A Wilmington auto service contract company under investigation for consumer fraud by the Delaware Department of Justice abruptly shut down last week.
A recorded message at American Standard Auto Protection informed potential customers Friday that the company was no longer taking new clients.
“American Standard Auto Protection cannot manage or maintain the obligations to their current customers,” the message said, adding that existing clients would receive a letter in the mail with instructions on how to file a financial claim. Customers expecting a refund or payment from American Standard as part of an active claim were told to contact their financial institutions.
“There’s nobody to go after. They’re gone,” said Jason Simpson, an Arkansas customer who tried unsuccessfully for more than six months to cancel his American Standard policy. The welder said he was forced to sell his 2012 Dodge Ram truck after the auto service provider reneged on its agreement and refused to replace the vehicle’s ball joints.
Delaware Attorney General Matt Denn’s office recently began investigating American Standard after receiving more than 50 complaints from customers around the country – the majority of them in the last several weeks, according to DOJ spokesman Carl Kanefsky.
The most common complaints accuse the company of improperly denying claims, failing to pay for warranted repairs and refusing to provide refunds after contract cancellations, Kanefsky said.
The Better Business Bureau in Delaware has logged 83 complaints against American Standard in the past month, out of 175 complaints against the company in the last year, according to local BBB President Christine Sauers.
American Standard, which is registered under the company name VSC Administrators Inc., gets an “F” rating from the BBB. It also racked up negative reviews on Yelp, RipOffReport.com and on the company’s Facebook page.
“We were getting responses from the company,” Sauers explained. “But starting in December that stopped.” None of the customers that contacted the BBB were from Delaware, she said.
Of the positive reviews on American Standard’s Facebook page, many are nonsensical, such as this one: “You really accomplished more than guests’ desires. Much obliged to you for rendering these supportive, put stock in, illuminating and furthermore cool musings on the theme.”
A comment below the post reads: “Fake.”
VSC Administrators first registered in Delaware in 2012. Department of State records list multiple senior officers on annual filings: Michael Hakim, Jeanne Hakim and Joseph Calvo.
Neither the Hakims nor Calvo responded to requests for comment last week. VSC was shut down in Delaware in 2014 for failure to pay franchise taxes and file required annual reports, according to Department of State spokesman Doug Denison. A few months later, VSC paid the back taxes and submitted the necessary paperwork to be reinstated, he said.
As of Aug. 16, 2017, VSC was listed as “forfeited” and rendered inactive by the Delaware Division of Corporations, after the company’s registered agent resigned without designating another agent. State records don’t show why the agent, The Corporation Trust Company of Wilmington, stopped representing VSC. The Corporation Trust Company did not respond to a request for comment.
Without commenting on the American Standard case, specifically, Denison said registered agents sometimes resign over nonpayment.
VSC Administrators was also a registered business in New York, but the company was suspended in July by the New York Department of State for failing to designate a new registered agent, a state department spokesman said.
Over the years, records show that VSC Administrators and American Standard used at least four different addresses at downtown Wilmington office buildings: 300 Delaware Ave., Suite 750; 901 N. Market St., Suite 460; 1105 N. Market St.; and suite 1200 at the iconic Brandywine Building at 1000 North West Street.
It’s unclear if the company actually occupied space in any of the high-rises. Area leasing agents did not respond to requests for comment. Kanefsky said the DOJ is still investigating whether the company ever operated out of Delaware.
Trail of abandoned enterprises
Calvo and Jeanne Hakim were also registered officers of Continental Risk Underwriters Retention Group Inc., a Nevada company formed in 2012, according to Nevada Secretary of State records. In late 2016, the state’s Division of Insurance withdrew the company’s certificate of approval for failure to file annual paperwork, a department spokeswoman said.
In 2012, the same year Michael Hakim established VSC Administrators in Delaware, the state of Washington’s Insurance Commissioner ordered another auto warranty company with which Hakim was affiliated to stop selling unauthorized insurance in Washington, according to state records.
