Avoiding Car Warranty Scams

Because cars are such a big investment for consumers, a variety of law are aimed at protecting consumers. One such law is the California lemon law, but there are also other consumer protection rules that apply to a wide variety of situations. 

Unfortunately, even with consumer protection laws in place, scammers are still taking advantage of car buyers and hurting California consumers.

Don’t Fall for the Scam

There are many different kinds of scams targeted at car buyers. Just recently, the Herald Dispatch published a warning alerting its readers to not “fall for the car warranty scam.”

The scam targets people who recently purchased cars. They often begin getting telephone calls and other notices in the mail warning the owner that his or her warranty is about to expire. This may not be true. The mail and phone solicitation are aimed at trying to convince people to buy a so-called “extended warranty.” The extended warranty is actually a vehicle service contract which may not provide any of the expected benefits motorists thought they were getting.

The car warranty scam is a major problem, especially if the calls or mailings trick consumers into thinking they are from the car manufacturer, as is commonly the case. The scammers send out “warranty expiration” notices which are designed to look like authentic notifications direct from manufacturers. 

Consumers are urged to respond right away, so they will not lose the chance to extend the coverage on their vehicles. Many consumers buy these “warranties” in response to the mailings and other high pressure sales tactics and then discover that they have far less coverage than they were promised.

The warranty scam is so common that the Federal Trade Commission (FTC) mailed more than $4 million in refunds to around 6,000 customers who had been sold bogus warranties by just one company last year. The consumers each paid between $1,900 and $2,900 for service contracts that were sold as extended warranties. 

When they tried to use their warranty service, they discovered it was almost impossible to actually get any repairs covered.  In other circumstances, the “warranty” or service contract they bought just ended up covering a few limited things that the original car warranty was still covering anyway.

The bottom line is consumers need to do research and make informed choices.  The Herald Dispatch recommends not responding to any phone calls or mail solicitations without contacting the vehicle manufacturer or its dealership directly to find out if the offer is a legitimate one.  By doing your research when someone is trying to sell you a warranty, you can reduce the likelihood of falling victim to a scam.

You should also make certain you are aware of the scope and limitations of laws like the lemon law, which could provide important protections in appropriate situations. Contact The Bickel Law Firm, Inc. to find out more about whether you could have recourse under California's lemon law.