Kresgeville car owner: Don't count on this warranty company
When Lawrence Rapp's transmission blew, he never thought his extended warranty would give him extensive aggravation.
The 73-year-old Kresgeville resident bought a Chevrolet Aveo LT fully loaded five years ago. About two years ago, he received a direct marketing pitch from U.S. Fidelis offering an extended warranty for the transmission, which he bought for $2,780.
About two weeks ago, the Aveo's transmission blew up. The cost to replace it: $3,000.
He contacted Fidelis, which sent out an adjuster. The company came back to Rapp and said it was denying his claim.
"They said I abused it," Rapp said.
The 5-year-old car has 16,700 miles on it, or 3,340 miles a year. Rapp insisted the car was in great shape.
"I had a car for 31 years, a Buick Electra 225, 171,000 miles on it," Rapp said. "I bought it brand new and took pretty damn good care of it. Then they tell me I have a car for five years and I abused it?"
When Rapp complained, he said a representative for Fidelis hung up on him. So he called General Motors in Detroit, maker of the car, and was assigned a case number.
"A woman (from GM) called me back two days later this week. And all of a sudden they (Fidelis) turned around and said they'd pay me."
The General Motors representative apparently brokered a deal between U.S. Fidelis and Rapp. The insurer agreed to pay $2,500 and Rapp would pay $500. That's $400 more than he was required to pay after his $100 policy deductible.
As it turns out, U.S. Fidelis has a history of consumer abuses. The company agreed in November 2010 to a multi-state settlement, including Pennsylvania, over illegal business practices.
U.S. Fidelis is a Missouri-based company accused by 11 states of using deceptive and misleading tactics to sell used car warranties. The company was also accused of disregarding "Do Not Call" rules by generating an estimated one billion unwanted sales calls.
Fidelis, in the midst of bankruptcy proceedings, is owned by brothers Darain E. Atkinson of Lake Saint Louis, Mo., and Cory C. Atkinson of Wentzville, Mo. According to the settlement, the brothers agreed to surrender at least 90 percent of their assets, about $10.5 million in personal assets and millions in additional valuables, including Darain Atkinson's 40,000-square-foot mansion; a 50-foot yacht and 10 other boats; 11 automobiles; 14 motorcycles; and assets related to 20 different corporations, according to the Pennsylvania Attorney General's Office.
The Atkinsons are also permanently prohibited from telemarketing in Pennsylvania, or any of the other states involved in the settlement, and they may not be involved in the mass marketing or sale of vehicle service contracts in those states. U.S. Fidelis could not be reached for comment.
"Any time a customer is looking to make a purchase and add a parts-and-service agreement or extended warranty, we recommend that you buy it from a dealer," said Chris Andreas, general manager at Brodheadsville Chevrolet, where Rapp bought his car and the transmission is being replaced.
Andreas said when you buy from a dealer, you can meet with a representative face-to-face instead of talking to someone on the phone you've never met before, as is the case with third-party warranty providers.
Brodheadsville Chevrolet sells a lot of these warranties, according to Andreas, through either General Motors or a company called First Extended. Andreas said the biggest mistake consumers make with extended warranties is failing to maintain their cars.
"This doesn't take into neglect," he said. "If you don't maintain the car well, it doesn't matter where you buy the warranty from."
Anyone having a problem with an extended warranty should file a complaint with the Pennsylvania Attorney General's Bureau of Consumer Protection at www.attorneygeneral.gov/complaints.aspx?id=451.