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Extended-warranty scams can take various forms and have different end goals. Sometimes, the person on the other end of the line is trying to get your person
Extended-warranty scams can take various forms and have different end goals. Sometimes, the person on the other end of the line is trying to get your person
“Hi, this is Tim calling from the vehicle service department. I’m calling with regard to your Ford Ranger warranty. The factory warranty is about to expire and requires renewal before the cutoff. Call me back at…”
Chances are, you’ve gotten one of these calls before. Actually, it’s more likely that you’ve gotten so many you’ve lost count.
Yes, that call is almost certainly a scam. But does that mean extended vehicle warranties as a whole are a scam?
No, not when they’re provided by manufacturers or legitimate providers.
Yet, even when they are provided by real businesses, that’s not a guarantee of trustworthiness. Misleading sales tactics and vague contracts can make you feel like you’ve been scammed further down the road.
How do you know who to trust then?
That’s one of the key questions we’ll be answering. But first, you need to know how scammers operate, how to tell whether a warranty is legit, and what red flags to steer clear of.
Extended-warranty scams can take various forms and have different end goals. Sometimes, the person on the other end of the line is trying to get your personal information to defraud you.
Other times, the caller is trying to sell a warranty for thousands of dollars, without disclosing that it’s so full of loopholes and fine print that it may as well be a very expensive piece of paper.
Protecting yourself starts with knowledge. An important piece of information to be aware of is the difference between an extended vehicle warranty and a vehicle service contract (VSC).
When you buy a new vehicle, it comes with a factory warranty. This is the manufacturer’s guarantee that they will take care of any breaks or repairs due to factory defects, and it remains valid for a certain number of years or miles. Usually, that will be 3 years/36,000 miles for bumper-to-bumper coverage and 5 years/60,000 miles for powertrain protection.
Here’s the part scammers like to prey on: It is possible to extend the factory warranty, but it has to be done before the original warranty lapses. That’s why you get so many calls, emails, and notices saying you need to act now.
VSCs, which are also commonly referred to as extended warranties, can be a bit murkier when they come from third parties or dealers. That’s because it can be tricky to spot an imposter company from one that’s real but follows bad business practices. Once you’ve been burned, it can be hard to trust that there are customer-centered businesses out there.
Extended coverage, whether it’s from the manufacturer or a third-party provider, is optional. There are times when it is beneficial to have it, but there are also times when it makes sense not to pay the extra fee.
Scammers, as well as businesses that employ aggressive sales tactics, will have you believe otherwise.
There are many businesses that are transparent, provide great customer service, follow the relevant auto-warranty laws, and won’t send unsolicited communication. Unfortunately, not everyone sticks to the same principles.
Fake businesses will try to sell you a nonexistent product while on a fishing expedition for personal information. You may also encounter real companies that operate unethically.
For example, some use misleading advertising to hook potential customers. They may give the impression that you need protection, even if you are already covered by another provider.
You could also encounter a contract that seems far better than anything you’ve seen before. Cut to you needing work on your engine, only to have an administrator inform you that key components aren’t their responsibility.
It’s a cliché for a reason: If it seems too good to be true, that’s because it probably is.
It’s been a few years since the Federal Trade Commission filed its 2022 and 2023 lawsuits against firms that used calls, robocalls, texts, and emails to defraud consumers by pretending to sell nonexistent extended car warranties.
There has been a drop in the number of auto-warranty scams, but they haven’t disappeared. Fraudsters have a way of adapting to new rules, or just ignoring them.
These are some of the more common tactics to be aware of:
The most common scam takes the form of a robocall. You’re probably familiar with this one: You get a call, pick up, and hear a recorded message telling you that your warranty is up for renewal. You’re then asked to press 1 to fix the issue, or press 2 to remove yourself from their list.
Don’t press anything but the “end call” button.
Asking you to press a number is a common tactic used to identify potential victims. It lets the scammer know that there is someone on the other end of the line.
