According to Automotive News (4/11/12), US Fidelis, which sold automotive extended-service contracts to consumers, may have been involved in fraud. One of the company's co-owners pleaded guilty in April to felony stealing, insurance fraud and consumer-protection violations after being accused of misleading consumers about the company's affiliations and service coverage.
Automotive News notes that Darain Atkinson admitted that US Fidelis kept refunds that should have been given to customers when they cancelled their contracts, misled customers about the extent of their extended-service coverage and mislead consumers into believing that the company was affiliated with automobile manufacturers when it was not. Charges were laid after an investigation by Chris Koster, attorney general of Missouri.
US Fidelis reportedly inspired copycat extended-service companies, prompting Koster to call Missiouri, the "Silicon Valley for auto service contract scams," (as quoted in Automotive News; 4/11/12).
The Post-Dispatch (4/19/12) reports that US Fidelis employees were rewarded for stopping a customer from canceling their extended services contract, even if to do so they kept a customer on hold for hours or simply hung up on the customer. Some employees are also alleged to have overstated the coverage included in the contracts.
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One such lawsuit may be in its final stages. The lawsuit filed by Laura and Steven Faught against American Home Shield (AHS), was reportedly settled, with American Home Shield agreeing to reconsider claims that were allegedly wrongfully denied. According to Home Warranty Wiz (3/30/12), some states opposed the settlement because they were investigating their own litigation against American Home Shield.
The final date for appeals was April 26, 2012. No appeal appears to have been filed, so the settlement is now considered effective. Customers who made a claim between June 24, 2001 and October 20, 2009, can resubmit their claim after May 26, 2012, according to the Faught Class Action Website.