Two days after a Missouri task force met to re-think state regulations on extended auto-service contracts, three companies that sell the controversial aftermarket coverage donated $3,900 to the man expected to push the group's reform agenda in Jefferson City.
The companies donated to the re-election campaign of Missouri Sen. Scott Rupp, R-Wentzville, the sole legislator on the task force formed in March by Attorney General Chris Koster. Koster is suing several service-contract companies and has said the industry is rife with fraud.
He isn't alone. In the last year, service-contract marketers -- including the dozens of companies based here -- have come increasingly under fire from consumer advocates and regulators nationwide for what they have called fraudulent practices and deceptive marketing tactics.
Koster's 11-member task force met on June 23 to discuss ways to amend Missouri's service contract law, including banning the word "warranty" from the names and marketing materials of service-contract marketers and requiring state-licensed coverage providers to identify any companies authorized to sell on their behalf.
Koster has said that Rupp's support for service-contract reform would be critical to winning support in the legislature.
On June 25, three service-contract marketers donated to Rupp's campaign, according to reports filed with the Missouri Ethics Commission.
Downtown-based TXEN Partners, which does business as Protection Direct, donated $1,200; St. Charles-based National Dealers Warranty, which does business as StopRepairBills.com, donated $1,200; South County-based Nationwide Automotive Protection, formerly Warranty Activation Headquarters, donated $1,500.
(Koster's consumer-fraud suits against National Dealers Warranty and Nationwide Automotive Protection are on-going. In 2008, then-Attorney General Jay Nixon sued TXEN Partners, but the company settled the suit by vowing to discontinue mailing consumers false information about vehicles' warranty status.)
The $3,900 represents just a fraction of the more than $350,000 raised for Rupp's primary fight against Rep. Cynthia Davis. Rupp defeated Davis on Aug. 3 and will face Democrat Don Crozier in the general election.
Attempts to reach Rupp were unsuccessful. Voice-mail message left on his cell phone and at his campaign headquarters were not returned. A Koster spokeswoman said she had no comment.
In June, Rupp told the Post-Dispatch that he doesn't want any new laws to kill an industry with a strong presence in his district. He said any new laws should be designed only to prevent fraud, not to discourage consumers from buying the aftermarket coverage.
In recent years, the St. Louis area has been a hub for telemarketers selling service contracts, with most of those firms based in St. Charles County.
St. Louis Better Business Bureau President Michelle Corey is a member of the service-contract task force. She said in an e-mail that she wasn't surprised by the companies' contributions. She said they wouldn't affect the BBB's role in the task force as "the voice of the thousands of consumers damaged by the industry and to push for sensible industry regulation."
