The Better Business Bureau (BBB) is urging dissatisfied customers of US Fidelis
to continue to pursue refunds and settlements with the company even though it filed for bankruptcy on Monday.
The BBB suggests that consumers with questions about their contracts first contact US Fidelis and the third party administrators who are managing their vehicle service contracts. If they cannot get satisfaction, they should contact the BBB’s St. Louis
office and the Missouri attorney general’s office
. They also may want to file a claim with the U.S. Bankruptcy Court in St. Louis, the BBB said.
US Fidelis, once regarded as the nation’s top seller of extended auto service contracts, filed for bankruptcy protection on March 1. In less than a year, between April 2009 and late February 2010, the number of employees dropped to slightly more than 100 from a peak of 1,100.
A customer service representative with Tier One Warranty, one of the administrators for which US Fidelis sold contracts, said the bankruptcy filing should not affect the handling of service contracts for consumers. “Absolutely not,” she said.
US Fidelis is owned by brothers Darain and Cory Atkinson.
The 7-year-old company first came under serious public scrutiny last April when the St. Louis BBB issued a news release
raising concerns about that company and several similar businesses operating in the St. Louis area. At that time, the BBB reported that it had received more than 1,100 complaints against US Fidelis in the previous 36 months.
Consumers told the BBB they felt misled and pressured into buying vehicle service contracts that they either did not need or which they later learned did not provide the coverage they had expected.
The April 2009 BBB warning prompted a flurry of publicity about the company and the industry, with local and national media reporting on customer problems.
Three months later, the BBB issued a second news release
, noting that complaints against US Fidelis had actually increased despite promises from CEO Chris Riley that officials would “clean up everything” with the company.
When the bankruptcy petition was filed, the BBB had recorded
more than 1,700 complaints against the company in the past 36 months. The bankruptcy filing came on the heels of a news report in the St. Louis Post-Dispatch noting that the company recently had stopped issuing refunds to customers.
At about the same time the company stopped issuing refunds, US Fidelis stopped responding to complaints filed with the BBB. Records show that US Fidelis last responded to a BBB complaint on Jan. 28, 2010. In the month that followed, customers filed nearly 60 complaints against the company.
By late last fall, financial problems began to result in employee layoffs. Earlier this year, the company announced it had stopped selling service contracts altogether.
The 440-page bankruptcy filing identifies about 1,500 creditors, including hundreds of US Fidelis customers who may be owed cancellation refunds. Other major creditors and the amounts owed include Chicago-based MEPCO Finance Corp., $14.5 million; a Pennsylvania TV advertising agency, $7.3 million; the law office of John Ashcroft, $668,000, and Rusty Wallace Racing, $535,000.
According to the filing, the Atkinson brothers or their affiliated real estate companies owe US Fidelis more than $65 million. If aggressively pursued in the bankruptcy court, that money could be used to satisfy creditors, including consumers with claims against the company.Contacts:
Michelle Corey, President & CEO, 314-645-3300, email@example.com
or Bill Smith, Trade Practice Investigator, 314-645-3300, firstname.lastname@example.org