Buyers Beware: ‘Tis the Season for Auto Warranty Scams

Posted December 5, 2016

It’s that time of year again; when scam auto warranties telling people that they need to ‘take immediate action and purchase an extended car warranty or else they’ll be in trouble’ arrive in mailboxes. This has become such a serious issue, in fact, that the Federal Trade Commission (FTC) recently had to take action against one business selling these warranties, resulting in $4 million in refunds to more than 6,000 customers.

The scam works by these businesses sending out thousands of cards or making consumer calls, convincing consumers to purchase extended auto warranties. However, the warranty typically turns out to be essentially worthless and costs these consumers anywhere from a few hundred dollars to a few thousand. Some of the companies even fraudulently posed as manufacturers. As a result, many consumers filed complaints with the Better Business Bureau.

What to do

Experts suggest that, if you receive a postcard or phone call about your car’s warranty expiring, you should contact the manufacturer right away instead of contacting the number listed on the postcard. Before you decide that you absolutely need a third-party warranty, make sure you do your homework, and consider going with a service contract with the manufacturer instead. Third-party contracts are notorious for excluding the actual repairs that you need when the time comes.

You can also check out ratings on the Better Business Bureau website. It is absolutely crucial that you never sign any contract for a service or product without first reading all of the conditions and terms—even with an experienced attorney, if necessary—so that you know exactly what you are getting into beforehand.

The FCC also recommends that you take various steps to protect yourself if you receive a call or postcard along these lines, including the following:

• Do not provide any personal information, such as your Social Security number, driver’s license number, credit card information, etc.; and
• Screen incoming calls if you have caller ID. Legitimate telemarketers are required to display their phone number and/or a name; however, note that you should still be cautious—fraudulent callers can deliberately falsify information transmitted to your Caller ID display.

You also have the option of filing a complaint with the FCC and Better Business Bureau if you feel that you are being harassed by any of these companies. The FCC can, under some circumstances, issue warning citations and fine companies who are violating the Telephone Consumer Protection Act.

Lawsuits

One attorney general recently sued a company that sold service contracts to consumers after sending them postcards indicating that their cars needed repairs but their warranties were about to expire. This particular company—United Auto Defense, LLC UAD—sold contracts excluding coverage for repairs covered by a manufacturer’s warranty—contracts that cost consumers between $2,500 and $4,750—to people who already had good manufacturer warranties in place.

Experienced Oklahoma Bad Faith Insurance Attorneys

If you find yourself the victim of an extended warranty, our experienced lawyers can help. Focusing exclusively on representing victims of bad faith insurance, we’ve filed countless lawsuits requesting damages for our clients. Contact us today for a free consultation, (405) 272-0303.