Avoiding Car Warranty Fraud

car warranty fraud

Considering the so many complaints of our clients on car warranty fraud we decided to again speak about this widespread scam. This scam has a “privilege”; it can be practiced not only by dishonest car dealers but also other people trying to make money on car buyers’ ignorance.

A classical car warranty fraud scenario is as follows; you receive a phone call or a mail informing your car’s warranty is expiring and you need to prolong it or buy an extended warranty.

Let’s first of all speak about the mailings. They look like your own car dealer or manufacturer is sending them to you. There is always an eye-catching and misleading warning on the front of the letter, such as ““Final Notice: Expiring Auto Warranty”, “Final Warranty Notice” or “Motor Vehicle Notification”. This is done to get you into panic so that you react as soon as possible. However, in reality most manufacturers do not contact car buyers directly. So you already guess that there is a third party and rather a doubtful one. Besides, honest and legitimate businesses will give you time to think about their offer. The same cannot be said in this case where you will be forced to immediately pay a down payment to get the rest of the information.

As for phone calls, they are usually robotized. They will again represent themselves as your dealer or manufacturer and ask to provide some personal information to get an extended warranty for you. Usually this is done through a few “easy steps” during which you may be trapped to give your Vehicle Identification Number, credit card numbers, bank-account details or Social Security numbers. They will later use all this information to trap you in other scams.

Be attentive to always detect car warranty fraud. More than likely, these calls and letters are not from your dealer but from an unrelated business that wants to make you buy their extended warranties or the so called service contracts for hundreds and thousands of dollars. Remember, a service contract is not a warranty. It is just a promise to pay for (or perform) some repairs. A service contract can be arranged anytime and it usually costs extra money. As for the warranty, it is always included in the new car’s price. Used cars also provide some kind of coverage.

In order to avoid such scenarios of car warranty fraud follow these tops;

  • Any time you receive a phone call or a mail offering you warranties, contact your dealer or manufacturer if you have any questions about the warranty.
  • Avoid companies with little history. Gather information about them in Better Business Bureau (bbb.org) or local consumer protection agency.
  • Stay away from those companies which offer you to pay a down payment before the paperwork are sent to you.
  • Do not give them any kind of personal information including VIN numbers, credit card numbers etc.