Six months after the nation's biggest seller of extended auto service contracts stopped hawking the aftermarket coverage, the St. Louis area remains a hub for the controversial industry.
That's despite a crackdown by Missouri Attorney General Chris Koster, who next week will meet with a task force he formed to try to stamp out deceptive and, in some cases, fraudulent practices many of the companies have been accused of using.
According the St. Louis Better Business Bureau, which has been crusading against the St. Louis area service contract companies for more than a year, little has changed when it comes to how the businesses here market their products to the nation's vehicle owners.
"We're still seeing misleading advertising and failure to pay for repairs or make refunds," said Michelle Corey, the president of the BBB here. "The product they're selling is still a big concern because people don't really understand what they're buying."
It's difficult to judge the health of the service contract industry in the St. Louis area, which has been home to at least 40 companies that sell service contracts.
That's because the service contract firms operating call centers here are private companies, and they don't need to release much financial information to the public. What's more — because the industry is under assault from consumer groups and regulators — many of the firms purposely keep low profiles.
But if consumer complaints to the BBB are any guide, business seems to be dropping off. This year, the watchdog group has recorded about 690 consumer complaints about service contract sellers based here and about 32,400 consumer inquiries about those companies. That's a big drop from the second half of last year, when the BBB said there were 1,062 complaints against the St. Louis area businesses and 63,516 inquiries.
Corey said much of the decline can be attributed to the collapse of Wentzville-based US Fidelis, the nation's largest service contract seller, which stopped selling coverage on Dec. 29 and filed for bankruptcy on March 1.
Hundreds of people still work in the call centers here where service contracts are sold, and five companies are responsible for most of the service contract complaints received by the St. Louis BBB, including:
StopRepairBills.com • The St. Peters-based company used to be called National Dealers Warranty. This year, it was the subject of 6,008 consumer inquiries and 113 complaints.
St. Charles-based Dealers Warranty • The firm does business as Mogi. It was the subject of 6,221 inquiries and 42 complaints.
Maryland Heights-based Dealership Warranties • The firm does business as National Vehicle Protection Services. It was the subject of 628 inquiries and 15 complaints.
St. Charles-based CarSafe • It was the subject of 4,321 inquiries and 45 complaints.
St. Louis-based TXEN Partners • It does business as Protection Direct. It was the subject of 2,189 inquiries and 48 complaints.
Nils Flodberg is general manager of CarSafe, the only company to respond to phone messages and e-mails seeking comment for this story.
He said the 2-year old CarSafe is doing well, despite a growing mistrust of the service contract industry brought on, he said, by the sales practices of other companies.
Flodberg said the company's BBB complaints represent only a tiny fraction of the company's approximately 20,000 customers. He said the company is seeking certification by the Vehicle Protection Association, a trade group that has promised to clean up the service contract industry and police its members.
And Flodberg said that, in December, CarSafe stopped selling warranted additives marketed as service contracts — controversial coverage plans often sold by the St. Louis companies. These so-called product warranties are conditional on the purchase and use of special automotive elixirs and pills.
In November and December, Koster cited those coverage plans when he sued 10 service contract sellers, including all of the companies listed above, except for TXEN Partners. The suits, which haven't been resolved, allege widespread consumer abuses.
Koster has dubbed the St. Louis area "the Silicon Valley" for fraudulent service contract sales, and his office has made no secret of its desire to push some of the companies out of business or out of state.
It's too early to tell whether that's happening, but Corey said she has fielded an increasing number of calls from her counterparts at other BBB offices.

