If you haven’t received a call warning you that your car’s warranty is about to expire and pressuring you to purchase an extended warranty, you’ve probably heard of someone who has.
The extended car warranty industry is hard for customers to trust:
- Some companies offer legit vehicle service contracts that can cover the cost of unexpected car repairs.
- Others push murky contracts with too-good-to-be-true pricing that might not do anything except take money out of your bank account every month.
- Then there’s the fake warranty offers, often presented over the phone or email, that are likely not connected to any real service contract and could end up putting your financial information at risk.
Here’s how to tell the difference between a real extended car warranty, a serious scam and the grey area in between.
Are all extended warranties a scam?
No, not all extended car warranties are a scam, though they tend to have that reputation. The NerdWallet editorial team shopped for extended car warranties and found a handful of legit third-party extended warranty companies (warranties not offered by the car manufacturer or dealership). These companies provide clear sample contracts, have positive customer reviews, and are accredited by the Better Business Bureau (BBB).
We also found several companies that still offer extended warranties, but raised some red flags: high-pressure sales tactics, no sample contracts, recent bankruptcy and inconsistent pricing information. These companies may not be peddling a true “scam,” but they’re unlikely to give you and your car the protection you’re looking for.
Nerdy Perspective
Extended warranties may be helpful for some car owners, but they’re not necessary for everyone. Weigh the peace of mind an extended warranty can offer against the monthly cost, and make sure to check that the plan you choose has the coverage you need. That monthly cost could go a long way if your extended warranty ends up covering a costly repair, but that amount could also go into a savings account as a car repair fund.
I got an extended warranty scam call – what’s going on?
Extended car warranty scam calls are so pervasive that car owners may be more aware of the fake warranties they offer than actual aftermarket extended warranties.
How it happens: These calls are often prerecorded or automated, and may include specific information about your car that can make them seem legit. They might tell you that your car’s factory warranty is about to expire and that you have to act quickly to extend your warranty by providing immediate payment.
What to do: In general, assume that any caller requesting personal information from you – such as a license number or payment information – isn’t safe to deal with. Don’t share any of this info over the phone. If you’re concerned about your warranty expiration, contact your car’s manufacturer or dealership directly to confirm. Any legit warranty provider should be able to send you a written copy of the policy, so ask for one if you’re not sure.
Extended warranty flags to watch out for
Whether you’re shopping for an extended warranty and coming across fishy behavior from real companies, or trying to identify if the call, email or letter in the mail you just got is a scam, some common red flags should make you pause before proceeding or signing anything. Here are a few warning signs:
- Demands for immediate action. Any time-sensitive pressure, whether it’s from a cold call or an online extended warranty company you requested a quote from, is a signal that the sender might want to push you toward an unwise financial decision. Generally, you don’t need to purchase an extended warranty until your factory warranty fully expires, so don’t rush.
- Unsolicited communication. “Warranty expiration” notices or mailers that aren’t from your car’s manufacturer may have information about your car, but that doesn’t mean they’re helpful. If you didn’t contact the company first – or are unable to get ahold of customer service when you try – they’re likely not legit.
- Murky contracts and policies. A good extended warranty company that is actually providing the service they’re advertising should have no problem providing a sample contract and clarifying their pricing levels to customers. If you’re being asked to input payment information before seeing what you’re signing up for, it’s a red flag. And if the pricing looks too good to be true, it probably is.
- Bad reviews. You can search a company on the BBB website to see if there’s open customer complaints, and check their rating on an A to F scale. Not all companies will have a rating, so customer reviews may help paint a picture. The Federal Trade Commission (FTC) also has reports on lawsuits against companies, which you can search by company on the FTC website. You can also check more informal review sites, like Trustpilot.com and Reddit, to read unfiltered customer experiences.
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What Reddit users say about extended car warranty scams
Reddit is an online forum where users share their thoughts in “threads” on various topics. The popular site includes plenty of discussion on financial subjects like car warranties, so I sifted through Reddit forums to get a pulse check on how users feel about (topic). People post anonymously, so we cannot confirm their individual experiences or circumstances.
Reddit users who have experienced extended car warranty scams describe being solicited via U.S. mail and by phone call. Users warn that both letters and phone calls can be deceptively convincing. Several reported that scammers somehow gained access to their car purchase info. One Reddit user says his father, who fell victim to this scam, had to cancel his credit card, but the scammers keep hassling him, saying he owes them money. Another user recognized the scam call and was able to discourage the caller by stating that he didn’t own the car.
Frequently asked questions
What methods might extended car warranty scammers use to try to reach me?
While extended warranty scams often come via phone call, scammers may also try to reach you through text messages, social media ads and even door-to-door visits. To avoid contact with any of these scammers:
- Don’t answer calls from numbers you don’t recognize (any legitimate callers will always leave a message).
- Block numbers you don’t recognize that call repeatedly and don’t leave messages.
- Don’t answer any unsolicited text messages from unfamiliar numbers. Delete and block them promptly.
- Don’t click on social media ads.
- Don’t answer the door if you don’t recognize the person knocking.
If you answer the phone before realizing a call might be suspicious:
- Hang up if someone asks, “Can you hear me?”
- Hang up if an automated voice asks you to press a key to be connected with a live operator.
- Never give out personal or financial information on an unsolicited call from a person you don’t know, even if the caller says they’re from a familiar business.
What should I do if I fall victim to an extended car warranty scam?
If you’re a victim of this scam (or even if you’ve just been contacted by scammers), you can:
- File a complaint with the FTC online or by calling 877-382-4357.
- Reach out to DISB Enforcement and Consumer Protection Division at (202) 727-8000.
- File a complaint with the FCC. Even though the FCC doesn’t award damages, it helps identify scammers and can impose fines against those violating the Telephone Consumer Protection Act.
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