U.S. Fidelis Stops Selling Useless Car Warranties

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 exposé, 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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Edit Your Comment

  1. AllanG54 says:

    If they need so many new customers to keep the company running it’s nothing but a Ponzi scheme. I guess they should have used Madoff as a consultant. And what’s going to happen to poor ol’ Rusty Wallace. They sponsor him in Nascar.

    • ktetch says:

      Maybe he can go to a driving school, and learn how to become a racing driver.

      • DoubleEcho says:

        Why do that when you can just get a fake diploma from the driving school?

        • temporaryerror says:

          Doesn’t Rusty Wallace also appear in ads for a title/payday loan company? He must really be either hurting for money or just go with whomever will take him on.

    • GearheadGeek says:

      Well, it’s not QUITE the same as a Ponzi scheme, since no one but the owners of the company are expected to get anything but service out of the deal. They’re just gambling on statistics and human nature, hoping for people who buy the policy and forget to use it, buy the policy and don’t actually ever need service, or will let them get away with denying payment for service that should be covered. It’s really a form of insurance without the regulation that covers the insurance industry, and you see how much dirty pool insurance companies play even WITH regulation. Nearly everyone would be better off putting the money they pay for service policies into a bank account in case something goes wrong with the car, but everyone is afraid they’ll be the statistical outlier who has expensive problems with their new car, so they fall for the pitch.

  2. redskull says:

    One of the biggest perks of my getting rid of cable earlier this year was never having to see one of their commercials again.

  3. dg says:

    Well, that would explain why I haven’t been getting called (despite being on the National DNC list), and haven’t seen their commercials on TV lately.

    Good riddance. Someone let me know where they’re buried so I can go piss on their grave.

  4. Nogard13 says:

    I have no issue with US Fidelils, or companies like it. There are plenty of stupid people out there willing to believe the “too good to be true” nature that the company pitches. Everyone knows that insurance/warranty carriers will do their best to deny a payment. If you are dumb enough to trust a non-regulated company, then you deserve exactly what you get.

    “A fool and his money are soon parted” – Thomas Tusser

  5. danstirling2000 says:

    Seeing *productive* employees lose their jobs is sad. Seeing employees whose work is economically detrimental to society is not sad. In this troubled economy it is important to recognize the difference. Paying unemployment to someone is cheaper than paying wages, overhead, and additional business costs when there is nothing of value produced.

  6. valen says:

    …and nothing of value was lost.

  7. mbz32190 says:

    Good for them…is there any signs of this company being anywhere near legit? I still see ads advertising similar extended warranties though, so this isn’t going away. Just like BlueHippo disappeared but theres still other scammers filling the airwaves.

  8. heart.shaped.rock says:

    So here’s a question: Are there ANY legitimate after-market auto service contract companies?

  9. Batmanuel says:

    I guess US Fidelis and their halo-logo is an extension of the old rule of thumb that any contractor with a Jesus-fish on the back of his truck is inevitably going to royally screw you over.

  10. morganlh85 says:

    Too bad there are about 5 other crap warranty companies with commercial running on TV in their place.