Even if you’re considering an extended warranty, be wary of any solicitation you get through the mail or over the phone. Scammers have found that the warranty business can be very lucrative, and the Better Business Bureau has received thousands of complaints from consumers who have been stung. Typically, the questionable outfits contact an unsuspecting owner whose warranty has just expired or is about to expire.
"The impression they want to give people is that they are contacting them on behalf of their dealer or manufacturer, or they are associated with them, which, in fact, they are not,” says Michelle Corey, president and CEO of the St. Louis office of the BBB.
Once they’ve taken the bait, the unfortunate victims often find that their problems have just begun. “They’re not able to read the contract until it’s mailed to them,” says Corey. “They don’t see the conditions, the limitations, or exclusions. Then when they try to use it, they’re informed that pre-existing conditions don’t apply, or they’re told they don’thave maintenance records showing that they followed the manufacturer’s requirements for upkeep.”
The final insult comes when unhappy customers try to get a refund, and they are either refused or only given a prorated amount based on when they signed the contract.
The first step to take to defend yourself against this type of fraud is to contact your dealer to ask whether whoever is trying to sell you coverage is associated either with them or the carmaker. Also ask whether your original warranty really has expired to avoid paying for redundant, overlapping coverage.
Moreover, don’t give your credit-card number or commit to anything over the phone or through the mail without seeing a contract and reviewing what is covered first. And be sure to keep maintenance records and receipts for future reference. Beyond warranty concerns, it may help in selling your car down the road.