How many times have you received a phone call from someone at “Dealer Services” seeking to sell you an extended warranty for your vehicle?
You might not receive them anymore, if the Federal Trade Commission gets its way.
The FTC is suing a Fort Lauderdale, Florida company it claims “bilked” customers out of more than $6 million over four years by making illegal sales calls to sell auto warranties that did not cover what its sales representatives claimed.
But American Vehicle Protection Corp. is fighting back. The company has filed its own suit against the FTC, claiming that the federal agency used flawed information to conclude that the company is operating a “scheme” to “bilk” consumers.
The company’s suit also claims that the FTC is overstepping its legal authority by seeking monetary relief on behalf of consumers. It cites a 2021 Supreme Court ruling from a separate case that found the company had no such authority under federal law.
The FTC’s complaint states that American Vehicle Protection Corp. called hundreds of thousands of customers over four years, pretending to represent their vehicles’ dealer or manufacturer while offering “bumper-to-bumper” or “full-vehicle” coverage for prices ranging from $2,800 to $3,400, the suit states.
A Toyota owner was told the caller was from Toyota, while a Jeep owner was told the sales rep was with “Chrysler/Jeep Dealer Services,” the complaint states.
“They also falsely claimed that consumers can get a full refund of their down payment or full payment within 30 days of buying the warranty if they are not happy with it,” an FTC news release said.
According to a statement by Samuel Levine, director of the FTC’s Bureau of Consumer Protection, “AVP blasted consumers with illegal calls and made bogus claims about bumper-to-bumper warranties.
“The truth is that the warranties didn’t come from the manufacturer, didn’t cover the repairs people needed, and weren’t sold legally. We are holding the AVP accountable.”
The company misrepresented which parts of consumers’ vehicles were covered by the warranties, the FTC’s complaint states. Consumers only see a long list of excluded parts and systems, the suit says, after they paid their down payment or initial payment.
Based on representations from the company, one customer tried to get an oil pump replaced while another tried to get struts replaced. Both were excluded from coverage, the FTC said.
The calls violated both the FTC Act and the FTC’s Telecommunications Sales Rule, the release said, adding that many of the targeted consumers were on the Do Not Call Registry.
The FTC’s lawsuit seeks monetary relief, including “rescission or reformation of contracts, the return of money, the return of property, or other relief necessary to redress injury to consumers.”
However, the company’s suit against the FTC claims it overstepped its bounds with that demand.
In a case that the FTC brought against AMB Capital Management LLC, the Supreme Court found in April 2021 that the FTC had no authority under federal law to obtain monetary relief.
By seeking money in this suit, the FTC “has doubled down on its abusive and incorrect enforcement methods,” the company claims.
The FTC also seeks a court order permanently barring further violations of the Telecommunications Sale Rule through “illegal and deceptive marketing,” as well as from remotely creating and depositing remote checks, from violating Do Not Call Registry rules, and from failing to pay fees required to access numbers on the registry and scrub them from their call lists, the release stated.
Co-defendants listed on the FTC’s complaint filed Feb. 9 in U.S. District Court in Fort Lauderdale were CG3 Solutions Inc., doing business as My Protection Plan Inc.; Tony Allen Gonzalez and Charles Gonzalez, owners, officers and/or managers of American Vehicle Protection Corp.; Tony Gonzalez Consulting Group; Sunrise-based Kole Consulting Group Inc. and its owner, officer and/or manager Daniel Kole.
In its lawsuit, filed on the same day that the FTC filed its complaint, American Vehicle Protection Corp. and nearly all of its co-defendants accused the FTC of building its case by relying on “flawed information.”
The case was built, the company claimed, on outdated Better Business Bureau “data” and “ratings” as well as “whistleblower” accounts from a felon whose convictions include, among other things, mail fraud, fraud on financial institutions, practicing optometry without a license, stalking, and grand theft. The suit does not identify the “whistleblower.”
The FTC’s suit states that consumers often do not get requested refunds until after their complaints to the Better Business Bureau are forwarded.
Complaints about the company on the Better Business Bureau’s website have been removed. A statement on the company’s page states, “This business profile is being updated.”
After learning about the FTC’s investigations, the company “took the allegations seriously” and last November “made the business decision to revamp [its] policies, practices and procedures,” the company’s suit states.
On Nov. 8, the company temporarily ceased operations and hired a third-party consulting firm to review and modify its sales practices, policies and procedures, its suit says.
The company’s attorney, Mitchell Roth, said in an emailed statement, “While AVP disagrees that it was violating the law, it embarked upon an extensive and unprecedented revamping of its policies and practices to ensure compliance” with federal laws.
Roth also said, “Notwithstanding being made aware of these steps, it is disappointing that the [FTC] chose to pursue this path. We believe the [FTC’s] chosen path is in disregard of the limitations imposed on it by Congress, is without legal support and will be struck down by the Court.”
While the company’s suit states that compliance training took place between Nov. 15 and Nov. 17, the FTC’s suit claims that illegal sales activity continued “as recently as November 22.”
