Minnesota Attorney General Lori Swanson on Monday sued a Missouri-based company that she said used deceptive practices to sell costly and unnecessary vehicle service contracts to Minnesotans.
United Auto Defense LLC sent postcards to consumers that wrongly suggested their vehicles needed repairs or their manufacturer warranties were about to expire, the attorney general's office said. The postcards looked like they were from a car manufacturer or dealership.
United Auto Defense allegedly sold service contracts, priced as high as $4,750, to people whose vehicles were covered by manufacturer's warranties and that specifically excluded payments for repairs covered by such warranties.
"They are often like Swiss cheese; they are full of holes," Swanson said about United's contracts during a news conference.
United Auto Defense could not be reached for comment.
The attorney general's office said it is aware of about two dozen Minnesota residents who complained about United Auto Defense's practices. Some of the mailings were labeled "Technical Service Bulletin" or "Vehicle Alert Notice" and mentioned that people needed to call before an "inspection cutoff date" and that the alert was "very urgent and time sensitive." The postcards often included the receiver's make and model of the car, which made it even more believable to unsuspecting consumers, Swanson said.
When people called the phone number on the cards they were sometimes told their factory warranties had expired, Swanson said.
Brenda Zierden of Eden Prairie was contacted by United Auto Defense in 2014 a few months after she bought her Toyota Corolla, even though she had an extended warranty on the car. It wasn't until after she made a payment on a United contract that she figured out she didn't need the coverage. The company refused to cancel the contract.
"Don't fall for it," Zierden warned other potential victims. Swanson encouraged consumers to research warranties and thoroughly understand the terms and the length of their contracts.
"You are buying a promise with these companies," she said.
Monday's lawsuit was filed in Dakota County and seeks injunctive relief, civil penalties and restitution.