Auto warranty firms launch sleazy scam

Before he would give me the price, Corey passed me off to Chris, the program director. Chris explained that this was a one-time deal and if I said no, their computer system would “automatically delete” my files at the end of the phone call. That was clearly designed to put pressure on me to make an on-the-spot decision.

Now it was Corey’s turn to close the deal. He had good news. I “qualified” for full coverage: four years or 48,000 miles. And he was going to waive the vehicle inspection.

By activating my coverage today, I would get 20 percent off the retail price. With that discount, the cost of the four-year coverage was $3,110 or $777 a year. Corey offered a variety of payment plans and pointed out several times that this was not a contract. “You are not obligating yourself to anything,” he kept saying.

“Can you guys send me this policy, so I can see all this in writing and I can get back to you?” I asked.

“We don’t actually send out any paperwork without receiving a down payment,” Corey explained. He said once I paid, the policy would be mailed to me within seven to 10 business days.

Needless to say, I did not buy anything. Instead, I called back and identified myself as a reporter, but no one would talk to me.

A bad deal all around
Like most consumer advocates, Robert Krughoff, president of checkbook.org, advises car owners to skip extended warranties because they are rarely worth the money. He is appalled at the idea of buying one this way.

“You would never want to buy an extended service contract without seeing in writing exactly what’s covered and what you have to do to make a claim,” Krughoff says.

What about the great price Vehicle Services offered me? Krughoff calls it “outrageous.” By comparison, my car dealer would sell me a three-year/36,000 mile extended warranty for $1,795 or $598 a year. As Krughoff pointed out, as with everything at a car dealer, that price was negotiable.

My two cents
The companies using these deceptive and sleazy sales tactics must be stopped and brought to justice. They are making a mockery of the Do Not Call Registry and the government’s rules regarding telemarketing sales.

If you are the recipient of one of these sales calls, file a complaint with the Federal Trade Commission.  The government has the power to sue these companies, fine them, and make them stop any misleading sales practices.

Links:

• You Make the Call: The FTC's New Telemarketing Sales Rule
• Unwanted Telemarketing Calls
• Automobile Extended Service Contracts

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