Office of the Attorney General News Release Archive

Thursday, August 31, 2000

CORNYN ANNOUNCES $100,000 SETTLEMENT WITH DECEPTIVE WARRANTY COMPANY

AUSTIN - Texas Attorney General John Cornyn today announced a settlement with Warranty USA to prohibit violations of the Texas Telephone Solicitation Act. The State alleged that Warranty USA violated Texas laws in using deceptive sales tactics and failing to post a bond with the Secretary of State's office.

"Businesses which operate through deceptive advertising tactics will not be tolerated. My office is constantly on the lookout to protect consumers and enforce the law," said Attorney General John Cornyn.

Warranty USA mailed out postcards to automobile owners asking them to call a 1-800 number for warranty and safety information. Consumers were led to believe that the postcard was some type of manufacturer's recall notice. However, when consumers called the 1-800 number, they did not get warranty information; instead they were solicited to purchase extended service contracts for their vehicles. The lawsuit alleged that Warranty USA engaged in deceptive advertising by failing to disclose in the postcards that it was selling extended service contracts in its initial solicitation to consumers.

Also, the Texas Business and Commerce Code requires that all telemarketers post a $10,000 bond with the Secretary of State's office prior to engaging in telephone sales. Warranty USA did not post the required bond.

Under the terms of the settlement:

    1. Warranty USA will provide refunds to individuals who canceled their transactions with Warranty USA during the refund policy period, yet failed to get their money back. Warranty USA already has provided over $10,000 in refunds to consumers who filed complaints with the Office of the Attorney General. Consumers who purchased the extended service contracts and canceled the purchase within the cancellation period may file a complaint with the Office of the Attorney General's San Antonio Consumer Protection Division, at 115 E. Travis, Suite 925, San Antonio, Texas 78205-1605, (210) 225-4191. 2. Warranty USA will register with the Secretary of State and post the required bond before conducting further telephone solicitations in Texas. 3. In any future solicitations, Warranty USA must disclose the clear purpose of its solicitations to consumers in its advertisements and disclose that Warranty USA is not associated with any vehicle manufacturer. 4. Warranty USA will pay the State of Texas $90,000 in civil penalties and attorney's fees.

The settlement was in the form of an Agreed Permanent Injunction and was filed and approved today in Bexar County District Court. Assistant Attorney General Aaron Valenzuela, in the Attorney General's Consumer Protection Division, San Antonio Regional Office, handled this case.

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Contact Mark Heckmann, Heather Browne, or Tom Kelley at (512) 463-2050
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