How to Protect Yourself from Auto-Warranty Scams

Beware Fast Talk and Fine Print

by cashadvance.com

If you’re planning to keep your vehicle beyond the usual 3-year/36,000-mile warranty offered by the manufacturer, an extended warranty is a good idea. The trick lies in discerning the authentic warranty from one that could leave you steaming by the roadside.

Ignore “Urgent” Letters and Phone Calls

Be wary of mail and telephone offers warning that the warranty on your car is about to expire. These “urgent” messages are designed to resemble a legitimate notice from your car dealer or manufacturer. Using phrases like “Motor Vehicle Notification,” “Final Warranty Notice” or “Notice of Interruption,” they are trying to scare you into calling a toll-free number where the hard sell can begin.

These bogus warranties — known as “auto service contracts” — can sell for hundreds or thousands of dollars and usually require personal financial information and a down payment before you are provided details about the services included. If you buy a service contract, you may find that the company has mysteriously gone out of business when it comes time to file a claim.

Protect yourself from shady offers by registering your phone number with the National Do Not Call Registry. Once registered, no salesperson may call you unless you’re an existing customer or have contacted the company within the last 18 months. To report violations, visit the site or call 1-888-382-1222.

Protect Yourself

Hang up on fast talkers. Telemarketers often use high-pressure tactics to get you on the hook. A legitimate business will give you time and written information about a warranty before asking you to purchase it.

Never give out personal financial information such as your bank account, credit card or Social Security numbers. Don’t give your driver’s license number or Vehicle Identification Number (VIN) unless you’re sure the company is reputable. Scam artists often solicit this information, and then use it to commit additional fraud against you.

If you have questions about your warranty, check your vehicle’s owner’s manual. You can also call the dealer or contact the vehicle manufacturer.

Do Your Homework

Research the company responsible for paying your claims (usually called the “contract administrator” or the “service contract provider”). Service contract brokers do not decide which repairs are covered, and may claim to have no further responsibility once you’ve bought their contract.

Check out the seller and the contract administrator with your state Attorney General, local consumer protection agency and the Better Business Bureau to make sure the company has no complaints filed against them.

Fight Back

If you think you’ve been victimized by an auto warranty scam, file a complaint with the Federal Trade Commission. The FTC cannot intervene in individual disputes, but the information you provide may indicate a pattern of possible law violations requiring action by the Commission.