Court Orders US Automotive Protection Services and its Owners to Pay $5.9 million in Civil Penalties for Deceptive Advertising and Unlicensed Vehicle Insurance Products

 

SALINAS, California - Monterey County District Attorney Jeannine M. Pacioni, together with the

Napa County District Attorney, announced on September 30 that Monterey County Superior Court entered a

judgment against Missouri-based US Automotive Protection Services LLC (“USAPS”), and its owners,

Brandon Schrader and Michelle Schrader. The defendants were ordered to pay $5.9 million in civil

penalties, in addition to restitution to California consumers, for false and misleading advertising related

to the sale of unlicensed insurance products.

From 2021 through 2023, USAPS sent more than 4 million deceptive advertisements to California

consumers. The mailers were designed to create a false sense of urgency, leading recipients to believe

they would lose their automobile warranty protection unless they immediately called the telephone

number provided. Consumers who called the number were then subjected to additional

misrepresentations by USAPS sales representatives, including claims that the product was an extension

of the caller’s existing dealer warranty, when it was not.

The defendants also led consumers to believe they were purchasing a vehicle service contract through an

automotive dealership with which they had previously done business. In reality, consumers were

purchasing an unapproved motor club membership from an unrelated third party.

Even after the People filed their lawsuit in October 2024, the defendants continued to market and sell

their unlawful insurance policies to California consumers. The defendants told consumers they had

found a “loophole” and encouraged them to provide false out-of-state addresses.

More than 13,000 California consumers signed up for the deceptive policies, and more than 10,000

ultimately cancelled their policies before the end of their terms. The high cancellation rate demonstrates

the disconnect between what consumers were led to believe they were purchasing and the products

actually provided by the defendants.

The Court ordered Defendants to pay $5,934,150 in civil penalties, in addition to restitution to California

consumers. The Court also issued a permanent injunction prohibiting the defendants from selling

unlicensed insurance products and engaging in false advertising.

The Monterey County District Attorney’s Office will pursue enforcement of the judgment in Missouri,

where the defendants are based.