agent Entrepreneur logo
MenuMENU
SearchSEARCH

Minnesota AG Sues EFG Over Service-Contract Refunds

PAUL, Minn. — Minnesota Attorney General Lori Swanson filed a lawsuit on Sept. 24 against Irving, Texas-based Enterprise Financial Group Inc. (EFG Companies), charging the F&I product provider with violating three consumer-protection laws for the way it handled service-contract cancellations and consumer refunds. Filed in Hennepin County District Court, the complaint, which seeks unspecified civil ... Read More »

October 7, 2014
5 min to read


PAUL, Minn. — Minnesota Attorney General Lori Swanson filed a lawsuit on Sept. 24 against Irving, Texas-based Enterprise Financial Group Inc. (EFG Companies), charging the F&I product provider with violating three consumer-protection laws for the way it handled service-contract cancellations and consumer refunds.

Filed in Hennepin County District Court, the complaint, which seeks unspecified civil penalties and restitution for alleged victims, charged EFG with violating the state’s Service Contract Law, the Consumer Fraud Act and the Uniform Deceptive Trade Practices Act for not delivering on its promise of issuing full refunds to consumers in a timely manner if they canceled their service contract within 30 days.

Ad Loading...

The lawsuit doesn’t make clear who sold the service contracts in question, although it states that EFG uses third-party companies to sell directly to Minnesota consumers. Two such sellers listed in the complaint were Azusa, Calif.-based Precise Auto Protections Inc., and Garden Grove, Calif.-based Auto Processing Center. Both companies have “F” ratings with the Better Business Bureau (BBB).

“Minnesotans are bombarded with postcard mailers claiming that their auto warranties are about to expire, and people need to know that not all of these companies play fair,” Swanson stated in a press release, referring to direct-to-consumer sales of vehicle service contracts.

According to the complaint, EFG has issued more than 3,700 vehicle service contracts to Minnesotans since 2009. They are marketed under a variety of names, including TechChoice Used Deluxe Coverage, Classic Used Vehicle Service Contract, Dent Zone Auto Body Guard PDR Contract, Motorist Assistant Plan, and Vurge High Gear Coverage.

Swanson, who is running for reelection this November, charged that the cancellation instructions given to consumers by sellers of EFG contracts were either confusing or differed from the instructions in the contracts. In one instance, according to the lawsuit, a 78-year-old grandmother talked to a dozen different people and was hung up on twice when she attempted to get a refund.

The complaint also charged EFG with delaying refunds, then failing to issue the 10% penalty per month for refunds not issued within 45 days, as required by law. In some cases, according to the lawsuit, consumers did not get full or even partial refunds.

Ad Loading...

The attorney general did not return calls seeking comment, but she did tell the Star Tribune that the lawsuit is part of a broader investigation into “extended auto warranty practices.” That’s the impression John Pappanastos, CEO of EFG, got when he was contacted by Swanson’s office this past December. He spoke to F&I and Showroom about the lawsuit Monday morning, the first interview he’s given since the lawsuit was filed.

“Up until the lawsuit, they never said what the nature of the investigation was,” Pappanastos said. “They just told us it was a broad-reaching investigation and that they were looking at multiple providers.”

Pappanastos said EFG provided a substantial amount of information to the attorney general after the company was contacted in December, but he said EFG stopped short of handing over customer information when the attorney general could not guarantee the information would be kept private.

“We would love this industry to be held to a high standard; we would love to have given the AG’s office everything they wanted,” Pappanastos said. “They just couldn’t give us assurances they would protect it.”

The attorney general also denied EFG’s request for the names of the affected consumers — 10 of whom were listed in the complaint by only their initials. Having that information, Pappanastos said, would alllow EFG to identify the source of the complaints. The executive noted that the last communication EFG had with the Minnesota Attorney General before she filed her lawsuit was in June. “And somehow, the press was privy to the lawsuit before us,” he said.

Ad Loading...

Customers who cancel their EFG contract within 30 days of purchase are instructed to contact the seller for a refund. Typically, that refund consists of the purchaser’s down payment, which is collected solely by the seller. EFG, Pappanastos noted, does not transmit funds on contracts until after the first 30 days, which means it would not have an enforceable contract in its system until after that period. If that’s the case with the consumers involved in the complaint, Pappanastos said EFG would have no active record of the sold contracts.

