Office of the Attorney General News Release ArchiveThursday, 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:
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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