You might receive a call from someone claiming to work with the vehicle-services department or something similar. The script is pretty standard: They’ve been trying to get hold of you to discuss your expiring warranty; if you don’t take immediate action, they’ll close the file.
Ignore it.
You’ve probably been told that legit callers will leave a message if you don’t pick up. If the caller includes specific information about your vehicle, you might be even more inclined to call back. That’s what scammers are counting on.
The language is predictable.
Motor vehicle notification. Notice of interruption. Final warranty notice.
The urgency makes you pause.
Then they get into the substance: You haven’t contacted them to have your service contract activated. Once your factory warranty expires, you will be liable for repairs. But of course, there is a solution—activate your VSC. You just need to call this number now, before it’s too late.
And then comes the hard-selling tactics.
There will be times when a notice is legitimate, but before you call any numbers, do some fact-checking. If you have an existing VSC or are still under factory warranty, reach out to the provider using the contact information provided on their official website.
If you aren’t sure whether your car is under factory warranty, you can check using a VIN tool. With your VIN, you can also check with an authorized dealer or use the manufacturer’s online portal. Reviewing the document that came with the original purchase is another option.
Maybe you find that the warranty is actually about to expire. You get to decide where to go from there, not a scammer.
The Federal Communications Commission (FCC) has regulations for unsolicited communication in place. Knowing when businesses are and are not allowed to contact you makes it easier to tell when to ignore a call or notice, and when to follow it up.
A reputable company won’t make unsolicited calls—because they’re not allowed to. Businesses need your permission to make sales calls to you.
It’s similar to robocalls. You need to give written consent to receiving calls. Without your express agreement, either on paper or electronically through website forms, it’s illegal for the callers to make autodialed or prerecorded calls to your number.
There are some exceptions, like in the case of calls on behalf of tax-exempt nonprofit groups to landline numbers. The FCC also allows autodialed calls for market research or polling purposes. Emergency calls are allowed, too.
None of those exceptions applies to robocallers selling extended warranties.
Additionally, a legitimate telemarketer has to display their phone number and name when they call you. In the display, they also need to provide a contact number that you can call during business hours to ask the company to stop calling you.
If you receive a robocall or an unsolicited call, it could definitely be a scam. It could also be an unethical operator ignoring the rules. If that is the case, you don’t want to be in business with them in the first place.
A good starting point is to treat any unsolicited call, text, or email with suspicion. Here are some other tips to help you steer clear of scammers and bad VSC providers:
The FCC has a useful guide on stopping unwanted calls and texts. It also explains how to lodge a complaint about suspicious calls. Those reports are useful to regulating bodies, because it helps them track patterns and investigate fraud.
The Federal Trade Commission's National Do Not Call registry allows you to report unwanted phone calls, but it can’t stop operations that aren’t acting within the law. In other words, it can’t stop illegal scammers, so you still need to be careful when taking calls from unknown numbers.
The Better Business Bureau (BBB) exists to promote trust by ensuring that companies behave responsibly and fairly. There are a few ways they do this:
Here’s a step-by-step walkthrough of how to check a warranty company’s BBB rating:
If there’s a company you’re really concerned about, you can also visit the Federal Trade Commission’s Legal Library. Search the business’s name, and if there has been legal action against them, it should show up here.
When it comes to extended warranties, there are two kinds of red flags to watch out for. The first signals that whoever is reaching out to you is a scammer. The second indicates that a company, although real, is likely to give you the runaround.
Scams tend to have certain red flags in common:
There are legitimate third-party extended-warranty providers. However, there are also those you would be better off staying away from. These are some indicators that you’re better off looking for a more reputable provider:
A good place to start is the Chaiz directory. Here, you’ll find a list of providers that have gone through a strict vetting and accreditation process.
Each provider is assigned one of three badges:
The badges allow for quick screening. You can see which providers are fully connected to Chaiz, which ones have been vetted and approved, and which ones are only listed.
Each listing also includes the BBB rating, number of complaints the business has received in the last three years, and an overall provider quality score.
