Beware of bogus car warranty pitches

Law enforcement officials throughout the country are warning of misleading solicitations aimed at pressuring car owners to buy extended warranties.

Missouri Attorney General Jay Nixon recently announced that he had filed lawsuits or reached settlements with numerous companies that he said misled and pressured scores of car owners across the country into buying extended warranties that, in most cases, they didn't need. In some instances, consumers were charged thousands of dollars.

He said the companies, most based in St. Louis, used official-looking postcards that included words such as “Notice of Interruption!” or “Important Dated Material Enclosed” to mislead vehicle owners into thinking that the mailing was from the vehicle manufacturer or dealer that sold them the car. He said one elderly consumer paid nearly $1,900 to buy a warranty after being told that her existing coverage “expired or was about to expire” in March 2007; the actual expiration date was November 2008. He said the company then refused the customer’s request for a refund.

“Many consumers—confused, but not wanting their car warranties to expire—went ahead and purchased the new, but in most cases unneeded, service contract the company was hawking,” Nixon said, in a news release.

A warning on the Washington State attorney general’s office Web site said that attorneys general around the country have been receiving increasing numbers of complaints about the practice. It said many of the postcards are personalized with the car owner’s name and a customer ID number. On such postcard, which appears on the Web site, was labeled in large, capital letters: “FINAL WARRANTY NOTICE.”

The Connecticut attorney general’s Web site reports that 20 states are investigating such solicitations, which it said also come in the form of letters, e-mail messages, and telephone calls.

Even when extended warranties are being sold honestly, they often aren’t worth the added expense, especially if your car has a top-reliability score. On the other hand, if your heart is set on a model with below-average reliability, deciding on whether to buy an extended warranty —also known as an extended service contract—is more of a toss-up. —Anthony Giorgianni

Comments

[Janice G]

Allstate Insurance could teach these warranty scammers a lesson in the predatory manipulation of consumers through false tag lines on envelopes! I recently received a letter from Allstate that said "FINAL NOTICE" on the outside envelope. There was no other printing other than addresses and postage. Turns out, it was a marketing offer. Ironically, Allstate's TV ad talks SYMPATHETICALLY about how hard it is for consumers to open their mailboxes these days because of the difficulty paying bills. In this economic climate, I consider it predatory for Allstate to have used this FINAL NOTICE envelope tag line to imply that the contents were a past-due bill of some kind, instead of simply a marketing offer.