Join our community of Solution Seekers!

Avoid This Car Service Contract Scam

Don't be taken in by deceitful auto-repair warranties.

By Susan Stellin
Tire and jackLaurie Frankel

The rip-off: Marketers call or mail letters warning you that your car warranty is about to expire, then offer to sell you a service contract to cover the costs of future repairs. These policies, which can run up to around $3,000, are also advertised on TV, the radio, and the Internet, promising bumper-to-bumper coverage that will keep you from shelling out big bucks if your transmission fails or your engine breaks down.

The tip-off: Some “auto-repair service sellers” have led customers to believe that they are affiliated with vehicle manufacturers. Not so. These companies operate on their own and are infamous for refusing to reimburse claims on car repairs, says Bill Smith, a St. Louis-based investigator with the Better Business Bureau (BBB). According to Smith, the sellers often cite loopholes in the contract (ones you would never be able to discern) to avoid paying up, then void the document, leaving you in the lurch.

How to protect yourself: Although the Federal Trade Commission has cracked down on the use of illegal robocalls to sell auto-repair service contracts, many companies, such as StopRepairBills.com, Consumer Protection Services, and Service Protection Direct, are still in business (despite receiving grades of F from the BBB). If you are the target of one of these offers, research the company’s history at bbb.org—or to be on the safe side, steer clear of these policies entirely.

Read More About:Money

Related Content

Handing over money

3 Ways to Protect Yourself When Loaning Money

Whether it’s for an overdue bill or to fund a new business, a relative will ask for financial help at some point. Follow these tips for a smoother lending process.

What do you think about this article? Share your own solutions and ideas

View Earlier Comments
Advertisement

Quick Tip

Illustration of suitcases

Packing for a family vacation? Travel versions of favorite games won’t crowd suitcases, and playing them will keep kids from begging to watch TV at night. Get more tips.