If you own a telephone chances are you got a call in the last year with the message that the warranty on your auto was about to expire and for a small fee they would help you extend it. Their urgent message concluded by providing an 800 number for you to call them back. You probably received this automated message multiple times. I was personally getting these pre-recorded calls a couple of times a week at both my home and office. I do not own a car. In fact, I have never owned a car. Sound like a scam?

The Federal Trade Commission certainly believes it to be a scam. Late last year they shut down two of the biggest companies responsible for the auto warranty automated calls, Transcontinental Warranty Inc. and Voice Touch Inc. The FTC believes they were literally calling every phone number in the United States which amounted to tens of millions of calls every week.

These calls were happening round the clock. There were reports of calls coming in at 4 am. Not only are these automated calls in direct violation of the federally implemented Do-Not-Call registry, when contacted the companies are using high-pressure sales tactics for services that are being misrepresented or worse, are complete frauds.

A contributor at, Herb Weisbaum, played along with one of the automated calls. He called back the number provided by Vehicle Services in St. Peters, Missouri and gave his real information. Before the sales person would quote a price he passed the call along to his “program director”. The director stated it was a one time deal and if Mr. Weisbaum passed on the offer he would be permanently deleted from their records.

Not shockingly, he qualified for coverage in full for 48,000 miles or four years for $3,110 or $777 yearly. He was getting a discounted price of 20% for signing up immediately. Contract-free and with a variety of payment plans, the actual policy couldn’t be sent out before a down payment was made, making it impossible for Mr. Weisbaum to first see what he was purchasing in writing. Mr. Weisbaum chose to pass on purchasing the plan.

The contract length and price were both over the industry-standard offered by any respectable car dealer and unlike those contracts, the telemarketed warranty was non-negotiable.

It could have been worse. tells the story of Nancy from Clarksville, Tennessee, who claims she bought a 3-year extended warranty over the phone after receiving a call from Automotive Warranty Services, Inc. After paying $2,700 on her Discover Card, Nancy says she has yet to receive a policy or any information regarding her coverage. When she tried to cancel, she was informed the paperwork she signed and sent back via the mail was binding.

The companies making these calls rely on misdirection. They give the consumer the impression that they represent their car dealer or manufacturer. The phrases used, such as “Notice of Interruption” or “Final Warranty Notice” are designed to create a false sense of urgency so the targeted consumer will be all the more likely to call them back on the provided 1-800 number.

These companies are normally actually selling auto service contracts. Though often referred to as extended warranties, they are not defined as such by federal law. These companies are unrelated to the car dealerships or manufacturers who provide a true warranty with the purchase of an automobile and include it in the original price paid. The service contract is a promise to perform or pay for repairs or services as provided by the policy you purchase.

Auto dealerships, vehicle manufacturers and others independent companies offer these auto service contracts, but never seek out business through automated, blind cold-calling.
Buyers beware when getting in bed with these telemarketers. The FTC recommends the following steps in determining a provider for an auto service contract:

– Check on the company responsible for paying your claims. Sometimes referred to as the service contract provider or contract administrator, this is the company that will be making the decisions about what repairs will be covered for your car. The person selling you the contract is often a broker and has no control over these decisions and no responsibility to the purchaser after the service contract has been bought.

– Licensing and registration in your state should be researched. Many states have strict regulations for contract administrators, including New York, California and Florida. Many states do not oversee these companies and you would be wise to rethink purchasing a contract from one that is not state regulated.

– Investigate if there have been any complaints about the contract administrator you are considering with your state’s attorney general’s office, the Better Business Bureau, and your local consumer protection agency. Links to their websites will be provided at the end of the article.

Here are some things to remember the next time you get a phone call from one of these automated auto warranty sellers.

– Don’t assume the claim that your warranty is up for renewal to be true. There is a possibility it is far from expiring, or has long ago. Check your automobile’s owner’s manual, or call the vehicle’s manufacturer or the dealership who sold you the car.

– Fast talkers and high-pressure sellers are usually hiding their true motives or the deficiencies of their product. Any legitimate company with worthwhile coverage will let you take your time to purchase it and definitely let you examine the offer in writing before taking your money.

– As we’ve written many times before, it is never recommended to give out your personal or financial information over the phone unless you are 100% certain who you are dealing with.

All automated telemarketing calls should be regarded with suspicion. These automated calling companies often aren’t in business long enough to provide what they promise and they aren’t promising anything worthwhile to begin with. This is why they resort to high-pressure sales tactics and demand down payments before letting consumers know what they are purchasing. Don’t fall victim to their sleazy strategies.


To investigate complaints against a contract administrator you are considering for an auto service contract, find your state or local branch of the following:

Attorney General’s Office

Better Business Bureau

Local Consumer Protection Agency

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