The Costly Auto Warranty Scams You Should Know About

“I’m calling about your auto warranty…” How many of us have heard those words and felt a wave of dread? For veterans who rely on their cars to get to work, run errands, and transport family members, it’s especially important to be aware of common auto warranty scams. 

Unfortunately, veterans are often the target of scammers offering extended warranties at exorbitant prices or with unrealistic terms. Those scams are not coming from the best car warranty companies. Knowing how to spot these extended car warranty scams is essential to protect yourself from financial losses. 

This blog post will discuss the different types of auto warranty scams, how to identify them, and what steps you can take to protect yourself. With some knowledge and savvy, you can protect your wallet from these predatory practices. 

Let’s get started.

Types of Auto Warranty Scams and How They Work

Have you ever received a call from an unfamiliar number, and the person on the other end starts spouting off about your car’s warranty? Chances are, you’ve fallen prey to a robocall or telemarketing scam. And you are not alone. 

A staggering 70% of U.S. adults reported being targeted by auto warranty scams in the last 12 months, as AARP’s October 2021 National Fraud Frontiers study found. 

You can get a used car warranty, but you need to make sure you are getting it from a reputable company and it’s not a scam. Let’s look at the most common kinds of warranty scams.

Car Warranty Robocall Scams and Car Warranty Telemarketing Scams

The most common type of auto warranty scam comes in the form of robocalls and telemarketing. In Car Warranty robocall scams, you’ll receive automated messages claiming that your auto warranty is expired or about to expire. 

The caller will prompt you to provide personally identifiable information (PII) such as credit card number, social security number, or other banking information. The scammers then use this PII to make unauthorized charges on your accounts.

In car warranty telemarketing scams, scammers call and pretend to represent a legitimate manufacturer or dealership. They will offer an extended warranty for your car at an unbeatable price and urge you to act quickly to take advantage of the deal. 

You should never provide personal or financial information over the phone without verifying the caller’s identity.

Car Warranty Service Contract Scams

A service contract is similar to an extended auto warranty, but rather than being offered by the manufacturer or dealership, a third-party company provides it. 

Service contracts can be a valuable way to protect your car against unforeseen repairs, but scammers often use them to make money.

Some scammers will call you, claiming to be from your auto manufacturer or an authorized service center. They’ll tell you that your factory warranty is about to expire and offer to sell you an extended warranty at a discount. 

The catch is that these extended warranties are usually worthless, so even though you’re paying for them, you’re not getting anything in return. 

Car Warranty Refund Scams and Car Warranty Cancellation Scams

Some scammers will try to sell you an extended warranty and then claim you can cancel it within a certain period and get a full refund. 

However, when the time comes to cancel, they’ll make it nearly impossible or claim you’re not eligible for a refund. 

Others will tell you that you must pay a cancellation fee to cancel your warranty, even though most legitimate companies don’t charge cancellation fees. 

Car Warranty Insurance Scams

Another common scam is insurance fraud. Scammers will call and offer you cheap auto insurance. 

However, the insurance they are offering is usually not legitimate and may be worthless. They’ll also often ask for large upfront payments or other personal information to process the transaction.

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Signs of a Potential Auto Warranty Scam

Now that you know some of the most common auto warranty scams, it’s important to know how to spot them. Here are some red flags to look out for:

You Receive a Call From an Unknown Number

The most obvious sign of a potential warranty scam is if you receive a call from an unknown number. 

Scammers often use spoofed or blocked numbers to make it harder to trace their calls. If you receive a call from an unknown number, verify the caller’s identity before giving out personal information.

The Call is Vague

Another sign of a potential scam is if the caller is vague about what type of warranty they are offering. If the caller is unwilling or unable to provide specific details about the warranty, it’s likely a scam. 

For example, if they can’t answer questions about the length of coverage, what type of repairs are covered, or how much it will cost, it’s a good indication that it’s a scam.

They Ask for Personal Information

Be wary of anyone who asks for your personal information or financial data. Legitimate companies will never ask for this information over the phone, so it’s likely a car warranty phone scam if someone pressures you to provide it. 

