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Wisconsin and Eleven Other States Obtain $14 Million Consumer Restitution Fund in Settlement with Vehicle Warranty Company US Fidelis

 

MADISON — Attorney General J.B. Van Hollen announced today that his office has reached an agreement to settle the state’s lawsuit against US Fidelis, a vehicle service contract marketer that routinely misled consumers before shutting down and filing for bankruptcy in 2010.  The agreement, which has been approved by the bankruptcy court, creates a $14.1 million consumer restitution fund to be used to provide refunds to consumers injured by the conduct of US Fidelis.  It also imposes injunctive relief prohibiting future illegal conduct by US Fidelis.

 

US Fidelis was a Missouri-based business run by two brothers, Darain and Cory Atkinson. At one time, the business was the nation’s largest dealer for vehicle service contracts, but on March 1, 2010, it petitioned for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Eastern District of Missouri.

 

In April 2010, Wisconsin and eleven other states sued US Fidelis and its owners for a variety of illegal actions stemming from its deceptive junk mail, illegal telemarketing, robo-calls, and misleading TV ads. The states alleged, among other things, that US Fidelis’ 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. Further, many consumers who thought they were purchasing a warranty with “bumper to bumper” coverage later found the contracts were full of exclusions and did not cover many necessary repairs. 

 

In November 2010, the states agreed to settle all claims against the Atkinson brothers if they agreed to turn over their assets to the bankruptcy estate.  Wisconsin obtained judgments of more than $2.5 million each against Darain and Cory Atkinson.  The Atkinsons also were criminally indicted in Missouri.

 

The settlement announced today establishes 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, most consumers must file their proof of claim by October 5, 2012. Consumers whose contracts expire after this deadline have additional time.

 

“This company engaged in truly deceitful behavior and then, after harming numerous consumers, declared bankruptcy.  I am pleased that we were able to secure a substantial restitution fund despite the collapse of this company, and I encourage affected Wisconsin consumers to present claims and obtain their share of the funds available,” Attorney General Van Hollen said.

 

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

 

The following states participated in the settlement: Arkansas, Idaho, Iowa, Kansas, Missouri, North Carolina, Ohio, Oregon, Pennsylvania, Texas, Washington, and Wisconsin.  Each state will file its own consent judgment in its respective state court.

 

Assistant Attorney General John Greene represents the State of Wisconsin in this case.