Premium finance company AFCO Credit Corp. has been ordered to pay two local LLCs more than $33,000 in premium refunds as part of a settlement by Attorney General Martha Coakley’s Office with AFCO resolving allegations AFCO enabled Boston-based William Gallagher Associates Insurance Brokers Inc. (WGA) to charge its customers undisclosed broker fees.
Under the terms of the settlement with AFCO, the company will refund $11,870 to Berkshire Power Company LLC and $21,455 to Milford Power Company LLC. These refunds represent the interest charges that each company paid to AFCO as a result of unknowingly financing WGA’s undisclosed fees. AFCO has also agreed to reform its practices by requiring insurance agents and brokers to separately disclose their fees on AFCO’s premium finance agreements.
The Attorney General’s Office filed a lawsuit against WGA on December 19, 2007, in Suffolk Superior Court, alleging that WGA unfairly charged customers over three million dollars in undisclosed fees. According to the complaint, in some instances AFCO acceded to WGA demands that AFCO hide fees on finance agreements by listing WGA’s undisclosed fees as insurance premiums. The Attorney General’s Office said it believes that AFCO’s actions enabled WGA to deceive customers and collect excessive compensation.
Under the terms of the consent judgment the Attorney General’s Office obtained against WGA in December 2007, WGA returned over three million dollars to customers, paid $925,000 to the Commonwealth, submitted to a binding audit, and adopted transparent compensation practices. As a result of the binding audit, which was completed in November, 2008, WGA returned an additional $330,624 to affected customers and paid an additional $80,000 to the Commonwealth.
