Have you received a call or a letter from a company claiming that your car’s warranty has expired and they are offering an extended warranty or stating you need to activate a vehicle service agreement for coverage? We have! These offers are not always Scams but they may appear to be something they are not and it is important to ensure you educate yourself on the product the company is trying to sell you before buying.
A warranty and a service contract are not the same thing, and knowing the difference is an important starting point to be an informed consumer. As defined by the Federal Trade Commission (FTC);
- An auto warranty is a contract to fix certain defects or malfunctions for specific amount of time after you buy a car. A manufacturer’s warranty typically is included in the purchase price when you buy a new car, but used cars might come with some type of warranty coverage, too.
- An auto service contract is a contract to perform (or pay for) certain repairs or services. Service contracts are sometimes called an “extended warranty,” but they’re not a warranty as defined by federal law. They’re sold by car manufacturers, dealers, and independent companies, you can buy them anytime, and prices and coverage vary widely. For example, some of these contracts may extend the length or coverage of the included warranty, and others may cover some maintenance tasks like scheduled oil changes.
Scammers will intentionally mislead consumers in solicitations and on phone calls to appear as if they are affiliated with a manufacturer or dealership. Be wary of unsolicited offers and look for red flags to avoid these types of scams. Consumers should be apprehensive of offers that are missing relevant data on their vehicle or are requesting personal or financial information upfront.
If you are looking to purchase additional coverage for your vehicle, be sure to do your research. As with any purchase, you want to ensure you know exactly what you are paying for and what may not be covered. Consumers should receive a full copy of the service contract, and it is important to read and understand all terms and conditions of the contract, including all exclusions. In addition, it is recommended to seek out multiple options in order to compare pricing and coverage, and make an informed decision.
The FTC provides educational resources on Auto Warranties and Service Contracts, advice on Buying and Owning a Car, and reiterates that consumers should do some research before deciding whether to buy an auto service contract.
- You don’t need (or want) duplicate coverage. Check your existing auto warranty coverage first.
- The more coverage, the higher the cost. Pricing can range from several hundred dollars to several thousand. You also may need to pay a deductible each time your car is serviced or repaired.
- Look for exclusions that deny coverage for any reason, or tell you where your car has to be serviced.
Please do not hesitate to contact our office for assistance if you have been scammed or have questions about avoiding or reporting a car warranty scam. The Erie County Office of Consumer Protection can be reached by phone at 716-858-1987 or via email to consumerprotection@erie.gov. Consumer Protection complaints can also be submitted through our website.
