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Want to know which extended warranty companies to avoid? Learn about the worst names in the business and how to spot red flags.
Want to know which extended warranty companies to avoid? Learn about the worst names in the business and how to spot red flags.
The line between a scam company and a legitimate business operating in bad faith can often seem very thin when it comes to extended car warranties.
Sometimes, the biggest names in the business can let customers down at a mass scale thanks to misleading advertising.
Other times, rotten apples get shut down, but customers are left short of thousands of dollars they’ll never get back. Meanwhile, some companies do their best cockroach impression, getting banned in one state just to re-emerge somewhere else under a new name.
Below, we’ll discuss how these companies operate, share some examples to learn from, and note patterns to look out for. But first, a quick disclaimer.
Chaiz is a marketplace that earns a commission when you buy through our platform. This does not affect our editorial rankings. This article is also not a ranking per se; rather, it uses real examples to illustrate red flags that will guide you in your search for the right provider.
Unlike with true warranties, there isn’t a federal regulatory framework for extended-warranty companies. The state-by-state rules and regulations can make it easy for bad operators to stay in business even when they face legal consequences in another state.
The term “extended warranty,” which is often used in marketing materials, can add to the confusion around regulations. These products are technically vehicle service contracts (VSCs), a point the FTC (FTC) stresses.
The warranty a new car comes with, often called the factory or manufacturer warranty, is federally regulated under the Magnuson–Moss Act.
VSCs are not. They are separate, optional, purchased agreements that pay for mechanical breakdowns if the parts in need of repair are covered.
Because there isn’t a federal license for offering VSCs, each state has its own regulatory terms. The statute, regulator, and financial-security rules differ across the country.
The National Association of Insurance Commissioners’ Service Contracts Model Act 685 creates a legal framework intended to regulate the service contract industry. However, its adoption is not nationwide and varies from state to state.
The patchwork regulatory system is one of the reasons so many bad companies continue to operate. A business can be banned in New Jersey just to crop up in Missouri.
Read through 1-star reviews of extended-warranty companies and a trend will emerge. A few common complaints show up time and again.
Claims are denied for legitimate reasons all the time, but some businesses are very good at avoiding approvals altogether. Sometimes they cite terms buried deep in the fine print. Other times, they deny claims even though they fit the contract’s terms.
The 100% coverage that a sales agent—or advertisement—promises you is a great selling point, until you need a claim paid. The surprisingly long list of exclusions can leave you with a four-figure repair bill on top of what you’re already paying for coverage.
Vehicle owners frequently recount cancellation troubles. Many mention their request being confirmed, yet the refund never comes through. In other cases, monthly billing continues even after the request has been confirmed.
It’s a familiar story for many who have been burned by extended-warranty companies: The phone calls are nonstop during the purchase stage, but when it’s time to file a claim, one-hour hold times become the norm.
Consumers and repair shops both report companies trying to cut down on the cost of labor for repairs. Some companies also try to pressure mechanics into using cheap, low-quality parts that end up creating new problems for drivers.
This list only names three companies that have gone out of business following legal action. The companies mentioned haven’t been ranked in any particular order. Rather, they’re mentioned here to illustrate some common frameworks to watch out for.
In 2022, the FTC filed a complaint against American Vehicle Protection and several co-defendants. The Commission alleged that the company cheated consumers out of more than $6 million.
These were some of American Vehicle Protection’s tactics:
A $6.6 million monetary judgment sounds like a win for customers, but it’s meaningless if the business can’t pay. That’s what happened with American Vehicle Protection.
In October 2024, the FTC used what money was paid to provide $223,000 in refunds to eligible customers. In June 2026, the FTC announced that it was sending a further 9,074 checks to people who accepted their first payment. This time, the total comes to $186,000.
It’s nowhere near $6 million, and it’s up to the victims to determine whether it’s any consolation that American Vehicle Protection and its co-defendants now face a lifetime ban from outbound telemarketing and the auto industry.
With an F rating from the BBB, a 1.3 rating on Trustpilot, and 1 star on ConsumerAffairs, it’s easy to see why Concord Auto Protect has recently closed shop.
In June 2024, the Pennsylvania Attorney General filed a lawsuit against Concord. The complaints listed aren’t novel. Concord was accused of failing to pay for repairs and other expenses as required by its contracts. The company was also accused of refusing to pay refunds and dodging customer calls.
On top of the legal action, Concord exhibited a few other red flags. The first was the failure to respond to 349 BBB complaints. Another was that the company never identified an independent underwriter.
The first is an issue because it reflects on the company’s attitude toward customer trust, good business practice, and its reputation. The second is an issue because customers are likely going to lose out on claims now that Concord has shut its doors.
Prior to the lawsuit, customers reported having their claims denied on grounds that weren’t disclosed at the time of purchase. Customers also reported that they never received their cancellation refunds, and many were unable to reach anyone at the company.
Concord went out of business without public notice soon after the lawsuit was filed. Now, customers are at a loss.
The most recent reviews on ConsumerAffairs come from customers reporting that they have no way of contacting the company. They also received no notice of the business’s closure. In essence, they’ve lost $1,000+ on what was supposed to bring peace of mind.
