Remember US Fidelis, one of the nation’s leading companies in the useless auto warranty market? Since the company’s anti-consumer practices were uncovered this spring in a Today Show exposÃ©, they haven’t been doing very well. The company has laid off over half of its employees, and now has stopped selling new service contracts altogether.
The company blames its poor fortune on customers canceling their policies due to the poor economy. Oh, yeah, and the fact that both consumer groups and the Missouri Attorney General were after both Fidelis and the many competing companies operating in the St. Louis area.
Although sales have been suspended, the company says it still employs more than 200 workers — including customer-service and account-resolution agents who work with existing customers, which the company has said number more than 300,000.
Keeping most of those customers from canceling is important, but it may not be enough to keep the company viable, said Philip Jehle, the former chief financial officer and vice president of operations at US Fidelis. To survive, it needs new customers.
“If they’re not selling, there’s no revenue,” Jehle said.
Seeing people lose their jobs is always sad, but it’s hard to shed any tears for a company with a business model as shady as US Fidelis.
US Fidelis suspends sales of service contracts [St. Louis Post-Dispatch]
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