|NEWARK – The Office of the Attorney General and State Division of Consumer Affairs have filed suit against a company that advertised vehicle repair coverage plans that purportedly offered bumper-to-bumper coverage – even including parts subject to normal “wear and tear” -- and then allegedly refused to fully pay when repairs were needed.
Direct Buy Associates Inc., which does business as Direct Buy Auto Warranty, allegedly committed multiple violations of the state’s Consumer Fraud Act. The company has maintained various business addresses in Middlesex County since at least June 2009. Nearly 250 consumers nationwide to date have filed complaints against Direct Buy Associates, one of the highest amounts against any active company in the state.
Despite its advertising statements that it sold warranties, Direct Buy Associates sold vehicle service contracts. Warranties are offered by the manufacturers or sellers of a product, while vehicle service contracts are offered by third-parties such as Direct Buy Associates. Further, the vehicle service contracts sold by Direct Buy Associates provided limited coverage and numerous exclusions.
The company also functioned as the administrator of the vehicle service contracts it sold, determining whether consumers’ claims for repairs would be approved. Consumers reported that they had to pay for repair costs themselves when the company denied repairs that were covered under the plans. The company issued its denials verbally, often changing the reasons for a specific denial when a consumer questioned company representatives.
Some consumers also stated in their complaints that they did not receive full refunds in a timely manner when they tried to cancel their contracts with Direct Buy Associates.
“Consumers are out thousands of their hard-earned dollars because of the alleged business practices of this company,” Acting Attorney General John J. Hoffman said. “We are seeking court approval to get restitution paid back to the affected consumers.”
Additionally, the State is alleging Direct Buy Associates violated the Consumer Fraud Act because on its website no details were listed for the various plans offered, such as the price of the plans; the Plain Language Act because the vehicle service contracts were not written in a clear and understandable way; the state’s Advertising Regulations; and the Business Corporations Act because it is not authorized to operate in New Jersey.
The State also is seeking assessment of civil penalties and reimbursement of its legal and investigative expenses from Direct Buy Associates.
“Direct Buy Associates offered consumers a product that sounded too good to be true, and, unfortunately, it allegedly was, as evidenced by the hundreds of consumer complaints,” said Eric T. Kanefsky, Director of the Division of Consumer Affairs. “Consumers hoping to save on vehicle repair costs instead were taken for a ride by this company so we have brought legal action to hold it accountable.”
Deputy Attorneys General David M. Reap and Jeffrey Koziar in the Division of Law’s Consumer Fraud Prosecution Section are representing the State in this matter. Investigator Aziza Salikhov in the Office of Consumer Protection conducted the investigation.
Consumers who believe they have been cheated or scammed by a business, or suspect any other form of consumer abuse, can file a complaint with the State Division of Consumer Affairs by visiting its website or by calling 1-800-242-5846 (toll free within New Jersey) or 973-504-6200.
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