Missouri gets tough with sleazy telemarketers

In many cases, the postcards and letters car owners get have the correct make, model, and year of their vehicle. My wife and I have received several of these postcards and each one had it right. This certainly adds to the air of legitimacy. So how are these smarmy telemarketers getting this information?

According Holste, they may get it from credit bureaus, auto dealers, or even quick lube places. “There are also companies out there that track this information and then sell it to these businesses.”

The salespeople promise you the service contract covers virtually anything that can break on the car. Consumers who buy the coverage complain that it’s not nearly that extensive and often difficult to use. Because you can’t read the contract before you buy it over the phone, you don’t know what’s actually covered and what restrictions might be in the fine print.

“One of the businesses we sued specified that in order to get coverage you actually had to use a specific brand of oil when you changed your oil,” Holste says. “Otherwise this contract that you were paying a couple of hundred dollars a month for was no good.”

Confessions of a former salesman
David was the general manager at one of the companies sued by Missouri’s attorney general. He told me he wrote the sales scripts and trained all the new hires. We spoke at great length about the tactics used to sell these extended warranties.  David (he asked that I not use his real name) said the public is “getting hammered” by salespeople who “misrepresent things” and “say whatever they have to say” to make a sale.

“Those sales floors are like boiler rooms,” David explained. “The managers are jumping down their throats to ‘Get the sale!’ If you’re not closing at 10 percent, you go to training. Go to training three times and you’re still not closing at 10 percent — you’re fired.”

I told David that when I called the company the salesperson put me on hold to talk to his manager about the price. “That’s a crock,” he said.  It’s a routine part of the sales pitch called “a take-away” and it’s designed to create a sense of urgency so you’ll buy on the spot. By the way, the “manager” is really just another salesperson playing the role.

What to do if you’ve been taken
If you’ve feel you’ve been misled, tricked, or high-pressured into buying one of these service contracts, file complaints. The Missouri attorney general’s office wants to hear from unhappy customers who bought from a company located in that state. If the company is in another state, contact the attorney general or consumer protection office in that state.

I encourage everyone to file a complaint with the Federal Trade Commission. You should do this even if you didn’t buy, but received the sales call on a cell phone, or home phone that is on the national Do Not Call Registry.

More information

• 'Operation Taken for A Ride' targets sellers of extended service contracts for vehicles who use high-pressure, misleading tactics
• Consumer Reports says extended warranties are a high-priced gamble
• Automobile Extended Service Contracts

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