Have You Received an Auto Warranty Expired Phone Call? It's a Scam!
Did you receive a call telling you that your car warranty has expired and you need to renew it? Scammers are not just busy on the internet, they are burning up the phone lines in attempts to scam people. See below for a consumer report of calls of this type. But there is good news: The Federal Trade Commission is asking a federal court to shut down a telemarketing campaign ( Voice Touch, Inc. ) that has been bombarding U.S. consumers with hundreds of millions of allegedly deceptive "robocalls" in an effort to sell them vehicle service contracts under the guise that they are extensions of original vehicle warranties.
Car Warranty Scam
Watch for bogus warranty expiration notices disguised to look as though they're from car manufacturers
By Anthony Giorgianni
July 22, 2016
If you get a call or letter saying that your new car warranty is about to expire and it offers you an "extended warranty," use caution. Car warranty scams, which attempt to trick consumers into buying vehicle service contracts, continue to plague consumers despite government efforts to crack down on the caper.
The Federal Trade Commission announced earlier this week that it was mailing more than $4 million in refunds to nearly 6,000 consumers who the agency said were conned by a company that used robocalls to hawk service contracts costing from $1,300 to nearly $2,900.
The FTC says the Miami-based company tricked consumers into believing that the calls were from their vehicle manufacturer or car dealer, a common tactic in car warranty scams.
Those who purchased the service contracts found that the coverage was far less than represented, the agency says. For instance, it says, the policies didn't provide bumper-to-bumper protection or cover the entire vehicle engine, as customers were led to believe. Those who tried to obtain refunds found it virtually impossible.
This is not the first case of its kind. In 2011, the agency announced it was returning nearly $3.2 million to 4,450 victims of two other telemarketing companies that it accused of using deceptive practices to sell auto warranties.
Although the refunds announced this week are from a 2011 settlement between the FTC, the company and its principle executive, the car warranty scam is alive and well, say the Better Business Bureaus based in West Palm Beach and St. Louis, where many warranty marketers are located.
"We have many, many complaints. We continue to get them," says Bill Smith, investigator for the St. Louis BBB.
Along with phone calls, some warranty marketers mail bogus warranty expiration notices disguised to look as though they're from manufacturers, dealers or state motor vehicle departments, says Smith. They advise recipients to call for details about extending their coverage.
Do you suspect you were targeted for a car warranty scam?
Tell us what happened in the comments section below.
"These people get you on a phone, and they will not let you go until they have sold you on a deal," he says.
Smith says the salespeople often try to pressure car owners into an immediate purchase by claiming the offer is good only for that day. They promise customers that they have ample time to cancel if they're unhappy after receiving the contract terms. But canceling and obtaining a refund often is difficult or impossible, he says.
Michele Mason, senior vice president of the West Palm Beach bureau, says the BBB has received consumer complaints about the scam as recently as last week. She says some complain that they're harassed daily by callers pushing the coverage. Even the bureau's new CEO has received bogus warranty expiration notices, she says.
Typically, the marketers aren't providing the actual coverage. Instead, they're selling the policies on behalf of companies that do. Legally, the policies aren't warranties, which typically are provided by manufacturers or retailers at no additional cost. Instead, they're service contracts that promise to pay for repairs. Many of the contracts simply duplicate coverage available under any existing manufacturer's warranty.
What to Do
If you receive a letter, postcard or telephone call advising you that your car's express warranty is about to expire, check with the manufacturer. It could be a car warranty scam. Don't call the number that's on any letter or postcard you receive, even if it looks like the communication is from the automaker. It could be a fake.
If your vehicle warranty has expired or is about to, don't purchase a service contract. Instead, plan ahead by buying a reliable car and maintaining it as the manufacturer recommends. Then self-insure by saving the money you otherwise would spend on a service contract and use that for any needed repairs or maintenance.
If you feel you must purchase a service contract, consider one offered by the carmaker. Third-party contracts are notorious for fine print that excludes many types of repairs and for denying claims for anything the provider deems to be a pre-existing condition. Repairs required because of normal wear and tear also may be excluded.
Never agree to a contract for any product or service without reading terms and conditions, no matter how long the company says you have to change your mind, says Smith. If a salesperson pressures you to make a purchase right away, go elsewhere.
You can learn more by reading the FTC's guide "Auto Service Contracts and Warranties." The agency also offers details on the differences between warranties and service contracts.
