Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insuranc...

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Benjamin Carr was a licensed insurance agent in Georgia and has experience in life, health, property and casualty coverage. He has worked with State Farm and other risk management firms. Benji is also a strategic writer and editor with a background in branding, marketing, and quality assurance. He has been in military newsrooms — literally on the frontline of journalism.

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Reviewed by Benji Carr
Former Licensed Life Insurance Agent Benji Carr

UPDATED: Apr 19, 2022

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To Sum It Up

  • Research the company to make sure they are legitimate before you purchase a warranty
  • Warranties can help with the high cost of repairs on today’s complex vehicles
  • Beware of warranties that appear to offer coverage at bargain prices

What are some common auto warranty scams?

Auto and vehicle warranties are an essential part of being a car owner. They can help you maintain your car and keep it running well. As complicated and advanced as modern vehicles have become, repairing them remains a costly venture. Even if you’re a savvy do-it-yourselfer, the money required to fix an engine or replace a dented side panel can be overwhelming.

New vehicles come with a base warranty. The dealership or other third parties will offer an extension of the warranty contract by lengthening the amount of time you are covered or expanding on the base factory warranty coverage. However, be aware there are a lot of scams out there if you are considering a warranty purchase for your new or used car.

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Prevalence of Auto Warranty Scams

The scope of scams involving auto warranties is growing by the day. The scammers are hitting us via email, phone calls, and even text messages. Some of us are savvy enough to avoid purchasing an openly fraudulent warranty, but the scammers have gotten much better and more convincing than ever. Those extended warranty calls are becoming quite the hassle.

Plenty of sinister individuals will work to convince customers to pay for warranty service that doesn’t exist or won’t live up to its promises. As the number of complaints regarding auto warranty companies continues to rise, you need to arm yourself with information and learn how to identify and avoid warranty scams.

Types of Scams

There are several prevalent scams criminals are using to sell you inadequate or nonexistent warranties.

Website Scams

With the rise in consumer awareness, scam companies have had to get creative when marketing their warranties. To do this, they leverage fake websites to attract customers and lend credibility to their operation. It’s no secret that these companies tend to use flashy websites with attractive offers to lure customers. With the help of scam websites, prospective customers can get a false feeling about a company’s legitimacy.

While some scammers create stunning fake company websites to fool you, you should also be wary of websites with poor design and grammatical errors. An honest company is likely to take more care with its websites.
Another trick you can use to help validate a warranty company is to contact them directly using the number listed on their website or a number you find online associated with the company. Not seeing either or getting a disconnect message will prove you need to move on to the next company.

Pricing Scams

This scam happens when a company offers a much cheaper warranty than the competition. The company may not have the best intentions, though, and may not be able to cover the repairs that are needed. They will use policy language and poor arguments for why something isn’t covered.

Another price-based scam is when a company offers a much more extended warranty than the competition. In addition to that, you should be even more concerned if the company is charging the same as companies with shorter lengths of coverage. Too good to be true is usually a sign that the company may not be reputable and is looking to take your money without providing the coverage you need.

Do your research before purchasing an auto warranty, and ensure that you are dealing with a reputable company.

Email Scams

Be wary of seemingly random emails trying to sell you extended auto warranties. Many of these emails are fraudulent. It can be easy to determine if they are a scam due to writing style, general content, or lack of a company email address.

Additional steps like vetting their website and looking at reviews or comments on the web will help keep you safe from scammers.

Automated Phone Calls

Most of us have experienced scam phone calls of one kind or another. The extended car warranty calls we’ve all come to know and detest have risen in popularity among the scamming community. If the company is using an unsolicited and automated phone call, it is usually enough of a red flag for most of us to move on to the next company. If you decide to move forward with this approach, make sure you thoroughly research the company.

Tips to Avoid Auto Warranty Scams

Be sure to ask about any red flags you find when doing your research. If the company has a history of complaints, such as repeatedly refusing warranty claims, it’s best to look for another company. It helps if you don’t have to worry about a company not honoring its promises.

If a company asks for the payment up front, be wary. A warranty scam might involve a fake warranty company taking your money and then disappearing without sending you any warranty paperwork.

Ask friends and families for recommendations. Don’t forget about your people network. Ask them, and they may be able to give you a lot of information if they either use the company you are looking at or have a company they want to recommend to you.

Only deal with reputable companies. Check with your state insurance commissioner. They can tell you if there are any legitimate complaints against the company you are considering for your warranty coverage. The state will record all claims filed against them, giving you a sense of how the company operates.

Use the internet to research any company you are considering. Look for news articles or reviews. You may find that the company isn’t what you thought they were initially. Positive and negative online reviews can give you a pretty clear sense of how they treat their customers.

Check the pricing, as most legitimate companies are transparent about the parts they’ll be using. They may be happy to give you an estimate based on your car’s make and model. Extremely low or high parts prices should raise a red flag, especially for extended warranties.

The best way to avoid being scammed is to arm yourself with knowledge. Be knowledgeable about your rights as a car buyer, the types of warranties available, and what each warranty covers. If a salesperson tries to pressure you into buying a warranty that you don’t need or doesn’t cover what you expect, don’t be afraid to walk away. There are plenty of other dealerships who would be happy to help you find the proper warranty for your car.

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Used Car Warranty Scams

Used car warranty scam calls are prevalent, given the risks of buying a used car in general. A used car may or may not have any factory warranty left, which means you are 100% responsible for any repairs. A third-party company or even the original manufacturer may step in to offer extended warranty coverage for purchase. It is up to you to determine your choices and vet their authenticity.

Don’t Let a Salesperson Scare You Into a Warranty

Salespeople can be a source of good solid information, but even the best may rely on incorrect facts. As soon as someone starts telling you something about your new car, such as what parts are failing or its repair history, ask for proof.

Verification could come in the form of a record on a computer or a part number, or perhaps they have a general industry article they can show you. Any such request will at least give you insight into how far someone is willing to go to gain your trust.

Warranties can help with costly repairs on today’s highly complicated vehicles. With all the complex electronics involved now, warranties can make a lot of sense on new or used cars. However, with higher consumer demand, scammers are coming out in force. Using what you learned will help you identify scams quicker by knowing what to look for and where to look.