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How to Steer Clear of Auto Warranty Scams

Some drivers choose to purchase a vehicle service contract in order to protect themselves from the cost of unexpected auto repairs. A vehicle service contract, often referred to as an extended warranty, is an agreement between the car owner and the warranty company, obligating the warranty company to pay for repairs covered by the contract for a specific period of time, typically between three and seven years. Extended auto warranties are offered by vehicle manufacturers, car dealerships, and independent providers.

If you are in the market for extended vehicle protection, it is important to take the time to shop around to make sure that you get the level of coverage that is right for you.

Knowledge is Power

One of the most important things is to completely and clearly understand what repairs and services are covered under your warranty and what is not. This is often the biggest source of confusion when it comes to extended warranties. Although they are called extended warranties, they do not all function in the same way that your original bumper-to-bumper warranty might.

Two important car warranty information terms you should know are exclusionary and inclusionary:

  • Exclusionary contracts generally cover all parts of your vehicle other than those specifically listed in the contract. Exclusionary plans are the closest plan to the factory coverage and include items outside of just the basic components. This is especially important for complex vehicles that have technology not found on any other vehicle. Typical eligibility is under 60,000 miles.
  • Inclusionary policies cover components of your vehicle that are specifically listed in your warranty contract. This type of coverage lists out the basic and major components for the listed systems. This can be a very comprehensive option for a vehicle over 60,000 miles.

Be sure to get a copy of your vehicle service contract. You should always verify the information the sales person is telling you matches the information in your contract.

How to Protect Yourself

It’s important to explore all of the options as sometimes uninformed consumers can become a target for scams. To protect yourself from becoming a victim, educate yourself!

To begin, be aware of when the extended warranty on your vehicle is scheduled to expire, and be cautious of any mail or phone calls you receive warning that the warranty on your car is about to expire. Many times, these phone calls or mailings give the impression that they represent your car dealer or manufacturer, but are actually coming from unrelated businesses who may be trying to take advantage of an opportunity to offer you an extended warranty you may not even need.

If you do respond to a call from one of these businesses, you may hear high-pressure sales tactics and demands for personal financial information. Never give out personal financial or other sensitive information, including your driver’s license number or Vehicle Identification Number (VIN), unless you know who you are dealing with.

Reputable providers of extended vehicle protection have highly trained, professional representatives who will work with you to find a vehicle protection plan that best fits your specific needs, without demanding your personal information.

To see video examples of these types of high-pressure sales tactics to help you recognize and avoid them, check out www.carchexdealbreakers.com.

If you get mail or phone calls about renewing your vehicle warranty, be sure to do your due diligence. Your vehicle’s warranty may be far from expiring. If you have a question about your existing manufacturer warranty, call the dealer who sold you the car, check your owner’s manual, or contact the vehicle manufacturer.

Be skeptical of any unsolicited sales calls, especially if the call is a recorded message or if your phone number is on the National Do Not Call Registry. You should not receive recorded sales pitches unless you have specifically agreed to accept such calls.

Before you do business with anyone offering you an extended auto warranty, do some research on the seller and the contract administrator (the company responsible for paying your claims). Check them out with the Better Business Bureau to make sure no unresolved complaints are on file.

If You’ve Been Scammed

If you are taken advantage of and end up losing money to a third-party warranty, there are several agencies you can turn to. Your first step is to try and resolve the issue with the company who sold the warranty to you. If that does not work, consider filing a complaint with the BBB. The purpose of the BBB is to act as an intermediary and resolve disputes between consumers and businesses.  By spreading the word, you may help expose a pattern of suspect activity and prevent others from getting scammed.

Buying an extended warranty for your vehicle can help you avoid paying a huge amount of cash if your car were to need an expensive repair. To help ensure your peace of mind, research your decision carefully before making the investment.

Joe Campanella is the EVP of business development at CARCHEX. Headquartered in Hunt Valley, Md.,CARCHEX is the premier provider of Extended Auto Warranties and Mobile Vehicle Inspections. CARCHEX is the preferred partner to the most trusted names in the automotive industry, including Pat Goss of TV’s MotorWeek and Carfax. You can read their automotive blog here.

By accessing The Allstate Blog, you agree to our Terms of Use and understand that this article is intended for educational purposes. It is not intended to be an endorsement of any brand.

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