Consulting firm, owner settle FTC’s auto warranty scam claims for $6.5M

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Auto warranty scam overview: 

• Who: Kole Consulting and Daniel Kole have agreed to pay $6.5 million to the Federal Trade Commission (FTC).
• Why: The FTC alleged the company ran a telemarketing scam selling expensive auto warranties.
• Where: The auto warranty scam settlement was filed in a Florida federal court.
• What are my options: CarShield provides vehicle protection plans.

A consulting firm and its owner have agreed to pay $6.5 million to the Federal Trade Commission (FTC) after they were was accused of operating a telemarketing scam hawking overpriced auto warranty protection.

On June 23, the FTC, Daniel Kole and his company Kole Consulting asked a Florida federal court to sign off on a settlement deal, a day after they informed the U.S. District Judge Rodolfo A. Ruiz II they had reached the agreement.

The FTC alleged Kole Consulting was one of the operators of a telemarketing scam that called hundreds of thousands of consumers nationwide to pitch them expensive “extended automobile warranties.” 

According to the deal, Kole and his company will face a lifetime ban from the extended automobile warranty industry and from all outbound telemarketing.

Allegations first filed in 2022

The FTC first charged the owners and operators of American Vehicle Protection Corporation (AVP) and Kole Consulting with violating the FTC Act and the Telemarketing Sales Rule in February 2022.

In its complaint, the FTC charged that the companies made unsolicited calls in which they claimed to be affiliated with vehicle makers and deceptively claimed their products, which cost thousands of dollars, offered “bumper to bumper” protection.

The FTC alleged the scam tricked customers out of millions of dollars.

The scheme consisted of selling warranties that “didn’t come from the manufacturer, didn’t cover the repairs people needed and weren’t sold legally” by making false claims about what the warranties did to convince people they needed them, the FTC said.

They also refused to provide refunds, the agency said.

AVP was handed down a monetary judgment of $6.6 million; however, it has largely been suspended based on their inability to pay, the FTC said. 

“If the defendants are found to have lied to the FTC about the financial status, the full judgment would be immediately payable,” the FTC said.

In 2022, the Federal Communications Commission (FCC) directed all phone companies in the U.S. to stop carrying traffic from certain individuals and companies the agency said had been spamming consumers with scam auto warranty robocalls. 

What do you think of this auto warranty settlement? Let us know in the comments.

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