures, restitution for injured consumers, injunctive relief and recovery of its costs and attorney's fees.

 

Wisconsin is joined by Iowa, Idaho, Kansas, North Carolina, Ohio, Pennsylvania, Texas and Washington.

 

The case has been assigned to Dane County Circuit Court Judge Foust.  It is being prosecuted by Assistant Attorney General John S. Greene, with assistance from the Wisconsin Department of Agriculture, Trade and Consumer Protection.