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Glad I didn't get a ext. warranty from Warranty Gold Posted by Duhey2 [Email]  (#151)  [Profile/Gallery]
(more from Duhey2) on Tue, 13 Jan 2004 20:58:32
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From the Houston Chronicle:
Texas takes aim at Internet warranty provider
Associated Press
AUSTIN - An Internet provider of car warranties is being investigated by the Texas Department of Licensing and Regulation for providing contracts without the financial means to pay the claims.
Austin-based Warranty Gold sold warranties to be serviced by a company that filed for bankruptcy in June, leaving 67,000 customers nationwide with worthless policies.
Warranty Gold then switched to a new company to service contracts, First Automotive Services Corp., which doesn't have financial backing to pay the warranties, according to the Texas Department of Licensing and Regulation.
On Monday, District Court Judge Suzanne Covington in Travis County ordered First Automotive to stop dealing in contracts in Texas without financial backing.
"We need proof of financial security. The company has to demonstrate to us that it has the financial wherewithal to cover its plans, and that's what we did not have in this case," Patrick Shaughnessy, a spokesman for the state licensing agency, said in Tuesday's editions of the Austin American-Statesman.
The department is continuing to investigate Warranty Gold, which once billed itself as the largest Internet marketer of extended warranties for cars.
Warranty Gold sold an estimated 2,000 policies backed by First Automotive, which is based in Albuquerque, N.M. Executives believed they were selling sound contracts, said Tim Herman, a Warranty Gold board member.
"There was never a time when a contract was sold without there being an effective insurance policy backing it up," Herman said. "We have always, as far as I know, been in compliance with the law."
First Automotive has maintained that the actual backer of the contracts was Dealers Assurance of Columbus, Ohio. But during its investigation of Warranty Gold, Dealers Assurance told the department there was no such arrangement.
In Warranty Gold's Nov. 11 bankruptcy, the company said it had $30 million in debt and only $7.7 million in assets.
In a posting on its Web site on the day it filed for bankruptcy, Warranty Gold said: "FASC's obligations under (post-June 7) contracts are in turn backed up by Dealers Assurance Corp., a licensed insurance company. Every contract we sell is effectively doubly insured. We need you to understand that point as to our present business."
posted by 65.124.86...
, Tue, 13 Jan 2004 20:58:32 <-- Viewing This Message
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