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Financial Services Law Insights and Observations

FTC seeks permanent injunction against auto warranties operation

Federal Issues FTC Enforcement FTC Act Telemarketing Sales Rule

Federal Issues

On February 9, the FTC announced it was charging a Florida-based group of operators (defendants) with violations of the FTC Act and the Telemarketing Sales Rule for allegedly engaging in deceptive practices when marketing and selling automobile warranties. The complaint alleged the defendants, among other things, (i) misrepresented that they are affiliated with consumers’ car dealers or manufacturers; (ii) misrepresented that their warranties provide “bumper-to-bumper” coverage; (iii) falsely promised that consumers can obtain a full refund if they cancel within 30 days; (iv) used remotely created checks which are illegal in telemarketing transactions; and (v) called numbers on the do not call registry. According to the FTC, the defendants allegedly collected more than $6 million from consumers since 2018. The FTC seeks a permanent injunction against the defendants to prevent future violations, as well as redress for injured consumers through “rescission or reformation of contracts, the refund of money, the return of property, or other relief necessary to redress.”