If you get a call or letter saying that your new car warranty is about to expire and it offers you an “extended warranty,” use caution. Car warranty scams, which attempt to trick consumers into buying vehicle service contracts, continue to plague consumers despite government efforts to crack down on the caper.

The Federal Trade Commission announced earlier this week that it was mailing more than $4 million in refunds to nearly 6,000 consumers who the agency said were conned by a company that used robocalls to hawk service contracts costing from $1,300 to nearly $2,900.

The FTC says the Miami-based company tricked consumers into believing that the calls were from their vehicle manufacturer or car dealer, a common tactic in car warranty scams.

Those who purchased the service contracts found that the coverage was far less than represented, the agency says. For instance, it says, the policies didn’t provide bumper-to-bumper protection or cover the entire vehicle engine, as customers were led to believe. Those who tried to obtain refunds found it virtually impossible. 

More on Extended Warranties and Car Repair

This is not the first case of its kind. In 2011, the agency announced it was returning nearly $3.2 million to 4,450 victims of two other telemarketing companies that it accused of using deceptive practices to sell auto warranties.

Although the refunds announced this week are from a 2011 settlement between the FTC, the company and its principle executive, the car warranty scam is alive and well, say the Better Business Bureaus based in West Palm Beach and St. Louis, where many warranty marketers are located.

“We have many, many complaints. We continue to get them,” says Bill Smith, investigator for the St. Louis BBB.

Along with phone calls, some warranty marketers mail bogus warranty expiration notices disguised to look as though they’re from manufacturers, dealers or state motor vehicle departments, says Smith. They advise recipients to call for details about extending their coverage. 

“These people get you on a phone, and they will not let you go until they have sold you on a deal,” he says.

Smith says the salespeople often try to pressure car owners into an immediate purchase by claiming the offer is good only for that day. They promise customers that they have ample time to cancel if they’re unhappy after receiving the contract terms. But canceling and obtaining a refund often is difficult or impossible, he says.

Michele Mason, senior vice president of the West Palm Beach bureau, says the BBB has received consumer complaints about the scam as recently as last week. She says some complain that they’re harassed daily by callers pushing the coverage. Even the bureau’s new CEO has received bogus warranty expiration notices, she says.

Typically, the marketers aren’t providing the actual coverage. Instead, they’re selling the policies on behalf of companies that do. Legally, the policies aren’t warranties, which typically are provided by manufacturers or retailers at no additional cost. Instead, they’re service contracts that promise to pay for repairs. Many of the contracts simply duplicate coverage available under any existing manufacturer’s warranty. 

What to Do

If you receive a letter, postcard or telephone call advising you that your car’s express warranty is about to expire, check with the manufacturer. It could be a car warranty scam. Don’t call the number that’s on any letter or postcard you receive, even if it looks like the communication is from the automaker. It could be a fake.

If your vehicle warranty has expired or is about to, don’t purchase a service contract. Instead, plan ahead by buying a reliable car and maintaining it as the manufacturer recommends. Then self-insure by saving the money you otherwise would spend on a service contract and use that for any needed repairs or maintenance.

If you feel you must purchase a service contract, consider one offered by the carmaker. Third-party contracts are notorious for fine print that excludes many types of repairs and for denying claims for anything the provider deems to be a pre-existing condition. Repairs required because of normal wear and tear also may be excluded.

Never agree to a contract for any product or service without reading terms and conditions, no matter how long the company says you have to change your mind, says Smith. If a salesperson pressures you to make a purchase right away, go elsewhere.

You can learn more by reading the FTC’s guide “Auto Service Contracts and Warranties.” The agency also offers details on the differences between warranties and service contracts