The Federal Trade Commission (FTC), the nation’s consumer protection agency, urges you to be skeptical of mail and phone calls warning that the warranty on your car is about to expire. The companies behind the mail and calls may give the impression they represent your car dealer or manufacturer. With phrases like Motor Vehicle Notification, Final Warranty Notice or Notice of Interruption, they are trying to make the offer seem urgent — and to get you to call a toll-free number for more information.
More than likely, these pitches are from unrelated businesses that want to sell you extended warranties — more accurately known as service contracts — that often sell for hundreds or thousands of dollars. If you respond to a call from a business pitching so-called extended warranties, you’re likely to hear high-pressure sales tactics, as well as demands for personal financial information and a down payment, before you get any details about the service contract. And if you buy a service contract, you may find that the company behind it won’t be in business long enough to fulfill its commitments.
So how can you steer clear of scam auto warranty offers? The FTC says:
A service contract is a promise to perform (or pay for) certain repairs or services. Although a service contract is sometimes called an extended warranty, it is not a warranty as defined by federal law. A service contract may be arranged any time and always costs extra; a warranty comes with a new car and is included in the original price. Used cars also may come with some type of coverage. The separate and additional cost distinguishes a service contract from a warranty.
Auto service contracts may be sold by vehicle manufacturers, auto dealerships or independent providers. If you want to buy a service contract, shop around so you understand just what you’re buying. Coverage varies widely. Other tips:
To learn more about service contracts and questions to ask a contract administrator, read Auto Service Contracts.
If you think you’ve been victimized by an auto warranty scam, file a complaint with the Federal Trade Commission. Although the FTC does not intervene in individual disputes, the information you provide may indicate a pattern of possible law violations requiring action by the Commission.
The FTC works to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. Watch a video, How to File a Complaint, at ftc.gov/video to learn more. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.