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Old 01-07-2008, 09:43 AM   #1
Join Date: Nov 2007
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Default The Danger of Self-Insuring 100% Service Contract Refunds

A Kansas City Mega-Dealer filed for Chapter 7 Bankruptcy seven months after a jury ruled against it at trial resulting in a $8.4 Million verdict.

The Court Case stemmed from a Class Action Lawsuit filed against the Dealer for failure to honor the terms of a Dealer-Backed 100% Service Contract Refund Program. The offer guaranteed a 100% refund of a Service Contract if it was not used during the contract period.

A Class Action Case was filed on behalf of more than 1,100 customers who purchased a Service Contract with the 100% Money Back Guarantee. The jury ruled against the Dealer with a $3.4 Million award and then added $5.0 Million in punitive damages.

A recent article in Automotive News cited a Dealer in the Denver area that reported that he no longer offers the 100% Money Back program because his accountants could not determine the correct amount to reserve for potential claims.

Here's a link to the article about the Kansas City Dealer: http://www.kansascity.com/business/story/397970.html
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