- Category: Texas Legislature
- Published on 20 July 2012
- Written by Lillie Bush-Reves
Texas Attorney General Obtains Relief for Thousands of Texans Scammed By Company Marketing Auto Service Contracts
Texas Attorney General Greg Abbott today issued a joint announcement with Attorneys General of Washington, Ohio, Missouri and eight other participating states on the bankruptcy liquidation plan for U.S. Fidelis – a former nationwide vehicle service contract marketer. The Missouri court ordered $14.1 million restitution fund in U.S. Fidelis case.
Attorney General Abbott said:
“U.S. Fidelis misled thousands of Texas vehicle owners by selling them unnecessary and worthless vehicle service contracts. The company has since been shut down, their illegal activities have been halted, and a customer restitution fund has been established to help eligible Texans who were defrauded by U.S. Fidelis seek refunds.”
U.S. Fidelis misled car owners into believing it was affiliated with vehicle manufacturers and that the owners’ warranties were about to expire. U.S. Fidelis’s telemarketers then falsely claimed that the vehicle service contracts it marketed provided the same protections as new car warranties. While service contracts do not provide nearly the same repair coverage as new car warranties, the company led purchasers to believe they were getting the equivalent of “bumper to bumper” coverage as with new vehicles. The company failed to disclose the fact that its products did not provide the same coverage as ordinary vehicle warranties. U.S. Fidelis also flooded the market with deceptive junk mail, made thousands of robo-calls and produced misleading TV ads.
The federal bankruptcy court in St. Louis, Mo., established an initial $14.1 million restitution fund to provide compensation to eligible customers, including 69,000 who reside in Texas. Attorney General Abbott filed an enforcement action against U.S. Fidelis in April 2010 to halt the firm’s unlawful marketing of vehicle service contracts in the state of Texas.
The company was shut down during bankruptcy proceedings and its assets were liquidated to benefit creditors. In the meantime, U.S. Fidelis partners -- brothers Darain and Cory Atkinson -- were criminally indicted in Missouri. They surrendered 100 percent of their personal assets to partially fund the consumer restitution fund.
Consumers may obtain more information by visiting the U.S. Fidelis bankruptcy web site at www.usfbankruptcy.com. The site offers a “frequently asked questions” tab, toll-free telephone numbers for questions about the fund and a proof of claim form with instructions for consumers who wish to submit a claim to the fund. The deadline for submittals is Oct. 5, 2012.