Ohio Auto Warranties
Ohio is a state that is very serious about consumer protections, and is one the dozen or so U.S. states that are at the leading edge of the fight against scams and frauds. In addition to monitoring the claims of infomercials, especially ones making medical and health claims for their products, the Ohio Attorney General (AG) announced lawsuits in early 2010 against several firms marketing vehicle service contracts.
The Attorney General, Richard Cordray, joined his counterparts in eight other states (and Washington, D.C.) to sue several high-profile companies that had been playing fast and loose with the law, in some cases even deliberately defrauding consumers by misrepresenting coverage and service. In Ohio and many other states there is a strict legal distinction between what are called extended warranties and what are called service contracts. Cordray claims in the suit that these firms were saying that their service contracts were actually comprehensive warranties.
Huge numbers of complaints
Two national firms that are being sued together by the multi-state team of Attorneys General are accused of using misleading statements in advertising and selling service contracts administered by other, separate companies. Consumers in Ohio and the other eight states filed scores of complaints against all of these parties. The Attorneys General reported that many buyers did not even need the service contracts, some contracts did not cover necessary repairs and numerous consumers could not get refunds of their payments after canceling their contracts according to the companies’ own rules.
Along with the multi-state case, Ohio Attorney General Cordray also filed a lawsuit alleging that yet another company had misrepresented itself and its products. Selling high-end coverage, the firm charged as much as $2,500 for service contracts with supposedly bumper to bumper protection. However, the company never clearly explained that particular repairs were not included, and routinely denied claims for repairs that were listed as being covered. Since this particular company is now out of business, buyers of their service contracts have nothing of value for the many, many dollars they paid to this fraudulent enterprise.
Back to basics (again)
It is quite noteworthy that the Ohio Attorney General gives consumers the same warnings about shopping for and buying extended warranties as leading extended warranty and service contract firms do. The first thing a reputable firm does is follow the laws of the nation, and of the state(s) in which it is doing business, by referring to its product in the prescribed manner. (Remember, states define the terms warranty and service contract somewhat differently.) Whatever the facts are in a particular state, this is how honest, upstanding warranty firms will act, and the law will guide them as to how to describe their products and services, and what state agency will have oversight (the insurance commissioner in two states, consumer agencies in many others and ultimately the AG in all).
Just as sales representatives at reputable dealerships or warranty firms would do, Ohio’s top law enforcement officer reminds consumers to read the entire contract, including (perhaps especially) the fine print. In Ohio, as in more than a few others, anything called a factory warranty or an extended warranty must be offered, sold and backed up by automobile manufacturers. It is different in some other states, which is why you need to read materials specifically addressing the laws where you live.
The lawsuits that Ohio brought against these companies note that the firms broke a variety of laws, including multiple portions of the state’s Consumer Sales Practices Act. In addition to withholding important terms, exclusions and conditions from marketing materials and ads, the companies also failed to substantiate many of the advertising claims they actually did make. They are also accused of failing to deliver products or services that had been paid for, as well as for gross misrepresentation. Finally, two of the involved companies are also being sued for numerous telemarketing violations, from continuing to call consumers listed in Ohio’s Do Not Call Registry to failing even to register as a telemarketer as required by the Ohio Telephone Solicitation Sales Act.
Reputable warranty and service contract firms do not defraud their customers, make spurious claims or run off to the Cayman Islands with ill-gotten gains. There are plenty of these companies with long-term good ratings from the Better Business Bureau and other consumer watchdogs. No leading warranty or service contract provider will ever shrink from giving you a copy of the agreement to take home and read, or promise things that are not included in it. In every line of business, you have your bottom-feeders and shadow-dwellers, so check out the companies you are dealing with, and put in a call to your state’s Attorney General’s office if you like. Honest people and honest companies will never have a problem with your doing that!