Third-Party Extended-Warranty Scams

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Unknown phone call
"Hello, we're calling because your auto warranty is about to expire." 
Chances are, you've received prerecorded or automated calls like this or received direct mail letters that warn, "Final notice! Your vehicle's warranty is about to expire! Don't go another day without coverage!" It doesn't matter if your car warranty is actually still good for another two years, expired three years ago, or if you have the world's best manufacturer's extended warranty currently in effect. If you own a vehicle and a phone, you may get calls from scammers posing as representatives of a car dealer, an auto manufacturer, or third party auto warranty company. They all tell you the same thing; your auto warranty is about to expire and they can save you from certain peril by renewing and extending your warranty. But you must act right away. 

Third party extended car warranty scams have been going around for years, but it has really revved up again recently. This is how it usually goes: You get a call saying your car warranty is about to expire, but that you can pay a little extra to extend it. It might appear that the call is coming from your dealership or another reputable company associated with it. What makes it particularly hard to discern if this type of call is fraudulent is that the scammer may have specific information about your car including the year, make and model of your vehicle, that they use to deceive you into thinking they are a legitimate caller.

What is a Third Party Auto Warranty?

A third party warranty is so named because it has no direct business relationship with the product it covers. In this case, that's your car. These warranties differ vastly from auto manufacturer extended warranties, which use original parts and factory-trained technicians to repair your vehicle at a dealership.

Third party warranty companies may give you the option to take your car into the dealership, but the reimbursement process can be a hassle if the warranty company doesn't want to cover a part. While some of these companies are legitimate, a number of them are fly-by-night operations that go belly up within a few years, costing consumers hundreds of dollars and leaving them without coverage.

Repeated consumer complaints about such companies generally fall into two categories:
  1. The first involves customers who buy an extended warranty and want to cancel it, but have difficulty getting a refund. 
  2. The second concerns consumers who buy a third party warranty and file it away until they need repairs. When they review the vehicle service contract, they realize that the repairs are not covered, thanks to the agreement's numerous exclusions. 
Stick to the manufacturer's extended warranty 
Warranty scams are widespread enough that the FTC has issued a consumer alert on its Web site. The best way to avoid extended warranty scams is to choose coverage using the auto manufacturer's extended warranty. That way, you deal with the same company you trusted enough to buy a car from in the first place. Almost every car manufacturer offers a factory extended warranty and you'll have the peace of mind that your vehicle is in the right hands. 

Don’t fall for it.

There's a possibility that the caller might be selling a real product. That product would be a service contract that costs quite a bit and covers little or nothing. More likely, the scammer is just trying to steal your hard-earned money or your identity. At the beginning of the prerecorded call, you are usually instructed to press a certain number or stay on the line, then asked to provide personal information, which can potentially be used to defraud you. 

The recorded voice might tell you to press zero to speak to a real person. Whatever you do, do not press zero. You might be told to press one in order to be taken off of their call list. Don't do that either. If you press any button, the "robocaller" will be alerted that it has reached a "live" number. That means you are a "hot lead" and your phone number will be sold to a lot of other scammers and you'll start getting a whole lot more of these robocalls. 

If you receive such calls, simply hang up or don't pick up the phone in the first place if you don't recognize the number. Some of today's clever robocalls seem to come from local numbers and/or places that you do recognize such as credit card companies, the police department, or from local area codes. Don't fall for it. 
How to protect yourself 
First, never answer calls from numbers you don't recognize. Never provide any personal information to anyone you don't know over the phone, such as a social security number, credit card information, banking account information or driver's license number. Remember that telephone scammers are very good at what they do and are trained to defeat any argument you might have as to why you should get off the phone with them. They'll tell you that they work for a company you have had dealings with and trust. Be extremely cautious. 

  • If you have caller ID, you can screen incoming calls. Legitimate telemarketers are required to transmit or display their phone number and the name and/or the phone number of the company they're representing. The display must include a phone number that you can call during regular business hours to ask that the company no longer call you. 
  • Be cautious even if a number appears authentic. Criminals may engage in caller ID "spoofing" wherein they deliberately falsify the information transmitted to your Caller ID display to disguise their identity. Avoid answering any calls you suspect may be spoofed.

What you can do about it 
The current rash of third party extended car warranty calls are just part of an unending, infuriating stream of telemarketing scams and schemes. The good news is that the number of people falling prey to scams has fallen, according to the Federal Trade Commission (FTC). The bad news is that the ones who are taken, are being taken for more money. The median loss per victim last year was $700. But these days, the problem isn't so much about avoiding the scams themselves, as avoiding the endless, annoying phone calls. 

Many people got rid of their landline phones when robocalls started outnumbering real ones. But now these scam calls come in on our cellphones, too. And many scams have made the jump to text messaging. Remember, if someone texts you a link, don't click it! 

So what can you do? 
  • Register your phone numbers with the Do Not Call List by calling 1-888-382-1222. It might not end all the scam calls you get, but it will probably cut down on some legitimate solicitors that you don't want calling you. 
  • If you lose money to a third party warranty, file a complaint with the Better Business Bureau (BBB). You can also file a complaint with the FTC. Note, however, that the FTC does not resolve individual consumer complaints. Instead, the complaints it compiles can lead to investigations and prosecutions. 

Lithia Motors can help 
Think of an extended warranty as a service contract that minimizes your costs in the event of high-priced repairs. Make sure you know what is covered and what is not covered in your policy before you sign the contract. That way, you won't run into any surprises when you need the coverage most. Your Lithia Auto dealership can look up the exact day when your car's factory warranty expires by determining the "in service" date. We have excellent options for extended warranty programs that will work for you.