Over in Colorado, the State Attorney General’s Office filed a civil lawsuit against Champion Car Warranty’s owners in October 2024. The allegations are familiar: failure to fulfill the terms of Champion’s VSCs and misrepresenting the products and the business’s reputation.
Champion is notable because the lawsuit demonstrates why it’s so important not to only trust a provider’s website.
According to its website, Champion
None of those claims could be verified.
Champion is an important example for another reason. Its owners have created similar businesses in other states.
Patriot Warranty in South Dakota is one of them.
On 17 July, 2026, South Dakota’s Attorney General announced that the state had received a permanent injunction and had been awarded $34,579 in penalties against one of the co-owners of Patriot Warranty.
That co-owner, Jack Yedid, was also a co-owner of Champion Warranty.
All car-warranty companies deny claims. The difference is that some deny claims for valid reasons that come with transparent explanations. Others hide behind fine print, loopholes, and delay tactics to avoid paying for repairs.
In other cases, customers are left frustrated because they were sold “100%” coverage that, in reality, is very far from total protection. CarShield is a famous example of how that kind of misleading advertising can lead to federal legal action.
CarShield’s $10 million settlement with the FTC was big news in 2024, and it serves as a cautionary tale for VSC providers nationwide.
According to the FTC, CarShield failed to cover repairs after advertisements and telemarketing promised that vehicle owners would “never pay for expensive car repairs again.”
The ads failed to mention that contracts came with exclusions and conditions that meant customers would, in fact, have to pay for repairs. When customers tried to file claims, they were denied coverage.
In its complaint, the FTC alleged that CarShield’s advertisements and telemarketing for its products misled customers. The company is now prohibited from making any misrepresentations related to its products. It’s also prohibited from violating the FTC’s Telemarketing Sales Rules, among other stipulations.
Despite the lawsuit and its settlement, CarShield maintains its A+ rating and accreditation from the BBB.
CarShield has decent ratings. On ConsumerAffairs, it holds a 4.0 rating from over 10,000 reviews. Its 4.1 Trustpilot rating comes from 56,000+ reviews, and its 3.29 rating on the BBB is an average based on 3,391 reviews.
While CarShield is a legitimate business with happy customers, there are some common complaints from reviewers:
The BBB is a valuable resource for assessing the best and worst car-warranty companies. With that said, it’s important to look beyond the letter rating.
If a business is BBB accredited, it meets the Bureau’s standards for honesty, transparency, and ethical business practices.
Being accredited means the business has been operating for a certain amount of time, is properly licensed, and agrees to follow ethical advertising guidelines. The business also commits to following customer dispute guidelines.
Accreditation is not a reflection of quality, nor does it mean the BBB has evaluated regulatory compliance.
The letter rating is based on specific criteria, including complaint history, type of business, licensing, advertising issues, and time in business. Transparent business practices and failure to honor commitments to the BBB also shape the score.
Customer reviews don’t factor in. That’s why you can have a company with an A+ but a 1-star rating from customers, as is the case with Smart Auto Care.
The customer reviews will often indicate how the business manages claims, how quickly they work, and whether they’re likely to give you the runaround.
The second thing to look at is how the business responds to the complaint. While a response counts in the provider’s favor, repeating the same boilerplate feedback doesn’t reflect an understanding of the problem.
BBB ratings are only one factor that goes into Chaiz’s provider rating. Customer reviews and years in business also inform the number rating you’ll see in the provider directory.
In addition to the provider rating, Chaiz also utilizes badges to show which providers are
Although the badges indicate how much trust and experience come with a specific provider, “not certified” simply means a provider is not affiliated or partnered with Chaiz. We don’t have a relationship with them, and we haven’t verified them beyond public data.
In a word: patterns.
One disgruntled customer probably isn’t something to worry about if their complaint is wedged between high ratings. But when a negative pattern emerges, so does a red flag.
Frustrating claims processes, misrepresentations of coverage, and trouble getting hold of the company are often trends, not isolated incidents, with the worst extended-warranty companies.
When you’re looking at reviews, check how they’re filtered. If all you see is the best feedback on a company with over 10,000 reviews, you’ll easily miss something. Try to get an impression of what the provider does well and what is a recurring problem.
Looking at the most recent reviews can be telling because it lets you see current trends and customer frustrations.
Most VSCs can be canceled at any time, usually with a prorated refund.
Many companies offer a 30–60-day review period. If you cancel within that period and haven’t made any claims, you should be entitled to a full refund. If you have made any claims, the refund will normally be prorated.
The exact terms should be in the contract.
This is what the process of canceling a VSC usually entails:
There may be a cancellation fee, typically around $50–$100.
Type in “worst auto-warranty companies,” and you’ll find an assortment of answers. Some names will recur; others might appear once or twice in a Reddit thread.
Shutting down bad extended-warranty companies is a bit like playing whack-a-mole: One goes away, another pops up. So while having a list of names to avoid is important, it’s arguably more important to know what to look out for.
That offers you a better chance of avoiding a bad seed than anything else.
Research is your friend. Using a combination of sources, like the BBB, ConsumerAffairs, Trustpilot, and Yelp, can paint a more realistic picture than only looking at one site.
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