Because major auto manufacturers such as Chrysler and GM are either declaring bankruptcy or fighting off the threat, there is a lot of confusion surrounding the status of auto warranties.
Your Better Business Bureau is concerned that consumers across the country are receiving solicitations by phone, mail and e-mail stating that their auto warranty is about to expire and that they must act immediately to avoid a lapse in coverage. Consumers are often led to believe it’s their manufacturer contacting them when, in fact, these companies are independent entities. Many of these solicitors are selling extended service contracts, essentially health insurance for the consumer’s car if something should break.
Consumers are complaining that after purchasing these service contracts, they learn there are many caveats and exemptions, and that the policy doesn’t cover the work needed on their cars.
In 2008, complaints and reports to BBB against companies selling extended auto warranties rose by more than 40 percent. More than 140,000 people contacted BBB in 2008 to confirm the legitimacy of companies soliciting extended auto warranties; more than 4,000 complaints were filed.
Te solicitation problem is so rampant that New York Senator Charles Schumer and Virginia Senator Mark Warner, both of whom have received these types of phones calls, are asking the Federal Trade Commission (FTC) to investigate and take action. As a result, the FTC has announced they will be filing lawsuits shortly on several companies.
When dealing with a firm selling extended auto service contracts, your BBB suggests:
- Never give personal information to an unknown telemarketer.
- Insist on getting a contract defining all terms and conditions. Make sure you understand the provisions before you provide credit card or other payment information.
- Read your auto manufacturer’s warranty and contact your dealer or manufacturer so you are not purchasing duplicate coverage.
- Before purchasing extended warranty coverage, check the company out first with BBB at www.bbb.org.
- Make sure your home and cell phone numbers are on the Federal Do Not Call list: www.donotcall.gov.
- By regulation of the Federal Communications Commission (FCC), the use of auto-dialers and recorded messages to cell phones is illegal. Cell phone users should file a complaint if they receive these calls—even if their cell number is not on the Do Not Call List.
- File a complaint with your state Attorney General, your BBB at www.bbb.org and the FTC at www.donotcall.gov.
- Not all companies selling extended service contracts are misleading consumers or violating Do Not Call lists.