Auto owners beware – car warranty scams are on the rise, and everyone is a target. As long as you own a car and any form of contact (phone number, postal address, email address, and so forth), you could be the next victim.
The scammers tend to begin by making a startling phone call, claiming to know a lot about you and your car. Sometimes they even claim to know when and where the car was bought, and, thanks to sophisticated information spoofing tools, in most cases, they’re correct. Often, you’ll be informed about the pending expiration of your manufacturer warranty and the need to buy a new coverage plan. Then, the caller will offer to help you buy a new extended warranty.
Do not fall for these scams. All the threats and promises these companies make are just a ploy to either con you of hard earned money or trick you into giving away critical information such as your credit card number, social security number, or bank details.
You need to take early steps to protect yourself. Below, we look at common traps and simple ways to stay safe from and handle any tricks directed at you.
Common Auto Warranty Scams and How to Stay Safe
There are four main auto warranty scams used to trick car owners into parting with money or personal information:
Fake Warranty Expiration Notices
We’ve already touched on this. Often, the scammers send out notices in bulk to hundreds of car owners. In many cases, the letters are disguised to look like legitimate notices from the manufacturer, complete with logos, stamps, and signatures. The idea is to fool you into thinking that it’s your manufacturer warning you about pending car warranty expiration.
Safety Tip: If you receive a warranty expiration notice, whether in the form of a letter, email, or text message, the first thing to do is check your warranty to confirm the expiry date. If indeed the warranty has or is soon to expire, find the phone number of your manufacturer in the original warranty document and call them or find a reputable extended car warranty online if you are thinking about extending your coverage. However, if the warranty is still intact, know that you’ve been thrown bait. The best thing to do in this case is to ignore the caller. If they persist, file a complaint with the Federal Communications Commission (FCC).
Traps in the Fine Print
Knowing that most people don’t bother to read warranty agreements to the end, sham warranty companies sometimes also insert a clause in the agreement that could see you paying top dollar for non-existent or below-par services. For instance, the company may state that in case of an accident, they’re allowed to supply the replacement parts. As soon as you sign the document, you agree to this clause, meaning that the company can supply whatever parts they like, even non-working ones, and you have to pay.
Safety Tip: Always read the warranty agreement in detail before signing. In fact, read it twice or have a friend read it too before accepting the deal.
Dubious Discounts and Made-up Offers
Warranty companies are also aware that consumers love a big discount. So, they from time to time use this “weakness” to trick car owners into seeing discounts even where none exist. How? By inflating the original price of the warranty and then slashing the ballooned price by a large discount. For instance, if a warranty package was originally priced at $1,000, the provider will first inflate the price to $3,000, then provide a 66% discount. This will take the price down to $1,020. See what happened there? You’re still paying the marked price!
Safety Tip: Treat every offer as an alarm bell. Whether it’s a “seasonal discount” or “Father’s Day special,” think twice before making a decision.
Finally, you may also encounter auto warranty scams in the form of no-shows. Simply put, when the time to pay comes, the company you so much trusted disappears! Either your calls will go in vain or if they pick, you’ll be told that they can’t pay for a number of mistakes you’ve made. For instance, that’s the day you’ll learn that the broken part isn’t covered. Or, your repairs could be withheld for “incomplete” paperwork.
Safety Tip: When choosing a provider, do a thorough research. Find out if there have been previous complaints about the company you’re considering. If you discover non-payments and no-shows, stay away from that provider.
How to Pick a Reputable Car Warranty Company
Do not be a victim of the above or any other auto warranty scams. When the time comes to buy extended car warranty, know what you need. Compare providers, discuss the deductible, and most importantly, read the fine print.