New lawsuit targets alleged car warranty phone scams

CNN, CNNBUSINESS, KOAT

By Peter Valdes-Dapena, CNN Business

If you’re tired of getting random calls from companies claiming to be from “dealer services” and offering you an extended warranty on your car, the Federal Trade Commission is taking aim at some companies accused of making those calls.

The FTC has filed suit against American Vehicle Protection Corp. of Florida and several affiliated people and companies for allegedly deceptive telemarketing practices. Operators working for the companies allegedly called people and told them they were working with automakers such as Toyota and Ford that produced the cars people owned, according to the complaint. In fact, the complaint alleges, they were not.

“AVP blasted consumers with illegal calls and made bogus claims about bumper-to-bumper warranties,” Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, said in a statement. “The truth is that the warranties didn’t come from the manufacturer, didn’t cover the repairs people needed, and weren’t sold legally.”

Operators pitched “bumper-to-bumper” or “full coverage” auto warranties that were allegedly riddled with exceptions for various parts, according to the FTC. Sales people even told consumers that specific parts were covered that were specifically excluded, according to the FTC.

The warranties were sold with the promise the policies could be canceled and money refunded within 30 days, the FTC said. When customers tried to cancel the policies, calls to the company often went unanswered and money was not returned until pressure was applied by regulatory agencies or the Better Business Bureau, according to the complaint.

Prices for the policies ranged from $2,800 to $3,400. The alleged scams have taken over $6 million from consumers since 2018, according to the complaint.

The companies also repeatedly called people who were on the National Do Not Call Registry even after they had been informed the numbers were on the list, the FTC said in its complaint. The companies also did not pay fees required to access the list before making calls, according to the agency.

In its lawsuit, the FTC is seeking financial redress for consumers and a permanent injunction to prevent the companies from doing any of these alleged deeds again.

Mitchell Roth, an attorney for American Vehicle Protection and other defendants in the case said AVP shut down operations after learning of the FTC’s complaints. The firm implemented extensive changes to its sales practices to ensure compliance with laws, Roth said. Roth’s clients have also filed their own suit against the FTC claiming that, under a recent Supreme Court decision, the FTC has no power to seek financial relief from his clients.

“AVP is committed to complying with all laws and finds it unfortunate that the Commission chose to pursue its lawsuit notwithstanding the changes that it implemented and notwithstanding the limits imposed on its powers by Congress as described in AVP’s lawsuit,” he said.

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