The New York-based Direct Buy Associates Inc., which conducted business under multiple names, had been selling auto repair plans since at least 2009 without being registered as a provider in Washington, the state insurance commissioner said at the time. The company listed a mail stop and a virtual office in New Jersey, and a European headquarters in Cyprus.
Direct Buy’s chief executive officer, Albert Hakim, 66, has shared several addresses in New York and New Jersey with Jeanne Hakim, 62, according to public records; the pair had multiple tax liens and civil judgments filed against them dating to the early 1990s.
In 2016, the Arizona Department of Insurance filed a cease and desist order against Direct Buy for unlawfully issuing vehicle service contracts in the state and engaging in “unfair trade practices,” including the company’s refusal to pay for covered repairs.
The order referenced a 2015 New Jersey Superior Court decision in which Direct Buy was prohibited from operating in New Jersey. As part of a settlement agreement in that case, Direct Buy was ordered to pay more than $810,000 in civil penalties, restitution and attorneys’ fees.
That wasn’t Direct Buy’s first run-in with New Jersey authorities. In 2015, the company agreed to pay nearly $200,000 in restitution to 162 customers, after the New Jersey Division of Consumer Affairs sued Direct Buy for consumer fraud. The state alleged that Direct Buy had advertised “bumper-to-bumper” auto warranties with no limit on labor rates. In reality, the warranties were vehicle service contracts with several exclusions attached.
The Federal Trade Commission advises consumers to be wary of “extended warranty” coverage for vehicles. The government agency has refunded millions of dollars to thousands of consumers who were conned by companies hawking service contracts that cost $1,300 to nearly $2,900 each. Some companies try to trick consumers into believing that they are dealing with their vehicle manufacturer or car dealer, according to the FTC.
Simpson, the American Standard customer, knew he was working with a third-party provider when he agreed to a five-year service contract with a zero deductible on his Dodge Ram. Simpson supplied The News Journal with a copy of his contract, which began in 2016 and cost $2,211.
Five months into the contract term, Simpson said he made a claim to replace the ball joints on his truck. An American Standard assessor denied him because they weren’t considered “covered” parts, Simpson said. According to Simpson’s contract, ball joints are covered under his “Total Performance” plan.
After threatening to cancel his policy, Simpson said the adjuster agreed to supply the replacement parts. But after waiting two months for the equipment to arrive at the dealership, Simpson decided to pay for the repair out-of-pocket and cancel his contract.
First, American Standard agreed to refund him only $700, he said. Then, the company increased the refund amount to more than $1,700 but required that Simpson sign additional paperwork and get a statement of his odometer reading notarized before they would issue payment within 30 business days.
“Every time I called them, no one would answer the phone for months and months,” he said.
The 30-day period ended on Feb. 15 and Simpson is still waiting for his money. He is now driving a 1986 truck that “barely gets me to work.”
“My mind is blown that they were able to operate as long as they did,” he said. “Pretty much they took my money and disappeared.”
FTC: Don’t fall for a car warranty scam
Auto service contracts, sold by dealerships, used car lots and independent providers, are supposed to help protect against unexpected, costly repairs. But the Federal Trade Commission recommends that consumers do their research, read the fine print and shop around to make sure that the contract they’re buying doesn’t overlap with the vehicle’s existing manufacturer’s warranty.
• Beware of unscrupulous dealers who may try to insert an auto service contract into your loan agreement without your consent.
• Check the length of the service contract, the upfront cost and deductible and find out who performs or pays for repairs under the contract terms. Few service contracts cover all repairs. Know your responsibilities under the contract, such as who is authorized to perform routine maintenance.
• If you get mail or phone calls about renewing your vehicle warranty, don’t immediately take the bait. Call the dealer who sold you the car or contact the vehicle manufacturer to find out when your warranty expires. Never give out personal financial or other sensitive information during an unsolicited sales pitch.