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Auto Warranty Expiration Scam

By: Stephanie Mintz, CFE Fraud Prevention & BSA Analyst

Posted on 5/21/2021 7:45:29 AM

Frustrated woman talks on her cell phone with car warranty scammers

“Hello! We’re calling about your car’s extended warranty…”

More likely than not, you have received annoying phone calls from someone trying to sell you a car warranty regardless of what your car situation is. Either way, when you receive one of these calls, you should proceed with caution. According to a recent study by PRNewswire, Americans received more than 45 billion robocalls in 2020, 46 percent of which were related to scams. That’s more than 20 billion scam calls last year alone.

Are these car warranty calls ever legitimate? Let’s break it all down.

What are “Extended Warranty” Calls?

Car warranty scams often come through pre-recorded robocalls and are typically filled with an extreme sense of urgency meant to scare you into action. For some people who like to avoid risk, paying to “extend” their auto warranty, often sounds worth it. But this plays on consumers' fears that their car may break down, and that they will be left with no other way to pay for the repairs. This allows innocent victims to be exploited by shady firms that “sell” these extended warranties and scam people out of money.

Now, this is not to say that every third-party auto warranty company is out to rip you off, but all too often, if you receive an extended warranty call, it's a scam. The honest providers are few and far between, but they tend to use more reputable ways of contact and typically avoid high-pressure sales tactics.

Spammer calling a consumer’s cell phone

How Do Extended Warranty Scams Work?

Many perpetrators of this scam call claiming to be employees of the company servicing your car's warranty will offer to extend your car's warranty for a fee. They utilize high-pressure selling tactics, where you'll be forced into providing personal information, such as your social security number, driver's license info, and credit card information.

The personal information you provide is valuable and can either be used to gain access to your accounts or be sold to be used in other fraudulent activities, including tax fraud and identity theft scams.

How Do You Know it’s a Scam?

It can be challenging to discern whether a call is fraudulent, especially when the scammers are armed with information about your car and warranty, but here are some red flags to look out for.

  • The telemarketers use high-pressure sales tactics to get you to take action right away or if you feel like you are rushed to make a decision, it’s probably a scam. Remember, no warranty or insurance is so important that it needs to be purchased immediately. Also, valid companies don’t threaten to delete your information.
  • The call is vague. If they won’t provide you with any information or tell you what the warranty actually covers, it’s most likely a scam. Also, watch out for scammers who say that you can cancel if you change your mind after making the purchase.
  • You’re asked to provide personal information over the phone. Legitimate companies will never call you and ask you to verify your identity or provide personal information they should already have. This is illegal and should be an immediate red flag.
  • You may receive warnings seemingly from the DMV with a message such as "Final Notice! Expiring Auto Warranty". Such statements can be startling, and you may be tempted to call the number provided. Before making the call, be sure to look up the information on the internet to make sure you know exactly who you are calling.

How to Protect Yourself

If you have any concerns about your car's warranty, check your car’s owner's manual first. If you can't find the information, you should focus on contacting your car dealer or the manufacturer.

Here are a few other tips to help protect yourself:

  • Download a robocall blocking app, such as RoboKiller, to screen your calls.
  • Add your number to the National Do Not Call Registry to reduce the number of telemarketing calls you receive.
  • If you realize it’s a scam while on the call, ask the representative to remove you from their call list. If they refuse, you can report the number to the FCC.
    • Read up on the Telephone Consumer Protection Act. If you're registered on the National Do Not Call Registry and a marketer calls you more than once a year, you could receive up to $1,500 per call in compensation.
  • If you receive a written notice in the mail, always look up the company online to ensure that they are legit.
  • When in doubt, file a complaint with the FCC. Your complaint can help the FCC take action against the fraudsters and protect others from these annoying calls.

Stay Safe

If you're interested in an extended warranty, choose a manufacturer-backed warranty. Always go back to the source. In addition, read your service contract thoroughly, even when buying from a known and trusted provider. You can never be too careful!