Extended Auto Warranty Program Charged with Misleading and Deceiving Consumers

A so-called extended auto warranty company has been ordered to stop pitching their services upon allegations by the Federal Trade Commission that their product is misleading and deceptive to consumers.

A temporary restraining order has been issued against Fereidoun "Fred" Khalilian and his company, The Dolce Group Worldwide, LLC, d/b/a My Car Solutions. The FTC filed a complaint on June 2, 2010 against Khalilian and his Florida-based telemarketing operation promoting the extended warranty program, alleging that since at least 2009 they have been blasting consumers with robocalls peddling their deceptive product.

Robocalls, pre-recorded sales calls which have been illegal since September 1, 2009, are not allowed unless the consumer gives advance written permission to receive these types of sales pitches. Consumers who receive any unwelcome prerecorded call from someone trying to sell something should realize the caller initiated contact with you by breaking the law. Take that as a fair warning that it is likely to be a scam only after your money or personal identifying information.

The robocall law only applies to sales calls and does not apply to automated calls made strictly for informational purposes, such as a notification of a weather-affected school day or a doctor appointment reminder.

According to the FTC complaint, consumers received automated messages warning them that their auto warranty is about to expire, and instructed call recipients to "Press one" to speak to a representative. Upon being transferred, the defendant's telemarketers identify themselves as from the "service contract department," and proceed to "verify" information about the consumers' cars and "confirm" other information such as the consumers' zip code.

After giving up their information, consumers were then transferred to a "senior specialist" who allegedly made more misrepresentations about the company's affiliation with the auto manufacturer or dealer. The "senior specialists" would often even outright lie to consumers to convince them, making claims such as, "I'm from Honda," or "I'm from your authorized Honda dealer," the FTC says.

The FTC charges that only after the consumer paid for their supposed extended warranty - typically between $1,300 and $2,485 per warranty - and received their warranty papers in the mail would they find out that the warranty does not cover "the entire engine," or does not provide "bumper-to-bumper coverage," or excluded "pre-existing conditions," contrary to what they were promised by Khalilian's telemarketers.

The complaint charges the defendant with violating the law by falsely claiming: they are affiliated with the consumers' car manufacturers or dealers; they know the consumers original warranty is about to expire; they are offering an extension of the original warranty; and that the product they sell provides complete coverage for auto repair.

The FTC reports that in 2001, Khalilian was also involved in a separate settlement that banned him from all travel-related telemarketing and required him to pay $185,000 back to consumers for making deceptive sales pitches for travel packages.


Source:
Federal Trade Commission