They’re likely trying to gain access to your personal or financial data, leaving you vulnerable to identity theft and fraud.

They Insist on an Immediate Decision

Legitimate companies won’t pressure you to make a purchase and will give you the time to make an informed decision. If someone urges you to sign up for a warranty immediately, it’s probably a scam. 

For instance, they may say that the offer is only available for a limited time, and you must sign up immediately to take advantage of it. If you feel pressured to make a decision, hang up and research the company before making any commitments.

The Caller Threatens You

Scammers will often use scare tactics to pressure you into buying a warranty. For example, they may say that your car is in imminent danger of breaking down, and you must purchase a warranty to protect it. 

Some even go so far as to threaten legal action if you don’t sign up. Be aware that this is a tactic scammers use, and never make a purchase out of fear.

Steps to Take to Avoid Auto Warranty Scams

Scammers are getting smarter, but there are some steps you can take to protect yourself from becoming the victim of a warranty scam.

Research the Auto Warranty Company

Doing research ahead of time is key to avoiding any scam. Ensure the company you’re considering has a solid track record, and check its customer reviews online. There are a variety of websites dedicated to providing consumer ratings on warranty companies, so take advantage of them.

Check for Proper Licensing & Accreditation

You should also find out whether the company has accreditation from industry organizations like Better Business Bureau (BBB) or has received certifications from organizations like Consumer Reports. 

Some states require extended warranties to be sold by licensed and bonded insurance companies. Check all the licensing information on the website before signing up for anything. Learn about the best auto insurance companies for veterans so you have an idea of what legitimate insurance companies are out there.

Read the Fine Print

No matter what type of agreement you enter into, read through the fine print carefully before signing. You should check the plan’s coverage and the duration of the coverage. Also, look out for hidden fees or clauses that could catch you off guard later. 

A reputable company will make this information readily available upfront, so don’t hesitate to ask questions if anything isn’t clear.                   

Avoid Unsolicited Offers

If an offer seems too good to be true, it probably is. Stay aware of unsolicited offers from unfamiliar companies. 

They could be a scam trying to exploit unsuspecting customers looking for an extended warranty plan at an unbeatable price point. It’s always better to research before committing yourself or your money anywhere.

How to Protect Yourself from Future Scams

No one wants to fall victim to a warranty scam, especially veterans and military personnel who rely on the protection of a warranty. But as we mentioned earlier, scammers are getting increasingly sophisticated in their tactics. 

So let’s look at key steps to protect yourself from falling prey to future warranty scams.

Report Fraudulent Activity

If you believe that you have been scammed, you must report this activity as soon as possible. Report fraudulent activity or anything suspicious directly to your local law enforcement agency. You can also file a complaint with the Federal Trade Commission (FTC).

Reporting fraudulent activity will help prevent others from becoming victims and potentially lead to criminal charges being brought against those responsible for the scam. If needed, the FTC also has resources available for consumer protection, so don’t hesitate to ask for assistance. 

Staying Vigilant Against Scams

Stay vigilant and be aware of any potential scams. Don’t make any hasty decisions when buying an extended warranty, no matter how good the deal may look. Stay alert to any suspicious activities and stay aware of any current scams.

Taking Legal Action When Necessary

When all else fails, taking legal action may be necessary if you have been scammed out of large amounts of money or if the scammers continue their fraudulent activity even after being reported. 

Consultation with a consumer protection lawyer can ensure justice is served and all parties are held accountable for their actions.

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Auto Warranty Scams: Bottom Line

An auto warranty scam is an unfortunate reality that veterans and military personnel face. However, knowing how to identify a scam, taking the necessary precautions, and being informed can help protect yourself and your wallet from becoming a victim of fraud.

Robocalls, telemarketing, service contracts, refund & cancellation schemes, and insurance fraud are common warranty scams.

Staying vigilant, researching, and being aware of current scams can help you stay safe from future ones. This will ensure that you don’t end up a victim of used car warranty scams. Report any suspicious activity to your local law enforcement agency or the FTC, and consult a lawyer if necessary. 

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