Aside from thoroughly researching the company and comparing reviews, you can figure out if a company is trustworthy by looking at the written agreement outlining the terms of service.
Ask for a copy of the policy. The contract should follow plain-language principles, meaning it should be written using language that you can understand.
A legitimate sample contract should state
If the company is legitimate, they will give you time to ask questions about the terms, exclusions, and pricing.
Transparency is key. The representative you’re working with should be able to explain how the quote is calculated.
Once you’ve decided on an extended-warranty provider, it’s not all smooth sailing. Common complaints include cancellation problems and difficult claim processes.
If you have a VSC but decide that it’s just not working for you or worth the money, why hang on to the expense?
And yet, when you look up how to cancel, it sometimes feels like roaming around a dark room. The overenthusiastic agents who took care of your onboarding are suddenly nowhere to be found.
That’s a common complaint people have about extended-warranty companies: how difficult it can be to end the coverage.
Users call to cancel, only to end up with a representative trying to negotiate different terms. Some customers get transferred around and put on hold until the line dies. In other cases, the cancellation request is confirmed, but the charges keep coming.
To counteract this, Chaiz makes canceling a plan simple with a one-click cancellation feature.
Aside from aggressive telemarketing and difficulty canceling, another of the most common complaints about VSC providers is how difficult it is to get a claim paid. It can easily feel like throwing money into thin air if every attempt to use the coverage ends in a no.
It sounds simple when you’re advised to read the fine print, but so many people don’t because it feels like information overload. Before signing, read slowly. Highlight terms related to extra costs, exclusions, and claim denials. Make sure you understand them.
In your research, look at what users say about the claims process. If you have a shortlist and are looking to narrow it down further, this could be the deciding factor.
If you purchase a VSC through Chaiz, there is a 30-day review period. You can use that time to make sure you are happy with the contract. If not, you can cancel within the specified window and get a refund on your down payment (the amount charged at the time of the sale).
These are some of the most common denied claims users report:
Before the company went out of business, Concord Auto Protect claimed to be the #1 top-rated vehicle protection company. And yet, in 2024, the Pennsylvania Attorney General sued the company for scamming vehicle owners. Concord might be out of business, but other similar companies are still in operation.
With one-star ratings across all user-review sites, American First Auto Protect is one such provider to steer clear of. ConsumerAffairs warns to stay away from the company, and for good reason. User reviews consistently mention terrible customer service and drawn-out cancellation processes.
While decent service providers are putting in the work to earn the trust of customers who have been burned in the past, other bad apples find new ways to draw people in. A favorite is manipulating reviews on sites like Google.
How do you spot those tactics? Check multiple sources. A company might be rated A+ by the BBB but have a one-star rating on Yelp or Trustpilot. In part, that’s because of the different criteria that go into calculating scores. The BBB grade is shaped by complaint resolution more so than customer experience, whereas user forums are less formal and more unfiltered.
If you’re shopping around for quotes and providers, check the Chaiz directory listings. You’ll see a numbered score calculated based on customer ratings, Chaiz’s own criteria, and BBB rating.
Independent research can give you greater peace of mind, especially if you’ve been burned before, but the provider quality score can help you create a shortlist, at the very least.
Whether it’s a robocall about an extended vehicle warranty or a pop-up saying your computer has a dangerous virus, scammers will find a way to weasel themselves into your day. No matter how old you are, how smart you are, or how clued up you are, there is always a risk of getting caught.
But the distrust surrounding VSCs doesn’t just come from outright scams. It also stems from years of aggressive sales tactics followed by little to no follow-through from providers. It stems from unanswered complaints and refunds that never arrive. It comes from dense contracts that hide loopholes in the fine print and leave customers out of pocket for repairs, while still charging the monthly cost of an extended warranty.
VSCs and legitimate extended factory warranties are not scams, but it’s understandable why people question whether they are.
If you’ve decided that a VSC is worth it for you, choose your provider with care. Compare consumer satisfaction, cost, coverage and offerings (including extras and discounts), and official ratings from verified review sites.
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