Extended Warranty Company CarSafe Agrees to Pay Over $100,000 in Restitution and Penalties, and to Cease Making False Representations
October 9, 2012
ATLANTA, GA – John Sours, Administrator of the Governor’s Office of Consumer Protection (“OCP”), today announced that the CarSafe LLC and its principals, Mark Eckman and Nils Flodberg, have entered into a settlement with the agency. The Oklahoma City-based company, which markets vehicle service contracts to consumers nationwide, is alleged to have disseminated misleading direct mail solicitations and misrepresented material terms of its vehicle service contracts to Georgia consumers, in addition to violating a previous agreement with OCP.
The agency believes that CarSafe’s direct mail solicitations falsely represented: that its vehicle service contracts would “extend” consumers’ factory warranties; that the company was affiliated with vehicle manufacturers; and that a consumer’s vehicle warranty had expired or may be about to expire when knowing this was contrary to fact. CarSafe was also charged with making further misleading statements to create a false sense of urgency among consumers. What’s more, when Georgia consumers called the phone number on the mail solicitations, CarSafe’s salespeople allegedly claimed that 100% of car repairs were covered under its contracts, which was not true, and failed to disclose all the terms of its refund policies.
In settlement of this matter, CarSafe and its principals have signed an Assurance of Voluntary Compliance, requiring them to pay a $30,000 civil penalty, $20,000 for investigative expenses and $50,000 in consumer restitution. In addition, CarSafe will provide cy pres restitution in the amount of $25,000, to be paid to the Georgia Governor’s Office of Workforce Development’s “Go Build Georgia” Education Foundation, for use in funding auto repair training programs.
The Governor’s Office of Consumer Protection offers the following tips to consumers on avoiding unscrupulous extended warranty companies, such as those involved in this case:
- If you are notified that your vehicle’s warranty is expiring, check to see if your own records substantiate that.
- Only the manufacturer can extend its original warranty. A separate company can provide you with a vehicle service contract, also called an “extended warranty”, but you should understand that it is not a continuation of the warranty you had under the vehicle manufacturer. If a company tells you otherwise, don’t believe it.
- Understand who you are dealing with. Is it the vehicle manufacturer? Is it a separate service contract provider? Or is it a third party who is only responsible for selling the warranty, but not administering it? If it is a marketing company, ask for the name of the company who will be administering the contract. If they won’t provide you with that information, don’t give them your money.
- Make sure you understand what issues would and would not be covered under the contract, clarify any vague or confusing statements, and always ask to see the contract in writing (and read it in full!). If a company says they cannot provide you with anything in writing until the deal is finalized, walk away.
- Evaluate whether the price being offered is really a good deal for you. Consider your vehicle’s age, mileage, the reliability of the make/model, your own track record with the vehicle, and how much you expect to pay on repairs and maintenance in a year. Also, consider any deductibles you would have to pay. Many extended warranties have deductibles on each claim, as opposed to an annual deductible.
- Beware of high pressure sales tactics, such as stating that if you don’t act immediately, the “special” rate you’re being quoted will no longer be available.
- Do not give out your bank account information or social security number over the phone.
- Check out the company with the Better Business Bureau (www.bbb.org) to see if there have been any complaints lodged against it.