The Federal Trade Commission has filed a federal lawsuit against a Florida-based vehicle warranty firm and related companies, charging that the firms’ telemarketers illegally said they represented car manufacturers and bilked consumers out of more than $6 million.
“AVP blasted consumers with illegal calls and made bogus claims about bumper-to-bumper warranties,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in a statement this week. “The truth is that the warranties didn’t come from the manufacturer, didn’t cover the repairs people needed, and weren’t sold legally. We are holding AVP accountable.”
AVP and its owners immediately counter-sued the FTC, seeking a declaration that the agency had overreached and had based its complaints on flawed information from a whistleblower who is a convicted felon.
“AVP uses telemarketing to market and sell vehicle service contracts administered by a third party and backed by an insurer,” the warranty company’s complaint reads. “In other words, AVP sells an actual product—legitimate extended auto warranties on which consumers may—and in fact do—make claims for repairs that are covered. There is no doubt that a benefit is conferred on consumers.”
The FTC made its concerns known to AVP last year, and the warranty company said it revamped its policies and procedures accordingly, then stopped all sales efforts in November. Company leaders then hired a consulting firm, which retrained telemarketers in compliance with federal telemarketing laws.
Nonetheless, the FTC commissioners voted 4-0 to file the suit in the U.S. District Court for the Southern District of Florida, arguing that companies continue to violate the law. The move is part of a larger crackdown by the FTC on what it calls deceptive trade practices that have lured consumers into paying for subscriptions, warranties and other services.
The agency appears to pull no punches in its complaint against the auto warranty firms.
The lawsuit said that Pompano Beach-based AVP violated federal law by calling consumers whose phone numbers are on the national Do Not Call Registry. The telemarketers also falsely promised a full warranty for less than $3,400 and that consumers could receive a full refund within 30 days if they weren’t happy with the warranty plan. But the refunds are never sent, the complaint said.
The company also used remotely created checks to obtain money from people, which is considered an illegal method of payment, the FTC said. The commission is asking the court to issue an order barring AVP from continuing in its telemarketing practices.
The defendants named in the suit, all based in Florida, are: 1) American Vehicle Protection Corp.; CG3 Solutions Inc., also d/b/a My Protection Plan Inc.; Tony Allen Gonzalez, individually and as an owner, officer, and/or manager of American Vehicle Protection Corp., CG3 Solutions Inc., and Tony Gonzalez Consulting Group, Inc.; Tony Gonzalez Consulting Group, Inc., also d/b/a The Gonzalez Group; Charles Gonzales, individually and as an owner, officer, and/or manager of American Vehicle Protection Inc. and CG3 Solutions Inc.; Daniel Kole, individually and as an owner, officer, and/or manager of American Vehicle Protection Corp. and Kole Consulting Group, Inc.; and Kole Consulting Group, Inc.
Telemarketers pitching the extended warranties, also known as “mini insurance policies,” have become notorious around the country. AVP has been the subject of numerous complaints filed with the FTC and with the Better Business Bureau, the FTC complaint notes. Two of the principals of the defendant companies, Tony Gonzalez and his brother, Charles, had previously been ordered by the Florida Office of Insurance Regulation to cease operating an illegal auto warranty business, the lawsuit notes.
Tony Gonzalez and Daniel Kole could not be reached for comment by the Insurance Journal Thursday morning.
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