You receive a call, with a recording telling you that your "auto warranty may be about to expire" and to "renew now before it is too late". You may not even own a car, or the warranty may have expired years before, or have years left before it expires. Or you may receive a letter or postcard saying your car's warranty is about to expire. Do not call the number that's on any letter or postcard you receive, even if it looks like the communication is from the automaker.
A typical message sounds like this:
"By now you should have received your written note regarding your vehicle warranty expiring. This call is to give you a final opportunity to extend coverage before it is too late. Press '1' now to speak to a warranty specialist regarding your options on your vehicle."
In most cases, the callers can not even tell you the make, model, or year of your car, so it is clearly a scam.
What to do?
Before you tell them ANYTHING, ask them:
"OK, YOU say my warranty has expired? How do you know? Prove it by
telling me the make, model and year of my vehicle"
Odds are good that the caller will simply hang up then.
You can report the scammers to the Federal Trade Commission (FTC) at 1-877-FTC-HELP or 1-877-382-4357.
We wish to extend a huge "thanks" to FTC Chairman Jon Leibowitz for putting a stop to these calls and the jerks behind them!
You can always check with the manufacturer or your local dealership to verify your warranty's expiration date.
Why is it a scam?
What makes the calls more than annoying is the scam nature: If people call back and agree to buy policies, the companies often don't let them see the contracts until they agree to pay. And some scam victims won't learn until it's too late that the policies don't cover many common types of repairs. In effect, the policies are worthless.
There appear to be a couple of scams using this approach:
- Companies selling extended car warranties without any knowledge of your situation, just using a phone list (in other words, phone spam or junk telemarketers)
- Scammers who don't even represent a real company, merely trying to get you to divulge your credit card or bank information so they can clean out your account.
Who is behind the scam and what is being done about it?
June 16, 2009: Fox News is reporting that there there are three companies; Transcontinental Warranty, Voice Touch and Network Foundations behind the scam. The scammers behind this deplorable act are alleged to be:
- James Allen Dunne (36, of Daytona Beach, Florida owns Florida-based Voice Touch). Fox News reports he has a criminal history including charges of trespassing, battery, filing a false report of a bomb and firearm violations,
- his wife Maureen Dunne, and
- Kamian Kohlfeld (35, of Valparaiso, Indiana,owns Chicago-based of Network Foundations)
- Christopher Cowart, (47, of Fort Lauderdale, Florida owns Delaware-based Transcontinental Warranty). Cowart claims to be misled by James Dunne into using the robodialing services)
May 18, 2009: Here's the latest: the federal government, lead by Senator Charles Schumer, are suing one of the major companies behind this despicable scam! Meanwhile, the FTC has sued the scum behind these calls. These bozos made the mistake of harassing the senator and other congressmen with the same annoying calls that the rest of us receive!.
May 14, 2009: The FTC has filed an injunction in the United States District Court for the Northern District of Illinois, Eastern Division against a major robo-calling company:
- Voice Touch, Inc., a Florida corporation, doing business as Voice Touch; Network Foundations, LLC, a Delaware corporation;
- James A. Dunne; Maureen E. Dunne; and Damian Kohlfeld, Defendants
The FTC's complaint alleges violations under the FTC's Telemarketing Sales Rule by calling consumers who were listed on the national "Do Not Call" registry. It also claims other deceptive practices, including concealing their phone number, failing to identify themselves to consumers and failing to disclose the call was a sales pitch.
"Scum" is too kind a word to describe the actions and behaviors that these companies and individuals are accused of. Some of the defendants used offshore shell corporations to try to avoid scrutiny, and a top officer in the telemarketing company bragged to prospective clients that he could operate outside the law without any chance of being caught by the FTC, the papers filed in court stated. According to the FTC, this defendant also claimed that he makes 1.8 million dials per day and that he had done more than $40 million worth of dialing for extended warranty companies, including one billion dials on behalf of his largest client.
More information and follow up
- Auto Warranty Firms Launch Sleazy Scam - It uses postcards, letters, and phone calls to sell outrageously priced extended warranties. The mailings look like an important notice from your car dealer or automaker. There is always an eye-catching warning on the front of the card, such as: 'Final Notice: Expiring Auto Warranty.
- BBB Receives More than 1,200 Complaints and Reports Against Extended Auto Warranty Company and NASCAR Sponsor US Fidelis - In the past three years, BBB has received more than 33,000 inquiries and more than 1,200 complaints and reports from consumers expressing dissatisfaction with US Fidelis or its services. Consumers say that in some cases they spent thousands of dollars for extended warranties and yet still ended up paying thousands more for repairs that were not covered under plans sold by US Fidelis. A number of state attorneys general have also taken complaints from angry consumers alleging the company's business practices are unethical and misleading.
