August 31, 2010

Department of Insurance joins lawsuit against US Fidelis for repair coverage scam

Jefferson City, Mo. - The Missouri Department of Insurance has joined a pending consumer fraud lawsuit filed by Attorney General Chris Koster against service contract seller US Fidelis. US Fidelis sold motor vehicle extended service contracts, sometimes called auto extended warranties, which are regulated by the Department of Insurance. In addition to extended service contracts, US Fidelis sold additive product contracts.

Department Director John M. Huff says his agency's involvement specifically targets what Koster calls the "additive scam," in which US Fidelis and other companies sell an additive and promise repair coverage. Huff says by offering additive products, US Fidelis has been selling insurance without a state license. He's asking the court to order refunds for thousands of consumers who bought the products.

"We always advise consumers to call our department to ensure that insurance companies, agents and products are licensed and authorized," says Huff. "These additive products may seem different, but if it looks and feels like insurance, it's insurance, and Missouri law requires licensing or registration and oversight."

The amended petition, filed in St. Charles County Circuit Court, and the state's claim filed in bankruptcy court, alleges 14 different state laws were violated by US Fidelis and its owners Darain Atkinson and Cory Atkinson. Huff's amendment alleges that US Fidelis' additive product contracts were actually illegal insurance contracts, sold without the insurance director's authorization and without an insurance license. 

Koster held two meetings earlier this year of an Auto Service Contract Task Force, which included Huff, legislators, car dealers and representatives of the service contract industry.

"During our task force meetings it has been made clear that these additive contracts, and the limited coverage they provide, were developed for the very purpose of evading insurance department regulation and the consumer protections that go along with it," said Koster.

Consumers with questions or complaints about additive purchases from US Fidelis should call the Attorney General's Consumer Protection Hotline at 800-392-8222 or visit ago.mo.gov. Consumers with questions about additives or service contracts sold by other companies should call the Department of Insurance Consumer Hotline at 800-726-7390 or visit insurance.mo.gov.

About the Missouri Department of Insurance, Financial Institutions & Professional Registration

The Missouri Department of Insurance, Financial Institutions and Professional Registration (DIFP) is responsible for consumer protection through the regulation of financial industries and professionals. The department's seven divisions work to enforce state regulations both efficiently and effectively while encouraging a competitive environment for industries and professions to ensure consumers have access to quality products.

###