lake saint louis • Companies selling extended auto service contracts have operated for years without any meaningful state regulations or industry-imposed rules. If that doesn't change, Missouri Attorney General Chris Koster told a task force on Thursday, criminal prosecutions could be the only way to reform an industry accused of defrauding consumers nationwide.

The firms — at least 30 of which are based in the St. Louis area — have been accused of deceptively marketing the aftermarket coverage, making it difficult for customers to cancel, pocketing refund money owed to consumers and selling contracts riddled with fine-print exceptions and limitations.

Koster said his office, which has filed civil suits against at least 10 of those companies in the last 12 months, is regulating the industry through litigation. But that isn't a lasting solution, he said.

"The reason we're here is we don't want to be here," Koster told the task force during its inaugural, 3½-hour meeting at Lake Saint Louis City Hall.

The task force includes state regulators, auto dealers, members of the service contract industry and others. Koster has charged the group with determining whether state regulations are needed and, if they are necessary, to propose new rules for legislators to consider next year.

Companies selling service contracts are changing their practices voluntarily, said Helen MacMurray, a former chief of consumer protection in the Ohio attorney general's office and a lawyer for the Vehicle Protection Association, a trade group for service contract sellers.

That group released a list of best practices for service contract sellers, and it has started a certification process to make sure member firms are in compliance. MacMurray said the group this year issued new rules governing the sale of so-called product warranties, an unusual form of coverage tied to the purchase of an auto additive.

The widespread sale of product warranties, which was made public in a Post-Dispatch investigation last year, is seen as especially problematic because they do not need to be refundable or underwritten by insurance companies.

St. Louis Better Business Bureau President Michelle Corey, a task force member, said her group generally prefers for companies to improve business practices voluntarily — not as a result of state-imposed regulations. However, the industry has been unsuccessful in its efforts to regulate itself and new laws may be needed, she told the task force.

The task force's sole legislator — Sen. Scott Rupp, R-Wentzville — said he believed lawmakers likely would support reasonable regulations on service contract sellers. Rupp's district is home to US Fidelis, which was the nation's biggest service contract seller until the company halted sales after a series of mass layoffs late last year.

US Fidelis generally is believed to have collapsed because — as its business practices became well-known — consumers stopped buying new contracts and existing customers canceled coverage. Koster noted the company's downfall in closing the task force meeting.

"There are 1,000 people out of work in Sen. Rupp's district, and it wasn't regulation that put them out of work," he said. "It was the lack of regulation."

The second meeting of the task force has not been scheduled. Koster said he would like for the group to meet in May or June.