Car warranties can be a helpful tool for keeping your car safe and reliable. An extended car warranty is much like the warranties that come with new cars. It covers your car’s mechanical and electrical systems, such as the engine and transmission, if they break down.
Unfortunately, there are many extended car warranty scams out there. Consumers received 28.2 million illegal car warranty scam phone calls in July 2020. Here are some ways to avoid warranty scams and best practices to help you find reputable extended car warranty companies.
How Car Warranty Scams Work
Unsolicited calls are one of the most common scams. If you ever get a call about your car warranty, be wary of who is on the other line. You should never give out any personal information to someone that you don’t know. Also, if they are calling multiple times within a short period of time, it’s likely an extended warranty scam.
Scammers usually use predictive dialers, also known as robocalls, saying that your warranty is about to expire. The goal of the phone call is to persuade you to purchase additional warranty protection before the call ends. They use caller ID spoofing to falsify their location, so it looks like they’re a local business.
Red Flags: How to Identify a Car Warranty Scam
Since there are so many scam companies out there, it’s important that you can tell the difference between a reputable extended car warranty company and a scam.
Scammers will try to get as much personal information as they can from the consumer. They will also have you send money using untraceable methods, such as gift cards, prepaid debit cards, and wire transfers. Here are some red flags to be aware of:
Buy Now or Lose the Offer
Scammers frequently intimidate customers to buy immediately by claiming that the offer is only available for that day.
To avoid extended warranty scams, it’s important to be patient. If something seems too good to be true, it probably is. Don’t jump at the first option you see. Take your time to research companies thoroughly before making a purchase decision.
Scammers will try to get you to pay immediately. If you’re told to wire money or use a prepaid debit card, it’s probably a scam. Reputable extended car warranty companies will give you time to consider the offer and decide if you want the offer.
Many scammers claim that they will provide an extended car warranty regardless of the vehicle’s age or existing problems, but this is never the case. Only registered companies approved by your state and insurance companies can legally provide coverage. All insurance companies are required to approve all applications for extended car warranties.
Refusal to Send Anything in Writing
If a company is unwilling to send your warranty information in writing or email, they are likely a scam. Legitimate companies will have a physical address and will be more than happy to send you the paperwork.
How to Avoid Car Warranty Scams
There are many ways to avoid extended car warranty scams. Here are some best practices for finding a reputable dealer:
- Protect your personal details: Never give out your personal information over the phone or online. Avoid giving out your social security number and credit card information. If a company asks for this information before sending you any paperwork or offers, they are likely a scam.
- Use your phone’s caller ID function: Identify which numbers are calling you and ask them where the call is originating from. If the company claims to be a local business, but the call doesn’t come from your area, it’s likely a scam.
- Hang up: If an unsolicited call is prerecorded or automatic and asks you to press a number to be connected with a live person, hang up. Also, hang up if the caller says, “Can you hear me?” or any vague question.
- Don’t make immediate payments: A reputable warranty company will not ask you to pay upfront.
- Read the fine print: Ask for a written copy of the policy they’re offering. If it’s a scam, they probably won’t send you anything, or they’ll say they will send it after you accept. Make sure you read the Ts and Cs before agreeing to any contract.
- Ask to call them back: If they say they’re from your dealership or insurance company, ask to call them back, use the contact information on your insurer’s website.
- Report the call: File an unwanted call complaint with the Federal Communications Commission.
Unfortunately, many consumers fall victim to extended car warranty scams. If a scammed consumer tries to make a claim, the company won’t be there to provide the warranty or will try to charge them more money for coverage. They are also likely not insured with the state, which means that you won’t be reimbursed for any repairs made to your vehicle.
It’s important to do your research when purchasing an extended car warranty. You should always ask companies for your state’s insurance commissioner’s contact information, so you can verify the company is registered in your state.