- BBB Warns Deceptive Auto-Warranty Solicitations Plague Consumers Nationwide - Better Business Bureaus is warning consumers to be extremely wary of telemarketing calls and mailers which claim their auto warranty has 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.
See these pages for the details of the FTC's actions:
- A Fox News story: "A Peek Inside One Telemarketing Firm Ensnared in FTC Lawsuit"
- Complaint For Injunctive and Other Equitable Relief
- Temporary Restraining Order with Asset Freeze and Other Equitable Relief
- Plaintiff Federal Trade Commission's Memorandum In Support of Its Motion For A Temporary Restraining Order With Asset Freeze and the Appointment of a Receiver
The Wall Street Journal has an article about this scam, as does Fox News. According to Fox News, "Missouri authorities filed a lawsuit last month against one of the largest car-warranty companies, Wentzville, Mo.-based USfidelis Inc., charging that company officials ignored a subpoena demanding that they answer questions about their business." The article says that USfidelis says they stopped making unsolicited marketing calls last year and now relies mostly on television advertising.
There are also angry consumers who are striking back against the persons believed to be behind one of these scams (although, it is not a company accused by the FTC). If you'd like to read about what they are doing, and find what they claim is the phone numbers and addresses of the owners of these companies, see this page on Reddit.com
See the following reports from consumers and see this page for a 2009 report.
Report received, April 16, 2008:
I have received automated phone calls telling me that my car warranty has expired. It asks me to press 2 to speak to a representative. As I know my car has not been under warranty for YEARS, I know this is a scam. I tried to find out more info by requesting the operator but as soon as I asked him if he could tell me either my name or the make of my vehicle he hung up. When I call the number back it shows as disconnected. The following is the phone number and info found when doing a reverse look up on the number. Folks like these preying on others are maddening to me!
[undisclosed] Rogers Point Rd
Type: Land Line
Location: Milbridge, ME
Listing date Sept. 2007
Another example: 702-520-1435
One of our staffers received a call on May 21, 2008 from 702-520-1435. It started with a recording saying "Your automobile warranty may have expired or be about to expire. Press 1 now to speak to a representative. "
When we were connected to their representative, the rep asked for the make, model and year of our vehicle. We asked, "why do you want to know this, you called us, saying it expired. How could you claim that if you did not already know those details? When asked how he obtained our cell phone number, he would not say. He simply said you must be on a list of people who recently purchased a 1997 model year car. That was not correct and we pointed that out to him. He apologized and saaiud he would take our phone number off his list.
Information About Specific Phone numbers
There are several websites that focus on reports of scam phone calls. See these:
There are a number of common telephone scams, such as:
and some new and as yet, uncommon scams.
Automobile Extended Warranty Scam Tips and Warning Signs:
- Beware of any mailings that appear to come from your automobile
manufacturer offering extended warranty coverage.
- Never give out personal financial information such as bank account
numbers or Social Security Numbers over the phone.
- When considering an extended warranty, or any other telephone or mail
solicitation, always insist on getting the complete terms and conditions of
your agreement in the form of a written contract before you agree to sign
up, pay any money or provide your credit card information.
- Never give out personal financial information such as bank account
numbers, credit card numbers of Social Security Numbers over the phone,
unless you are absolutely positive that you know the party with whom you are
- The Federal Trade
Commission says consumers, before signing any extended coverage
contract, should fully understand its terms and coverage. The agency also
stresses that what consumers are actually buying is not an extended warranty
but a "service contract." "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,' under federal law, it is not a
warranty," the FTC said. "A warranty comes with the original price of the
car, whereas a service contract costs extra. It is mainly this separate and
additional cost that distinguishes a service contract from a warranty."
- There are many things to consider when you're offered an "extended warranty" or service contract." Consumers should beware that certain "extended warranties" do not always provide the peace of mind and financial protection that consumers expected. Many of these contracts, when closely scrutinized, exclude so many items that they really provide very little coverage for outrageous prices.
- Check out a business with your state Attorney General's Office and your local Better Business Bureau before you agree to do business with them.
The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click here or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad.
- MEDIA CONTACT:
- Frank Dorman,
Office of Public Affairs
- STAFF CONTACT:
- Karen Jagielski,
Bureau of Consumer Protection
And please let us know about any suspicious calls or emails you receive. We look for patterns so that we can alert the authorities and victims to new scams, before it is too late!