STEVE INSKEEP, host:

Now when some consumers buy a car, they may be urged to pay extra money for an auto service contract which is sometimes marketed as an extended warranty. It's a product promising to protect you from the cost of unexpected repairs not covered by the real warranty.

Companies also try to sell such contracts to people who own older cars and trucks. And in Missouri, TV ads target these customers aggressively. St. Louis is considered the Silicon Valley for the firms that put out these contracts. One of the largest based there, a company called U.S. Fidelis, is now in bankruptcy with its owners facing criminal charges.

Maria Altman with St. Louis Public Radio's has more.

MARIA ALTMAN: U.S. Fidelis sold more than 400,000 contracts across the country, until it collapsed in 2009 amid allegations of fraud that eventually led to a bankruptcy filing. The company's two owners already have surrendered millions of dollars, putting their mansions, yachts, even jewelry, up for sale. They face more than a dozen criminal charges in Missouri, but that doesn't mean the industry has gone away.

(Soundbite of commercial)

Unidentified Man: Stop your auto repair bills now. Next time your car needs repair why get stuck with the bill?

ALTMAN: At the Better Business Bureau in St. Louis, CEO Michele Corey says with U.S. Fidelis gone, other companies are now marketing more aggressively. She says her office has gotten complaints about 24 St. Louis-area based auto service contract companies in just the last year. One, called Stop Repair Bills, racked up more than 180 complaints from consumers, who Corey says, often felt tricked by the company.

Ms. MICHELE COREY (CEO, Better Business Bureau): Bumper-to-bumper coverage and no questions asked, that's the impression they received. But that wasn't the case. You know, many consumers told us that as soon as they tried to use the service contract, that's when they were denied coverage.

ALTMAN: At Pernell Beasley's home there's little time to be without a vehicle. He's in school; his wife works nights as a nurse; and they've got two small children. So when he saw a TV ad for Stop Repair Bills, he thought it would be a good plan for his 2002 Dodge Ram.

Mr. PERNELL BEASLEY: I'm not a mechanic, so I need that type of sound mind, knowing that my vehicle will be covered. But what happened once the initial file was claimed, it was horrific.

ALTMAN: When Beasley's truck engine went out, he says Stop Repair Bills stalled. He went around and around with the company until he finally threatened to call the Missouri attorney general. Beasley says it took five months to get a new engine for this truck, but he was out $3,000 between the cost of the contract and a car rental.

Mr. BEASLEY: So I wouldn't recommend this to anybody. I think that it's a total scam, a total scam.

ALTMAN: Stop Repair Bills did not return phone calls seeking comment, but the company is a member of the Vehicle Protection Association, a trade group formed in 2008 to try to clean up the industry's practices.

Mr. LARRY HECKER (Executive director, Vehicle Protection Association): The companies have changed the way they do business.

ALTMAN: Larry Hecker is VPA's executive director. He says the association has set standards for marketing service contracts and created a certification process. Hecker says their 11 certified companies, including Stop Repair Bills, are now getting fewer complaints.

Mr. HECKER: They follow the standards that we have; they follow the laws in their states. And we have auditors, actually, who check that as part of the certification program and monitor them regularly.

ALTMAN: Missouri Attorney General Chris Koster says he's also keeping a close eye on this industry. He pushed for new regulations in Missouri that will go into effect next year and has filed dozens of civil lawsuits.

Mr. CHRIS KOSTER (Attorney General, Missouri): Other companies now recognize that we are going to bring integrity back to the industry, and if we have to do it in court, we will.

ALTMAN: While the criminal trial for U.S. Fidelis' owners has yet to be set, the attorney general hopes that for unscrupulous auto service contract marketers, that might be the best deterrent of all.

For NPR News, I'm Maria Altman in St. Louis.

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