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N.Y. Dealer Settles Insurance Fraud Suit for $1.6 Million

January 29, 2015

ALBANY, N.Y. — Last week, Fuccillo Automotive Group agreed to pay $1.6 million to settle a 2009 class action lawsuit that alleged insurance fraud. The lawsuit charged that Fuccillo Hyundai in Upstate New York illegally sold insurance without a license to customers under the guise of an anti-theft warranty.

Each of the 5,320 victims will receive settlements of $160, with the lead representative in the case, Heidi Seekamp, awarded $10,000.

The original lawsuit brought by Seekamp claimed that Fuccillo Hyundai sold a 2007 Hyundai Elantra with an Auto Theft Security Discount Guarantee for $295. The guarantee involved the etching of a VIN number into the vehicle’s windows, which the dealership said would serve a theft deterrent.

The security package — administered by Universal Automotive Services — came with a guarantee that if a car was declared a total loss due to theft, Fuccillo Hyundai would provide the owner with a 10% discount toward the purchase of a replacement vehicle, or $2,000.

Seekamp alleged in her lawsuit that what was represented as a theft warranty was actually an insurance policy, and because Fuccillo and Universal are not licensed insurance companies, brokers or agents in New York, it was an illegal act.

Seekamp also alleged that because the VIN numbers were etched into windows prior to sale, and that the dealer failed to submit its Auto Theft Security Discount to the New York State Insurance Department for approval, they were guilty of engaging in deceptive consumer practices and conspiracy to commit consumer fraud.

In its defense, Fuccillo pointed to cases in New Jersey and Pennsylvania where courts ruled that similar products were not deemed insurance policies and were upheld as theft deterrents and warranties. The New York Insurance Department, however, agreed with the plaintiff’s assertion that this particular program fell under the definition of an insurance contract.

The New York Insurance Department defines an insurance contract as any agreement or transaction where one party is obligated to give a monetary benefit upon the occurrence of “a fortuitous event.” And according to the insurance agency, the product’s warranty benefit being triggered by theft constituted a fortuitous event, making it an insurance policy by its definition.

Comments

  1. 1. Tom smith [ January 29, 2015 @ 04:37PM ]

    About time the bottom feeder auto dealers get it caught for their shady business practices. This has been going on for years, dealers hoodwinking and using a method called sliding get the customers to buy useless stuff. Remember in November 2003 when 20/20 or Dateline had that show about how car dealers selling useless and fake products. Ripping off the customers. It was great piece of how dealers have made millions off the customers in the past. Also glad to see the industry is cleaning up now. The dealerships are doing background searches on their employees no more felony's or criminals are selling cars. Felony's can deal with money or customer information.

  2. 2. Tom Byrnes [ January 30, 2015 @ 09:52AM ]

    when it comes to Fuccillo it's to be expected. THE FISH STINKS FROM THE HEAD DOWN !!!!!

  3. 3. George Spatt [ January 31, 2015 @ 10:24AM ]

    This story says more about NY than it does about the dealer. The selling of an etch product with the accompanying guarantee (not warranty, as warranties are typically offered at no charge to consumers) is treated differently from state to state. It is interesting to me as an independent agent in this business, that Connecticut, ironically a bordering state of NY, REQUIRES that an anti theft etch product be offered to consumers who buy new cars. And in Florida, where my agency is located, the etch programs are treated as Vehicle Service Contracts. This means the program's rates must be filed with the state and cannot be negotiated at the time of sale. The decision by NY to treat this product as a property and casualty insurance policy is ludicrous. I am not lawyer, nor do I play one on TV, but I am not aware of any other state that takes this position. Regarding the comments of the 2 "Tom's" who commented on the dealer's business practices, happily the hoodwinking to which they referred has been reduced exponentially. In fact, I think many of the alleged victims who will receive what appears to be a refund, would rather have the protection. I believe the average consumer is more than qualified and intelligent enough to make a good buying decision when provided the facts in a good presentation. I believe it is an insult to them to say they made a bad decision. Also, I may have missed it, but I don't remember anywhere in the article that explained how the consumers were damaged by buying this protection, except of course the amount they paid for the protection. There is little doubt that the company that provided the plan could provide many testimonial accounts from consumers who were thrilled when they received a benefit after their vehicle was stolen.

 

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