“That’s my bet,” Pappanastos said, noting that EFG’s total complaint rate from all contracts sold in Minnesota is less than 1%. “But we just don’t know who the distributors are, so we don’t know who hasn’t been taken care of, whether the contracts were ever funded …”

Based on the lawsuit, and the press release and consumer bulletin Swanson’s office issued in September, the investigation appears to center on telemarketing companies. Even an article published on Sept. 24 in the Star Tribune, which called EFG’s contracts “woefully limited” because they require consumers to maintain their vehicle and because they don’t pay for normal wear and tear, quoted Swanson as saying, “These [telemarketing] companies really seem to be on the uptick.”

Pappanastos, however, doesn’t believe the issues the attorney general uncovered are all related to direct-to-consumer sales, a distribution channel EFG began using in April 2008. He did reveal that EFG cut ties with Precise Auto Protection earlier this year for issues unrelated to Swanson’s complaint. He added that EFG has had no issue with the other company listed in the complaint, Auto Processing Center.

“If they can tell us what happened, we could find out if we had a bad partner or a breakdown in process,” the executive said. “But they still refuse to provide us with any info. I think we’ll be exonerated once we’re able to gather that info through discovery.

Ad Loading...

“Look, we have zero tolerance for the type of behavior alleged in the complaint,” Pappanastos added. “We have an ‘A+’ rating with the Better Business Bureau. We’re a family-owned, privately held business. There’s no impetus to compromise our integrity.”

More Industry

Five men smiling for photo in front of Honda car dealership.
Industryby Lauren LawrenceSeptember 10, 2026

Ohio Auto Group Under New Ownership

After 79 years with the Schluter family, Mansfield Auto Group has been acquired by Missouri-based Clement Auto Group.

Read More →
Blue and white RV parked on beach facing the ocean.
Industryby Lauren LawrenceSeptember 3, 2026

RV Group Expands Carolina Footprint

Blue Compass RV Columbia Northeast is the 13th RV dealership owned by Blue Compass in the Carolinas.

Read More →
Photo of two men and one woman on a discussion panel
Industryby Hannah MitchellSeptember 1, 2026

Agent Acumen

An Agent Summit panel of people who’ve been supporting auto dealers for years gave both timely and timeless advice for those starting out or mulling the prospect.

Read More →
Ad Loading...
Gloved hand holding two wrenches next to “Turn Overdue into Opportunity” Graphic
Industryby Lauren LawrenceAugust 27, 2026

Missed Maintenance Creates Opportunity

As families get back on the road and into daily school routines, service drives have an opportunity to capture customers who are behind on recommended vehicle maintenance.

Read More →
Mitsubishi shadow line-up
Industryby Hannah MitchellAugust 25, 2026

Mitsubishi Unveils U.S. Plan

The automaker announced a strategy that includes an expanded lineup and dealership presence, along with more ‘rugged’ and electric models.

Read More →
Photo of a laptop, cellphone and eyeglasses on a desk next to an office window
IndustryAugust 24, 2026

Selling to Grow

The question of whether you should sell your agency and if so, when, is up to you. But it’s a question worth asking to ensure you keep the business on the right path for yourself, employees and clients.

Read More →
Ad Loading...
Mechanic holding a vehicle diagnostic device while standing above an open car hood
Industryby Hannah MitchellAugust 24, 2026

Recalled Vehicles Hit 5-Year High

Though the number of events has fallen so far this year, impacted units are up significantly. Meanwhile, regulators consider consumer notification changes.

Read More →
outside of car dealership with cars parked in front
Industryby Lauren LawrenceAugust 20, 2026

Auto Group Acquires Top-Performing Rooftop

Car Pros sold its Kia Huntington Beach location to Sutherlin Automotive Group, marking the buyer’s third location in Southern California.

Read More →
Cars from the rear on a Shanghai freeway
Industryby Hannah MitchellAugust 19, 2026

China as Pacesetter

Automotive leaders huddled on where North America stands in the global picture and how it can strengthen its position against the Asian juggernaut’s surging industry.

Read More →
Ad Loading...
Orange BMW car on empty road.
Industryby Hannah MitchellAugust 14, 2026

BMW Concept Car Makes Fuel to Burn

The prototype developed in concert with a South Carolina university engineering team generates more solar energy than it uses in a typical daily commute.

Read More →
Ad Loading...