Department issues Cease and Desist Order to protect California consumers from illegal extended car warranties sales
News: 2021 Press Release
SACRAMENTO, Calif. - The California Department of Insurance issued Orders to Cease and Desist and to Show Cause effective immediately upon Opulent Marketing, Inc. doing business as Infinite Auto Protection (Infinite Auto) for allegedly selling illegal Vehicle Service Contracts (VSCs) to 25 California consumers across the state.
The Orders to Cease and Desist and to Show Cause allege Infinite Auto was not licensed by the California Department of Insurance and improperly denied claims, illegally sold contracts that they did not first file with the Department directly to consumers, and failed to use a backup insurer. Infinite Auto charged consumers a total of $58,216.
“Protecting consumers is our Number One priority,” said California Insurance Commissioner Ricardo Lara. “Californians depend on their cars as part of their daily lives. Any insurance company that operates illegally or attempts to hoodwink consumers will face the consequences.”
Under the Orders, Infinite Auto is 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 it 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 Infinite Auto failed to do, namely:
- VSCs can only be sold through automobile and watercraft dealerships licensed by the California Department of Motor Vehicles. Direct sales to a consumer is illegal.
- 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.
Consumers should not be buying these “extended warranties” over the phone or internet and should always check to see that the company is licensed in California before buying. They can check license status on the Department’s website here.
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- Cease and Desist Order and Order to Show Cause
- Michigan Secretary of State public filing
- More information about Vehicle Service Contracts (VSCs).
- According to public records, Infinite Auto maintains an address at 10000 Wayne Road, Suite 202, Romulus, MI 48174.
Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation's largest insurance marketplace and safeguards all of the state’s consumers by fairly regulating the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud. Consumers are urged to call 1-800-927-4357 with any questions or contact us at www.insurance.ca.gov via webform or online chat. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.