'Take the time to listen to customer complaints'

Scandals at a few companies that sold extended-service contracts directly to consumers potentially reflect badly on the whole industry, including dealerships that sell the contracts.

Larry Hecker, an industry certification specialist, is campaigning to repair whatever damage may have been done to the reputation of the service contract industry.

Hecker is executive director of the Vehicle Protection Association, a trade group in Selbyville, Del. The group was founded in 2008 specifically to introduce industry standards of conduct and a certification program for companies that sell extended-service contracts, especially those that sell directly to the public.

Hecker says his group's efforts are paying off. Consumer complaints related to extended-service contracts are down, at least in the state of Missouri, he says. The 2010 bankruptcy case of a Missouri company, U.S. Fidelis, brought notoriety to extended-service contracts and direct-to-consumer marketing. The Vehicle Protection Association has said it supports criminal charges against the founders of U.S. Fidelis. The founders were indicted earlier this year.

Before his involvement with the VPA, Hecker was president of the Motorist Assurance Program, a group that advocated a certification approach for independent auto-repair shops.

Special Correspondent Jim Henry spoke with Hecker by phone last week.

The Vehicle Protection Association's Web site, vpanet.org, says consumer complaints about service contracts are down. On what do you base that?

That's based on Missouri figures. Service contracts were the No. 1 complaint category, but now they no longer are. [The Missouri attorney general reported extended-service contracts were the No. 1 complaint category in 2009. Last year they dropped to No. 10. The top complaint category in 2010 was debt collectors.]

What specifically do people complain about?

A lot of complaints are over the methods of marketing. Sometimes they say, "We're getting more calls after we asked them not to call us anymore" or "Why are they calling me?" It's frustrating for consumers not to have a response.

That has started to change, as more companies have gotten certified and adopted the standards of conduct.

Do people call your organization?

We get inquiries from individuals asking how they can buy service contracts. Those have grown. People see the name of the organization and they figure that's who they should call.

You get complaints, too, right?

Questions come up concerning claims. "Should this be covered? Shouldn't this be covered?"

Do you tell them to call their administrator?

Usually I ask if they have contacted their administrator. A lot of people have never read their contract and don't know who their administrator is.

Are you set up to handle consumer complaints?

When I get a complaint, usually I will contact the company. I tell them their customer contacted me and would they please contact their customer and follow up with me. That's what I do for companies that are members.

How many calls do you get?

There's probably five to eight per week. Most people find us through our Web site.

How did you get started at this?

That's what I do. I start and run organizations whose industry needs certification. Previously, I was with Motorist Assurance Program. They have a Web site, Motorist.org. You could check it out. It's pretty substantial; there have been almost 8,000 stores involved.

Managers can learn a lot if they take the time to listen to customer complaints.

When it comes to customer mediation, I have always kept telling the stores to deal with problems now. Don't let them fester.