The case dates back to extended-service contracts sold in 2008 and 2009 by Enterprise, which did business as Dealership Services. According to prosecutors, Enterprise, which was based in St. Charles, Mo., went out of business.
The settlement was reached with officers and former owners of the business. They did not admit any wrongdoing as a condition of the agreement. Defendants William Webb, Tina Smith and Dustin Davis were ordered to pay $53,177. Another defendant, Jonathan Stubblefield, was permanently enjoined from selling unlawful auto service contracts in Missouri.
Most of the money goes toward consumer refunds, the attorney general's office said in a written statement on March 15. The state attorney general and state Department of Insurance, Financial Institutions and Professional Registration filed the complaint in the case.
According to state officials, the company solicited customers by phone, promising they would save money on future repair bills. "Typically, a bottle of ordinary oil additive was mailed to the consumer with the written contract that only provided very limited breakdown protection and had no relationship to the performance of the product in the bottle," the state attorney general's office said.
Phony additive warranties pose a threat to legitimate extended-service contracts sold at dealerships because they reflect on the reputation of all service contracts, according to the Service Contract Industry Council, a group in Tallahassee, Fla., that represents some extended-service contract administrators and captive finance companies.
Missouri started cracking down on shady extended-service contract administrators and toughened its laws governing the sales and marketing of the contracts following the 2010 bankruptcy of US Fidelis, a Missouri company that sold service contracts nationwide.