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Wednesday, December 19, 2007

Another Ohio Warranty Company Screws Customers

Posted By on Wed, Dec 19, 2007 at 12:48 PM

It was two years ago that Scene first wrote about the woes of Anthony Hodel , whose once-booming extended car warranty business exploded in a hail of thievery ("Platinum Tony," October 12, 2005). While Hodel lived like a prince with a fleet of expensive cars, a mansion in Brecksville, and enough jewelry to please a pirate, hundreds of warranty-holders were writing to the Ohio Attorney General to complain that their claims weren’t being paid. But when Hodel started feeling the heat come down, he ran like a scared little girl, declaring bankruptcy and leaving his customers with broken cars and worthless contracts. (Click 'More' to read on) Scene hoped the story might spur Ohio legislators to enact some sort of law to better regulate after-market car warranty companies. Unlike some states, where the businesses are regulated just like insurance companies, Ohio applies about as much scrutiny to warranty companies as they do your next-door neighbor’s kid’s lemonade stand. Want to start one? Just hang up a sign and you’re in business. Alas, Ohio lawmakers have more important things to regulate, like gay people and strippers. So it’s no surprise that another local warranty company has now done exactly the same thing. Ultimate Warranty, a Rocky River company in business for 10 years, has no money left to pay its outstanding claims, according to a story in yesterday's Plain Dealer. With 137,000 people holding the company’s warranties, those claims could potentially total $74 million. Because Ultimate Warranty’s executives insured the company under the umbrella of another company they own in South Carolina, the South Carolina Department of Insurance forced the company into receivership. Ultimate Warranty’s Rocky River office is now occupied by a company appointed by the receiver. If you’re one of the unlucky people to have bought the company’s warranties, you basically have no recourse, other than to hope the car dealer that sold you the warranty decides to take pity on you and honor it anyway. Considering that Scene still gets calls and e-mails to this day from people who haven’t yet seen a dime from the warranties they bought from Platinum Tony, we’d suggest that to get the most from your contract, use it to wrap your Christmas presents. -- Jared Klaus

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