Better Business Bureau of Greater Cleveland is warning consumers to be extremely wary of telemarketing calls and mailers which claim their auto warranty had or is about to expire. BBB advises that the deceptive solicitations could persuade car owners to purchase an extended auto service contract of questionable value.
BBB has seen a considerable spike in both complaints and inquiries nationally from consumers who state that they received misleading mailers or high-pressure telemarketing calls claiming their auto warranty was about to expire. Complaints against Auto Warranty Processing Services rose by more than 40 percent over the prior year. In 2008, more than 140,000 consumers across the country contacted their BBB to confirm the legitimacy of companies claiming to sell auto warranties.
The value of the various extended service contracts being sold also has been called into question, as many consumers complained that the contract had numerous conditions that might be difficult to meet. For instance, pre-existing conditions often are not covered, proof of maintenance records may be required and restrictions on authorized repair facilities and repair charges must receive prior approval making many of these contracts virtually worthless. Others report difficulty in obtaining refunds.
A Solon woman purchased an extended warranty plan from National Dealers Warranty after the company solicited her by telephone with a now-or-never price of $3,295. She was told that the policy covered any major repair on her 2004 Cadillac Escalade; however, the company denied her first claim for over $800 claiming it was not covered under the policy’s terms.
A Cleveland man had a similar experience with a $2,700 plan he purchased from Dealer Services for his 2007 Chrysler 300. Dealer Services refused to cover his repairs stating the condition was “pre-existing.” When he disputed their findings, they sent an inspector to view the car but failed to contact him with the result. After calling the company, the consumer was told to fax his receipt for his most recent oil change. The claim was then denied because the vehicle’s mileage was not noted on the receipt.
When a Cleveland woman purchased her $1,300 plan from Dealer Services on her 2003 Ford Windstar, she was told filing a claim was easy. “They told me all I had to do was take my car to a licensed facility of my choice”, she said, “and have them call the toll-free number to get authorization to do the repairs.” When she tried to file her first claim, she took it to her Ford dealership. The dealership called Dealer Services and was told repairs would not be covered unless the part was purchased elsewhere for a lower price.
Other local residents, as well as consumers across North America, have complained about the advertising methods used by these companies. Consumers claim that they were informed that their car warranty was about to expire, when such was not the case, and that they needed to take immediate action in order to avoid a lapse in coverage. Consumer Protection Services, as an example, mailed post cards to Clevelanders with “Final Notice” stamped in red on the front and a Washington, DC, return address. The card also contained the notice, “VEHICLE WARRANTY PROTECTION EXPIRES. CALL WITHIN 72 HOURS TO RE-ESTABLISH PROTECTION.” Consumer Protection Services is actually located in Missouri – the Washington DC address is a mail forwarding service – and has an “F” rating with the BBB due to consumer complaint activity.
BBB offers the following advice for dealing with a firm selling extended auto service contracts:
- Never give personal information, including Social Security, bank or credit card numbers, over the phone to an unknown telemarketer.
- When considering an extended service contract or any other type of telephone solicitation, insist on getting a contract in which all terms and conditions are clearly explained before signing up or providing credit card or other payment information.
- Read the terms of the plan. Be sure you understand what is covered, what is limited, and what is excluded. If any of the terms are not clear, ask for an explanation before deciding to purchase.
- Read your auto manufacturer’s warranty and contact your dealer or manufacturer so that you are not purchasing duplicate coverage.
- Before purchasing extended warranty coverage, consumers should always check the company out first with BBB at www.cleveland.bbb.org.
- Consumers can place their phone number on the federal do not call list by visiting www.donotcall.gov. If the consumer is already on the list but continues to receive telemarketing calls, he or she can use the same Web site to report the incident to the FTC.
For more information you can trust on avoiding fraud and identity theft, go to www.cleveland.bbb.org.