Don’t Get Caught In an Extended Warranty Scam

You’ve got a phone call, and there’s a helpful representative on the line. He wants to sell you a fabulous product you haven’t known you’ve been missing: an extended warranty on your car. Don’t sign up for anything just yet! You may be the target of an extended warranty scam. 

Here’s what you need to know about extended warranty scams and how to avoid them.

What is an extended warranty? 

Extended warranties, also known as service contracts, are offered as a way to protect yourself from the high cost of repairs after your manufacturer’s warranty expires. While legitimate extended warranties can provide peace of mind, the industry is also rife with scams that target unsuspecting consumers.

How do these scams play out?

Extended warranty scams play out like this:

1. You receive an unsolicited offer. This can be via phone call, email or a letter from a company claiming to offer extended warranties for your vehicle. These offers often appear to be urgent, warning that your current warranty is about to expire (whether you have one or not). The scammers might impersonate legitimate financial institutions, companies or dealerships to make themselves appear credible. They’ll generally ask you to share some personal information at this point.
2. You’re pressured to act quickly. Next, the scammer will attempt to create a sense of urgency, pushing you to make a quick decision. They might claim that this is a limited-time offer or that your car is at risk of costly repairs without their coverage. The goal is to get you to agree to the purchase without giving you time to do research.
3. You’re given vague or misleading information. Once you show the slightest bit of interest, the scammer will provide vague or misleading information about the coverage. They might use technical jargon or complex terms to confuse you and hardly offer any explanations of what is actually covered. Also, the terms and conditions will be unclear, making it difficult for you to understand what you’re buying.
4. You’re asked to pay up front and later hit with monthly fees. After convincing you to sign up, the scammer will ask for your credit card information to charge you an upfront fee and set up recurring monthly payments. 
5. You’re left with fake or useless coverage. If you do receive a contract, it will likely be full of loopholes and exclusions that make it virtually impossible to use the warranty for any real repairs. In some cases, the coverage might be entirely fake, and the company will be unreachable if you do try to file a claim.

Red flags of extended warranty scams

Look out for these signs of an extended warranty scam to protect yourself from falling victim:

• Unsolicited contact. Be very cautious if you receive an unsolicited offer for an extended warranty, especially if it comes through aggressive phone calls or emails. Legitimate companies typically do not pressure you to purchase a warranty at random.
• High-pressure sales tactics. If you’re pressured to make a quick decision, you’re likely looking at a scam.
• Lack of details. If the contact can’t provide you with clear details about the alleged coverage, it’s likely a scam.
• Request for immediate payment. Any company that demands upfront payment has a very good chance of being a scam.
• You can’t find any information about the “company”. If there’s no physical address or legitimate and professional online presence for the alleged company, it’s likely a cover for a scam.  

Protect yourself from extended warranty scam

Protecting yourself from extended warranty scams requires vigilance and skepticism. Here are some tips to help you stay safe.

First, before agreeing to any warranty, research the company that’s offering it. Look for reviews, check with the Better Business Bureau (BBB) and see if the company is registered with your state’s consumer protection agency. A lack of information or negative reviews should be a major red flag.

Next, if you’re unsure whether your current auto warranty is about to expire, or if you need an extended warranty, contact your car financial institution or dealership directly. They can provide accurate information and offer legitimate extended warranty options. 

If you are considering an extended warranty on your vehicle, be sure to read the contract carefully. Pay close attention to what is and isn’t covered and don’t sign any contracts until you fully understand the terms. 

Finally, never share personal information, such as your Social Security number, or other personal details with unverified contacts. If you’re interested in a warranty, initiate contact with a reputable company yourself. 

Extended warranty scams can prey on unsuspecting car owners and trap them in high cost but essentially useless plans. Use this guide to stay safe!

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