http://66.225.205.104/121009CarWarranty.mp3
How many times have you gone to the mailbox and pulled out what amounts to nothing but junk mail? Perhaps you've received offers from companies wanting to sell you an extended warranty for your car. And maybe you've seen their ads on TV. James McGill has, and he doesn't like them. "I get sick," he says. "I get sick every time I see one." Two years ago, the 79-year-old McGill - of Charlotte - signed up his wife's 1999 Chrysler sedan for an extended warranty. The car had about 77,000 miles. And a company called USfidelis was offering bumper-to-bumper coverage for another 100,000 miles. It would cost McGill about $1,400. "But from the price they gave me, I thought it was fair," McGill says. "And so I let 'em start drafting the payments on it from the bank." Then, a little over a year later, the car's transmission went out. McGill tried to file a claim on his warranty. "I would call one place and they would say well, we sold you the insurance but we're not responsible for it, we're just one of the brokers. And they would give me this other number to call and in most cases nobody would answer." When he finally got a hold of someone, McGill says he was told he'd have to send in oil change records. His mechanic, Eddie Stokely, says oil changes have no effect on the transmission. "They did not only ask for oil changes, they asked for his transmission service, tune up records, how he maintained his brakes," Stokley recalls. "I mean, all the paperwork that he could find and I could find in my stuff was sent to them. And they still declined him, saying that he didn't maintain his vehicle right." Consumer advocates like Missouri Attorney General Chris Koster are often critical of the industry. "It's up to our office to make consumers aware that they are treading in treacherous waters when they deal with a lot of these companies," Koster says. Koster sued six of the vehicle service contract companies last month. The same office filed suit against USfidelis last year, when it went by the name National Auto Warranty Services. "I'm not saying every company in the market is bad," Koster adds. "But I'm saying I would not buy one of these contracts and I would highly recommend people intensely scrutinize the contracts before they sign on the dotted line." Koster calls Saint Louis the "Silicon Valley" of an industry full of fraud. At least 30 companies that sell vehicle service contracts are based there, including industry giants USfidelis, Mogi and StopRepairBills.com. All three have 'F' ratings with the Better Business Bureau. Bill Smith is with the BBB. He says complaints over this type of company easily outnumber any other types of complaints his office receives. "In the beginning, we were just dealing with a few companies," Smith says. "But there have been many more that have started up just in the past 18 months." Smith says his office has received thousands of complaints over the last three years. The Bureau has taken issue with a number of industry practices and promises. One in particular deals with liquid additives. "Customers basically were told they needed to add this for their warranty to be valid," smith explains. "But after they added it they were later denied a refund and told the purchase was not refundable because the product had been used. In effect what it means is that the companies were encouraging their customers to use the fluids immediately, knowing that it would negate their opportunity for a refund." Koster, the Missouri Attorney General, calls the additives a "blatant" scam. He and about 40 other attorneys general from across the country have teamed up to investigate the industry. North Carolina's Roy Cooper is also among them. His office has received more than 600 consumer complaints about vehicle service contracts over the last two years. Earlier this year, Cooper sued a New Jersey company called Automotive Protection. "It's a very difficult economic time for people," Cooper says. "So someone who comes a long and says hey for a little bit of money every month we can protect you from that big expense that might stop you from being able to drive your car, people can easily be taken in by such advertising." Cooper says he's currently investigating USfidelis. Missouri's suit against the company is still pending. That lawsuit also accuses the company of violating Do Not Call rules. USfidelis says it stopped making calls in July of 2008. Since then, the number of TV ads for vehicle service contracts has increased significantly. USfidelis and StopRepairBills.com also sponsored NASCAR teams in 2009. For James McGill, the hassle with USfidelis came at a bad time. His wife had recently died. He has diabetes and gets by on Social Security and a part time job that he says buys him a tank of gas a week. "I think they was just hoping by my age and everything, thinking that I would just give up and say 'oh heck with it', forget it," McGill says. Instead, McGill filed a complaint with the Better Business Bureau. He ended up getting a refund. He used that money - and about $500 more - to get a used transmission for his car. The whole process took two months. USfidelis refused our request for an interview and would only answer questions by email. The company says it's adjusted operations to "lead this industry into a new era where customers come first." Regarding Mr. McGill, the company said only that it was "sorry that Mr. McGill feels that way." As for all those complaints on file at the Better Business Bureau, USfidelis says they represent a small fraction of its customers. StopRepairBills.com did agree to an interview. Mike Carter is a spokesman and an attorney. He acknowledges there has been a cloud hanging over his industry. But says "I think the cloud is thinning quickly. And there is probably some thanks to regulators and the BBB and companies like us who set up and make sure things are done rightAnd the VPA the Vehicle Protection Association is working hard to make sure that anybody who is not working toward a thinning of that cloud - clear skies - won't be able to be around." The VPA, by the way, is a new trade group. Carter says StopRepairBills.com is an industry leader in doing things the right way. It's also one of the companies the Missouri Attorney General sued last month.