For immediate release - Wednesday, January 2, 2002.
Contact Bob Brammer - 515-281-6699.
Miller: Caution on "Warranty USA"
CEDAR RAPIDS. Attorney General Tom Miller is warning Iowans to be wary of official-looking mail solicitations and
hard-sell telemarketing tactics being used by a company called Warranty USA.
"We are investigating whether the company is violating Iowa's Consumer Fraud Act, and we are encouraging Iowans to
contact us if they have complaints," Miller said. Warranty USA, of Las Vegas and Seattle, already is making refunds to
some Iowans, he said. The Securities Bureau of the Iowa Insurance Division is working with Miller's office in the
Miller said Warranty USA is sending post cards that some Iowans take to be official notices about their manufacturer's
auto warranty or even a safety recall. The cards include the year and make of car and vehicle identification number. Card
recipients are advised to "call at your earliest convenience concerning your vehicle."
"The card itself is misleading to some, but it is just the start of several practices by Warranty USA that we consider to be
questionable and possibly illegal," Miller said. "When people make the phone call, they are subjected to a classic, hard-sell telemarketing pitch urging them to buy the company's extended warranty auto service contract. Then the problems
begin," he said.
Miller listed several concerns his office is investigating:
- Questionable representations by the telemarketers, such as misrepresenting the coverage offered by the service plan
and terms for cancellation and refunds.
- Unauthorized charges to consumers. Some were signed up even though they declined or did not believe they were
accepting the offer. Others were charged for completely unrelated products, such as health insurance billed
automatically to consumers' accounts. "We are concerned that the company may be deceiving some older Iowans,
because this kind of charge sometimes was only noticed by adult children helping aging parents," Miller said.
- Problems with the service plan. "Consumers tell us the plan is portrayed as 'bumper-to-bumper,' but in reality it is full
of exclusions and may be virtually useless," Miller said. Consumers have had difficulty reaching the company,
obtaining refunds if they tried to cancel, and receiving payment for repairs.
- Questionable credit card practices. "We believe Warranty USA telemarketers may be obtaining people's credit card,
debit card, or checking account numbers by making misrepresentations early in the phone call," Miller said -- for
example, by telling people they needed the account information for "verification" purposes. Iowans also have
complained that deductions were made from their checking accounts without authorization after they gave checking
account information to Warranty USA telemarketers.
Miller said Warranty USA has made 37 refunds so far to Iowans ranging from about $95 to $1300 and totaling
$17,135.62. If Iowans paid the entire warranty cost "up front," the cost could range up to about $1500. Other consumers
made initial payments ranging from $250-300, and then made monthly payments of about $50-60 per month. The charge
for the health insurance usually was about $95 per year.
Miller said his office has received about 150 consumer contacts about Warranty USA, including complaints and many tips
from Iowans who provided the post cards which they considered misleading after they made the call to Warranty USA.
Miller said his office's Consumer Protection Division is seeking an Iowa customer list from Warranty USA. He also
encouraged Iowans to contact his office if they have complaints. The phone number is 515-281-5926. Iowans also can
find complaint forms and information online at www.IowaAttorneyGeneral.org (click on "Protecting Consumers.")
"This is under investigation," Miller said. "Meanwhile, consumers should feel free to discard the Warranty USA post
cards and should be careful about the company's sales tactics."
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