Scammers posing as legitimate warranty companies like to call car owners with offers to renew their car warranties, only to swindle them out of money with poor vehicle service contracts. Here's how you can detect vehicle warranty scams to avoid getting stung by them.
How Do Car Warranty Scams Work?
Most car warranty scams are straightforward. A scammer masquerading as a legitimate company, such as a car dealer or insurer, calls you to let you know your car warranty is due to expire. The scammer then offers you an extended warranty and asks for your personal information to draw up a vehicle service contract. Many such calls are robocalls—that is, automated calls that churn through many people quickly and that usually feature pre-recorded voices—and are therefore easy to detect. But others involve real people who may know a lot about your vehicle and warranty. They may know your name, the make and model of your vehicle, your vehicle's mileage, and the terms of your insurance or warranty agreements. Most of this information can be purchased online from data collection companies. The service contracts that these scammers offer typically range from $1,000 to $3,000 and tend to include woefully incomplete coverage, such as coverage of part of the engine rather than the whole. Getting a refund from the scammer never works, and scammers like to target seniors. Other car warranty scams include fake warranty expiration slips sent by mail and featuring a toll-free phone number for you to call. These notices typically have the return address of a motor vehicle department or vehicle manufacturer for a touch of credibility, and they may have bold-text warnings that read "Final Notice" or "Priority Level: High."
Car warranty scammers often use high-pressure sales tactics to push owners to buy their service contracts. These promises include saying their offers are one-time-only or that it's easy to cancel if you change your mind. The scammer may even threaten to delete your warranty or insurance files if you don't sign up for the contract. If pressed to provide a copy of the terms and conditions of the agreement, the scammer may request a down payment before sending it. Although some scammers practice straight fraud, others rely on legal loopholes to get away with unfair practices, such as by including carefully worded fine print in their contracts. Some scammers don't explicitly state that their offers are warranties and instead claim they're just offering "repairs." Alternatively, some scammers duplicate the coverage of consumers' actual warranties. Scammers may ask for your bank account information, Social Security number, driver's license number or credit card information over the phone. They may then sell this information to fraudsters or use it to steal your money. Car warranty scammers may also send you emails with addresses that look to belong to real dealerships. Although caller ID can give scammers away, such as by displaying a 1-800 number, the more advanced car warranty scam calls have legitimate-looking numbers. The scammers may even use the telemarketing trick of calling you from a number that appears to be local. To seem authentic, callers may "transfer" you to other scammers and then ask for details about your vehicle, such as whether you get it serviced often or whether your check engine light is on.
How to Protect Yourself from Auto Warranty Scams
Protecting yourself from these scams is easy once you know how they work. Use caller ID to screen phone calls because comanpanies are required by law to display a genuine number to contact to request that they stop calling. Similarly, cell phone providers sometimes offer apps to help you screen telemarketers, and you can also find such apps online. Unless you have proof that the company calling you is authentic, never give them sensitive information, such as your credit card or bank account details. If you receive a verbal or written correspondence regarding your car's warranty, check the manufacturer's contact information online to see if it matches. A service contract isn't always the best idea because you might be able to save more money by putting aside a repair and maintenance fund once you buy a vehicle. As a rule, don't agree to any contract without reading the terms and conditions, including the fine print, and comparing these against the Federal Trade Commission's Auto Service Contracts and Warranties guide.
If you want extra protection against scam calls, consider investing in robocall-blocking software such as YouMail. If YouMail's database detects a scam caller, it plays an "out of service" message to trick scammers into deleting your number from their call lists. You can also check YouMail's database for adverse reports. Keep in mind that not all third-party warranty companies are unscrupulous, even when they lack ties to manufacturers. And you always should file a complaint with the Federal Communications Commission if scammers harass you. The FCC can fine companies that violate the Telephone Consumer Protection Act. Occasionally, the FCC returns the money conned from consumers right back to them. In 2011, the FCC gave $3.2 million in refunds to 4,450 people who bought fake warranty coverage. In 2019, they awarded $4 million to about 6,000 people for the same reason. Making a consumer complaint to the Better Business Bureau is another good way to pressure scammers to give you a refund. Also, the BBB has records of previous complaints, which you can check for help in detecting scams. For extra peace of mind, log your phone number on the FTC's National Do Not Call Register.
Scammers tend to follow a similar playbook when they call. Their knowledge of cars tends to be superficial, so it's easy to catch them, making blatant mistakes about your vehicle or your personal information. When rattling off a list of parts that their warranties supposedly cover, they may mention parts unrelated to your vehicle. Scammers also tend to backtrack when pressed on specifics about their company, such as the location of their offices. Also, they tend to speak fast and offer a significant discount during the hard-sell process, and they frequently sell their coverage as a monthly payment plan. They may also claim that their warranty has no sales tax, which is most likely false. When shopping for car insurance online, keep in mind that any data you input, such as your car's make and model, can fall into the hands of scammers. Don't be afraid to hang up on telemarketers. Real manufacturers don't call consumers day after day or use high-pressure sales techniques. When in doubt, check your manufacturer's warranty for an expiration date or search Google for their warranty extension policies. In contrast to third-party warranty companies, auto manufacturers tend to offer robust extended warranties with thorough coverage. Finally, if you've already been scammed and want restitution, you can always call your state Attorney General and ask to sue the scammer.
Car warranty scams are a growing problem now that people's contact information and other details are easy to get online. However, it's still essential to keep up with scam trends. Be wary about companies that you might not be able to find quickly with an internet search or aren't from your automaker or local dealer. If you know how scammers operate, however, you can avoid falling for their tricks every time.