Department issues amended Cease and Desist Order to protect over 1,000 Californians from illegal extended vehicle warranties
News: 2020 Press Release
LOS ANGELES, Calif. - The California Department of Insurance (Department) issued an amended Cease and Desist Order and Order to Show Cause effective immediately to Omega Vehicle Services, LLC doing business as Delta Auto Protect (Delta), and its controlling manager, Charles Seruya, for allegedly selling over $2 million in illegal Vehicle Service Contracts (VSCs). Earlier this year, the Department issued an initial Order after learning Delta Auto Protect and Seruya had allegedly victimized over 20 California consumers but, as a result of discovery and additional consumer complaints received since then, the Department learned the number of victims is now over 1,000 throughout the state.
“Consumers should be careful when purchasing warranties like Vehicle Service Contracts over the phone or online,” said Insurance Commissioner Ricardo Lara. “If something seems too good to be true, most of the time it is. I urge consumers to look into any company offering a vehicle warranty and make sure they are licensed by the Department of Insurance and sold through dealers licensed by the California Department of Motor Vehicles. Contact the Department of Insurance for help. We are here to ensure companies are delivering on their promises and are doing so in compliance with our consumer protection laws.”
Under the Orders issued, the company faces a potential $5,000-per-day monetary penalty for transacting insurance business without a license.
The Orders allege both Delta Auto Protect and Seruya were not licensed by the California Department of Insurance and improperly denied claims, illegally sold contracts online that they did not first file with the Department directly to consumers, and used an unapproved backup insurer.
Under the Orders, Delta and Seruya are to immediately stop selling VSCs in any capacity and cease acting as an insurance agent or producer or in any other capacity in the State of California for which they do not hold a valid license, permit, or Certificate of Authority and show cause why a $5,000-per-day penalty against them should not issue.
Generally, VSCs, often called “extended warranties,” are offered to consumers by car dealers when they buy a car. Most VSCs typically provide coverage for repairs due to mechanical failure. Others offer coverage for routine services, such as oil changes and tire rotation, or other services such as paintless dent removal, glass or key replacement, or tire and wheel repair.
VSCs may be sold legally to Californians only when specific criteria are met, which Delta and Seruya failed to do, namely:
- Every VSC must be filed with the Department before it can be sold.
- Companies responsible for paying the claims on VSCs must be licensed by the Department, unless the company is a vehicle manufacturer, distributor, or dealer.
- These companies must carry Department-preapproved backup insurance insuring every VSC that they sell, unless they receive an exemption from the Department by proving their company has a net worth of at least $100 million.
- VSCs can only be sold through dealerships licensed by the California Department of Motor Vehicles. Direct sales to a consumer is illegal.
Californians who purchased a Delta Auto Protect Vehicle Service Contract and have requested, but not received a refund, should contact the Department at DeltaAuto@Insurance.ca.gov by November 13, 2020. Consumers should provide the name of the contract holder, the amount paid, and a copy of their contract. Impacted consumers do not need to contact the Department if their name appears in paragraph four subsection a of the amended Cease and Desist Order.
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- Cease and Desist Order and Order to Show Cause
- More information about Vehicle Service Contracts (VSCs).
- According to public records, including a civil complaint filed by the Pennsylvania Attorney General, Delta maintains addresses at 600 Eagleview Blvd, Suite 300, Exton, Pennsylvania and 1735 Market Street Suite 3750, Philadelphia, Pennsylvania. Public records also indicate that Charles Seruya maintains an address at 1 Ross Court, Oakhurst, New Jersey.
The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $310 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $469 million in claims and premiums. Please visit the Department of Insurance website at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.