[Infowarrior] - ConsumerMan: Sleazy auto warranty scam

[Richard Forno]

(Something I'm dealing with now after being stalked for a few weeks by
Acura, who I used to hold in a high regard.  Funny how their letters and
calls never quoted price or what the policy covers in any detail, and they
refused to email/fax me information before I commit.  Sorry, I don't work
that way!  --rf)


ConsumerMan: Sleazy auto warranty scam
If you get a call offering extended coverage, hang up and then complain
By Herb Weisbaum
updated 3:08 p.m. ET, Fri., Feb. 15, 2008

One of the most obnoxious and deceptive marketing campaigns I have ever seen
is taking place right now. It uses postcards, letters, and phone calls to
sell outrageously priced extended warranties.

The mailings look like an important notice from your car dealer or
automaker. There is always an eye-catching warning on the front of the card,
such as: ³Final Notice: Expiring Auto Warranty.²

Marla Wolfe gets a couple postcards a week telling her she needs to renew
her car warranty. ³I bought my car without an extra warranty,² she tells me,
³so there¹s nothing to renew.²

The postcards are annoying enough. Now there are constant phone calls trying
to sell her an extended warranty. Wolfe received five calls in one day.

³It¹s out of control,² she says. ³It¹s constant. It¹s non-stop. I don¹t know
what to do. I don¹t want their product. I don¹t want to be scammed into
whatever they¹re trying to sell. If this keeps up I¹ll go insane.²

Gari Weinraub¹s phone number is on the national Do Not Call Registry. And
yet, she gets at least one of these warranty calls a day. Weinraub knows the
warranty on her 1990 Honda isn¹t about to expire. It did that a long time
ago.

Even worse, these sales calls are on her cell phone, a number she considers
so private only family and a few friends have it. Federal regulations
prohibit sales calls like these to cell phones.

³I hate it,² Weinraub says. ³It¹s an invasion of my privacy.²

These sales calls are going out at all hours of the day and night. I have
spoken to a number of people who had their phones ring at 4 a.m., a clear
violation of federal regulations that prohibit sales calls before 8:00 a.m.
local time.

Complaints pour in
The bulk of the companies doing this are located near St. Louis. The Better
Business Bureau of Eastern Missouri and Southern Illinois lists 92 extended
warranty companies in that area. They are responsible for a huge number of
complaints from across the country.

Many of the complaints deal with deceptive advertising and high-pressure
sales tactics. Unhappy customers say they could not cancel and get a refund
as the salesperson promised on the phone.

Some people who buy the warranty find that they have problems using it.
According to Chris Thetford with the St. Louis BBB, potential customers are
told their extended warranty covers all kinds of repairs. ³In fact,² he
says, ³a very, very limited range of things are covered.²

Missouri Attorney General Jay Nixon is now investigating many of the
companies selling these warranties in his state. We should know in a few
weeks if his office decides to take any legal action.

ConsumerMan¹s undercover call
I have received a bunch of these warranty expiration notices, so I decided
to respond to one from Vehicle Services in St. Peters, Mo.  I gave the
salesman, Corey, my real name and valid information about my car.

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 ³automatically delete² 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 Corey¹s turn to close the deal. He had good news. I ³qualified²
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. ³You are not obligating yourself
to anything,² he kept saying.

³Can you guys send me this policy, so I can see all this in writing and I
can get back to you?² I asked.

³We don¹t actually send out any paperwork without receiving a down payment,²
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.

³You would never want to buy an extended service contract without seeing in
writing exactly what¹s covered and what you have to do to make a claim,²
Krughoff says.

What about the great price Vehicle Services offered me? Krughoff calls it
³outrageous.² 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 government¹s 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.


© 2008 MSNBC Interactive

URL: http://www.msnbc.msn.com/id/23147777/