Extended Car Warranties, Third Parties, and CorruptionPosted September 8, 2016
Chances are you’ve received numerous letters in the mail indicating that the warranty on your car is about to expire and you can renew it for the “low” price of several hundred dollars a year. Given that the average vehicle on the road today is approximately 11.4 years old with a significant number of miles on it, the original factory warranty is usually “a distant memory,” as one Consumer Watch reporter writes.
Although Oklahoma law treats extended warranties as insurance products, meaning that the company that sells one to you owes you the same duty of good faith and fair dealing as, for example, your auto insurance or home insurance policy company does, these notices are arguably somewhat fraudulent and misleading at times, especially those that look like warning notices that your car is officially “unprotected” so you must act fast.
Federal Trade Commission Investigation
Not only do these extended warranties cost a pretty penny, but there are some alarming exemptions included in many of them such that, if you find yourself needing the coverage at some point, you may just find that you can’t actually use the policy after all because your need isn’t technically covered. In fact, it’s become such an issue that the Federal Trade Commission (FTC) had to officially investigate one company—Dolce Group Worldwide (aka “My Car Solutions”)—last month, and force it to refund over $4 million to customers. In effect, the agency found that the company had conned customers into believing that it was associated with auto manufacturers and dealers, and in doing so, offered to sell them extended auto warranties that didn’t actually exist. Another company – U.S. Fidelis—was also investigated at one point, and its owners were sent to prison.
Based on the research done, it isn’t just this two companies: most of the companies out there appear to be out to rip people off, offering them peace of mind and then proceeding to deny coverage when they need it.
Distinguishing Good Policies from Scams
Extended warranties sold by these third parties can be distinguished from traditional auto warranties offered by the actual manufacturer; for example, traditional warranties typically require factory-trained technicians who work at a dealership and original parts, third-party warranties will state that you can choose who services your car (which is problematic for several reasons).
The FTC offered the following advice regarding extended warranties:
- Be skeptical
- If you feel pressured by a telemarketer, hang up on them
- Do not give out your personal information
If you have any doubts, sticking with the original manufacturer is the best way to go.
Experienced Oklahoma bad faith insurance attorneys
If you find yourself the victim of an extended warranty, our experienced lawyers will deal with your warranty provider so that they perform according to the terms of your vehicle service agreement. We will even file a lawsuit for bad faith requesting punitive damages if necessary. In these circumstances, it is always in your best interest to seek legal advice from a firm that focuses on bad faith denial of extended warranty claims because this area of litigation is still developing. Contact us today for a free consultation today—we can help.