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Car Warranties: Beware of Possible Scams

» Posted November 7, 2016Resources | Share This Post

Because cars are such big investments, they are often sold with warranties. Some warranties are written express warranties and other are implied that exist as a function of law.  An Orange County lemon law attorney can tell you that how your car warranty affords you protection under California’s lemon law.

Consumer Reports warns that some warranties are actually a scam. Consumers need to know the difference between real and sham warranties.

Understanding Car Warranty Scams

Consumer Reports has provided details on car warranty scams. The scams usually begin when a car owner is contacted via phone or mail with an alert that the car owner's warranty is about to expire. The letter or phone call offers to give the consumer a new warranty for the car.  Bogus warranties can be disguised to look like they come from the DMV, dealers, and car manufacturers- which can make the sham warranty appear authentic.

A sham warranty does not provide the promised protections. The coverage ends up being far less than what was described when the sales pitch was made. The costs of the warranties also end up being very high, especially based on the limited protection provided.

Some consumers claim they were promised bumper-to-bumper protection, which they did not actually receive, while others thought their engines were supposed to be covered but the drivers later found out they weren't.  When consumers tried to get refunds, they discovered it was almost impossible to get their money back.

The number of consumers who are caught up in car warranty scams is substantial. Consumer Reports indicates, for example, that close to 6,000 consumers were tricked by just one company into buying car warranties which didn't provide them with promised protections.

The warranties were sold to consumers on the false pretenses that it was a car manufacturer or car dealer calling to offer the extended warranty. Consumers paid anywhere from $1,300 to $2,900 for these sham warranties. The Federal Trade Commission (FTC) stepped in and demanded the company who engaged in this behavior mail more than $4 million in refunds. 

Unfortunately, this is not new. In 2011, the FTC made the announcement that a car warranty company would be returning close to $3.2 million to 4,450 victims harmed by telemarketing firms which had engaged in deceptive practices to sell sham warranties.

Consumers deserve better than fake warranties. They deserve strong consumer protection regulations like the lemon law. They also deserve to be free from phone or mail scams which can swindle them out of their hard-earned money.  If problems do arise and consumers are not getting what they were promised, consulting with an experienced attorney can provide help.


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