Oklahoma Commissioner Halts Auto Warranty Company Operations

April 21, 2009

Oklahoma Insurance Commissioner Kim Holland has issued an Emergency Cease and Desist Order against VSI Vehicle Services Inc. for allegedly attempting to sell insurance products in violation of Oklahoma law, the insurance department announced.

Holland initiated an investigation after the company randomly called an insurance department anti-fraud investigator at her home. After receiving the call at home, the investigator became suspicious upon receiving inconsistent answers to her questions from a sales associate and her supervisor. Holland launched an investigation into the company and immediately filed for a cease and desist order after discovering the organization is not a licensed service warranty provider in the state.

Holland said that a company that is properly licensed ensures its authenticity and legitimacy. She added that in order for a service warranty company to obtain a license in the state it must be solvent and own a bond to ensure it can honor the claims filed on its policies. In addition, the department is able to monitor and regulate the market conduct of licensed companies to ensure they act in an honest and ethical manner.

The Missouri-based organization frequently sells service warranty contracts by randomly calling potential customers at home and soliciting their products under the guise of an expired warranty.

The recorded call received by the insurance department investigator stated, “This is your second and final reminder that your vehicle warranty is about to expire.”

After staying on the line, a customer service representative spoke with the investigator and attempted to sell her a service warranty for her vehicle.

According to the commissioner’s order, the company’s employees “confuse potential consumers by advising them of different names of the company and [informing them] that they are licensed in Oklahoma.”

These are false and misleading statements and constitute “unfair or deceptive acts in violation of Oklahoma law,” the order goes on to say. However, Holland has also ordered the company to honor any contracts that have been signed to date.

Holland is urging anyone who purchased a product from the company to immediately contact the Oklahoma Insurance Department.

The company has 30 days from the issuance of the order to request a hearing before the Commissioner to vacate the order. Each violation of the order could result in a $25,000 fine and/or payment of restitution to the victim.

Source: Oklahoma Department of Insurance

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