Universal Underwriters Life Insurance Co. and Uni-versal Underwriters Service Corp. have agreed to pay a total of $205,000 to settle charges of payment packing in Washington state.
The Universal Underwriters companies are based in Over-land Park, Kan., and provide vehicle service contracts, subprime financing and business insurance for dealerships.
Universal Underwriters did not violate the law, but it decided to settle because prolonged litigation would not be in the best interest of its dealers, said spokesman John Weber.
The Washington Attorney General's Office last year had sued the companies, accusing them of training dealerships to inflate monthly payments on car loans and leases in order to make room for finance and insurance product sales. In a payment-packing scheme, the cost of aftermarket products is included in the payment without the customer's knowledge.
The $205,000 includes a $25,000 civil penalty, $80,000 in legal costs and $100,000 in restitution.
The state also has sued two other finance and insurance providers, also alleging payment packing: Associate Deal-ers Group of Bellevue, Wash., and Resource Dealer Group of Rolling Meadows, Ill. Those suits are pending, according to the attorney general's office.