Buyer Beware!

You’ve probably heard the phone message, “Your warranty is about to expire”, or seen those commercials on television promising to cover just about every auto repair under the sun.

But not all extended warranty companies will honor their promises. Some have received an “F” from the Better Business Bureau for the high number of consumer complaints. Others have just flat out lied.

In fact, the Federal Trade Commission in May announced legal action against companies that are allegedly violating do-not-call lists and pitching what they call bogus car warranties.

Forty states have launched investigations into the companies making what they consider harassing calls. And the calls are also a top complaint at for multiple consumer sites.

EasyCare has vowed to take action against this fraudulent activity. EasyCare CEO Larry Dorfman met with New York Sen. Chuck Schumer in August to help build an anti-fraud strategy for extended auto warranties.

One of the primary discussion points was the fact that there are many companies offering car warranties and service contracts that are misleading, hard for the consumer to understand, and that make it difficult to get coverage when a repair is actually needed. Examples include:

• A marketer offered another company's contract with three different administrators and two different insurance companies — all on the one contract.
• A consumer who was charged $1900 for a contract that had a maximum benefit of $3000 (less than the cost of an average engine replacement) and a maximum per claim amount of $1500.

The strategy and investigations are still ongoing. However, there are things that a consumer can do to protect themselves from bogus warranties. A good start is to read, “The Do's and Don'ts of Buying a Warranty."