Class Seeks $50M From Dealers Warranty

CHICAGO (CN) - A federal class action claims that Dealers Warranty - which agreed to "stop violating the 'no call' law" with "phone blitzes to millions of random households" - charges hidden fees that can claim more than half of the refund customers expect after canceling their policies. The class claims attorneys general in several states are investigating the company and its home state of Missouri "imposed a large fine" for its deceptive trade.

The class sued Dealers Warranty aka Mogi aka Federal Auto Protection, Warranty Finance and the companies' owner Brian Albert Marino.

Lead plaintiff Jonathan Sahim claims Marino charges $50 for canceling his alleged extended warranties, and fails to disclose a 10 percent "marketing fee" on the total cost of the contract, and interest, until after the customers cancel. He says the piled-up deductions took "more than 60 percent of his expected refund and over 25 percent of the total value of his contract."

Sahim claims that the "so-called 'marketing fee' has nothing to do with 'marketing,'" and that any reference to it is unclear and buried "in a tiny footnote."

The complaint claims that this is not the first time Dealers Warranty and Warranty Finance have come under scrutiny: "The Warranty Defendants are accustomed to having their unscrupulous business tactics come under legal attack. Recently sued by national phone companies for engaging in mass automated phone blitzes to millions of random households, the Warranty Defendants entered a consent decree to stop violating the 'no-call' law which was designed to prevent such illegal phone solicitations. Moreover, Congress recently held hearings on these same extended warranty service scams."

The complaint demands $50 million in damages. It lead counsel Bryan Waldman with Levin & Perconti.

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