FTC Action Leads to Industry Bans for Operators of ‘Extended Vehicle Warranty’ Scam

A Federal Trade Commission lawsuit against the operators of a telemarketing scam that called hundreds of thousands of consumers nationwide pitching “extended automobile warranties” will result in a lifetime ban from any outbound telemarketing business and from any involvement with extended automobile warranty sales.

The FTC first charged Kole Consulting Group and its owner, Daniel Kole, as some of the defendants running the American Vehicle Protection (AVP) operation that scammed consumers out of millions of dollars in February 2022. In its complaint, the FTC charged that AVP made unsolicited calls in which it claimed to be affiliated with vehicle makers and deceptively claimed its products, which cost thousands of dollars, offered “bumper to bumper” protection.

“Kole and AVP blasted consumers with illegal calls and made bogus claims about bumper-to-bumper warranties,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Today’s order bans Kole and his company from the extended auto warranty industry and imposes a monetary judgment of $6.6 million, continuing the Commission’s aggressive crackdown on telemarketing fraud.”

The proposed court order in the case, which the defendants have agreed to, includes the bans from extended automobile warranty marketing and outbound telemarketing. The order also includes a monetary judgment of $6.5 million, which is partially suspended based on the defendants’ inability to pay; Kole will be required to surrender $500,000. If the defendants are found to have lied to the FTC about the financial status, the full judgment would be immediately payable.

The FTC previously announced a settlement with the other defendants in the case in March 2023.

The Commission vote approving the stipulated final orders was 3-0. The FTC filed the proposed order in the U.S. District Court for the Southern District of Florida.

NOTE: Stipulated final orders have the force of law when approved and signed by the District Court judge.

The staff attorneys on this matter are Harold Kirtz, Hans Clausen, and Chris Gleason of the FTC’s Southeast Region.