US Fidelis, Inc., a company using high-pressure tactics to sell extended auto warranties, is now under indictment by the Missouri Attorney General’s office, and has prompted a nationwide investigation of extended auto warranty providers. US Fidelis, which has operated under a number of different names, is accused of misleading advertising and violations of federal telemarketing laws, and has earned an “F” rating from BBB.

U.S. Fidelis Inc., which is located in St. Louis, Missouri, has also operated under the names National Auto Warranty Services Inc., Dealer Services, N A W S, Dealer Warranty Division and Us Fidelis Administration Services Inc. It has been the subject of 955 BBB complaints in the last 36 months. According to its BBB report, under the name Dealer Services it was sued by the Missouri Attorney General in 2008 for sending consumers postcards and letters telling them that their warranties were about to expire and offering them a “final chance” to buy a renewed extended auto warranty. The lawsuit claimed that the company failed to inform consumers that it was not affiliated with the dealers or manufacturers of the vehicle, and that it was selling motor vehicle extended service contracts instead of warranties. In addition, the company violated the Missouri No-Call Law by calling Missourians who were on the no-call list as well as violating federal telemarketing laws by contacting consumers by phone and failing to honor their requests not to be called.

More recently, US Fidelis Inc. has been sued by the Missouri State Department of Insurance and has settled a lawsuit brought by Verizon Wireless. According to an April 30th article in the Saint Louis Dispatch, the Verizon lawsuit claimed that National Auto Warranty Auto Services (US Fidelis’ previous name) and its telemarketer Voice Solutions conducted an illegal telemarketing campaign in which nearly 3 million unsolicited calls were made to Verizon cell phone customers from January to June 2008. Telemarketers were alleged to have used an auto-dialer and “spoofing techniques” to mask the origin of the calls.

BBB reminds consumers that an “extended warranty” is not a warranty as defined by federal law, but rather a service contract. A warranty comes with a new car and is included in the original price. A service contract can be arranged at any time and always costs extra. If you are thinking of getting a service contract for your car, BBB suggests you ask the following questions:

• Who backs the service contract? It may be the manufacturer, dealer, or an independent company. Many service contracts sold by dealers are handled by independent companies called administrators. Administrators act as claims adjusters, authorizing the payment of claims to any dealers under the contract.

• What is the cost of the service contract? Usually, the price of the service contract is based on the car make, model, condition (new or used), depth of coverage and length of contract. The cost of the service contract can range from several hundred dollars to more than $2,000. In addition, you may need to pay a deductible each time your car is serviced or repaired.

• What is covered and not covered? Few auto service contracts cover all repairs. Watch out for absolute exclusions that deny coverage for any reasons. For instance, if the contract specifies that only “mechanical breakdowns” will be covered, problems caused by “normal wear and tear” may be excluded.

• How are claims handled? When your car needs to be repaired or serviced, some service contracts permit you to choose among several service dealers or authorized repair centers. Others require the car owner to return the vehicle to the selling dealer for service. Find out if you will need prior authorization from the contract provider for any repair work or towing services. Ask how long it will take to obtain authorization and whether you can get authorization outside of normal business hours.

• What are your responsibilities? Under the contract, you may have to follow all the manufacturer’s recommendations for routine maintenance, such as oil and spark plug changes. Failure to do so could void the contract. To prove you have maintained the car properly, keep detailed records, including receipts. Find out if the contract prohibits you from taking the car to an independent station for routine maintenance or performing the work yourself. The contract may specify that the selling dealer is the only authorized facility for servicing the car.

• What is the length of the service contract? If the service contract lasts longer than you expect to own the car, find out if it can be transferred when you sell the car, whether there’s a fee, or if a shorter contract is available.