A significant part of owning a car is paying for repairs to keep it on the road, and you’ve probably received plenty of phone calls from companies promising coverage. This could be a warning sign of a sketchy provider, but what signs can tip you off to the worst extended auto warranty companies?
In this article, we’ll cover what to look out for when choosing a warranty provider, as well as examples of the worst extended auto warranty companies. Our team of experts has researched and reviewed the best extended car warranty companies in the industry based on their cost, coverage, reputation, and customer experience to help you know how to identify reputable providers.
Worst Extended Auto Warranty Company Warning Signs
When you’re trying to gauge whether a provider is a reputable extended warranty company, there are a few warning signs to keep an eye out for. The red flags that can identify the worst extended auto warranty companies include:
Lack Of Transparency
One way to tell if a warranty provider is trustworthy is by how much information it shares online. Reputable companies like autopom! and CarShield post sample contracts of their protection plans on their websites.
This not only allows customers to see detailed overviews of the coverage plans and their exclusions, but also provides information about additional perks like towing and rental car reimbursement. If a company won’t share specifics about its vehicle protection plans until after you buy a warranty, that’s a definite warning sign.
Odd Payment Methods
Some scammers may ask you to complete your payment through an odd method. The Federal Trade Commission (FTC) says scammers may insist you pay via a money transfer company or by purchasing a gift card and relaying the information back to the provider.
A reputable warranty company will make it easy for customers to buy vehicle warranties, so be wary if you’re asked to make a purchase that’s overly complicated.
A quick Google search might tell you a lot about a company. Look for customer reviews and industry ratings from organizations like the Better Business Bureau (BBB), as well as information from federal organizations that protect consumers to inform you about the company’s reputation.
You’ve probably received your fair share of unsolicited calls asking about your car’s extended warranty. If you’re looking to buy and a company representative tries to pressure you on a warranty, you should hang up.
The Worst Extended Auto Warranty Companies
It’s not hard to find examples of auto warranty companies with poor business practices. Schemes have run the gamut from failing to provide refunds to forcing customers into contracts they don’t need.
Here are a couple examples of companies that were caught deceiving consumers:
What started as a company between two brothers ended in federal charges from state authorities and the Federal Bureau of Investigation. In 2012, Darain Atkinson pleaded guilty to felony charges of conspiracy to commit mail and wire fraud and for filing false tax returns.
He received an eight-year sentence while his brother, Cory, was sentenced to 40 months on similar charges. In addition to jail time, both Atkinson brothers were ordered to pay fines of over $4 million.
According to the St. Louis Post-Dispatch, the crux of the investigation alleges US Fidelis employed deceptive marketing tactics by telling customers they were getting comprehensive extended warranties from the car manufacturer. The FBI also cited mailers as a main component in the scheme.
Direct Buy Auto Warranty
Direct Buy Auto Warranty paid $810,000 to the state of New Jersey in a settlement after it refused to pay customer repair bills. Part of the settlement included ending business operations in New Jersey.
Direct Auto Buy advertised that its service contracts would pay for all auto repairs, which wasn’t true. In actuality, the contracts had lots of exclusions that shifted car repair costs to the customer.
The company would later file bankruptcy following the settlement.
What To Do If You’ve Been Scammed By A Warranty Company
Sometimes it’s not so easy to tell if an extended warranty company is legitimate. If you are a vehicle owner who fell prey to an extended auto warranty scam, you have a few options:
Contact The Company
The first place to start is seeing what the company can do for you. If you can cancel your warranty contract and get a refund, great. If the company won’t budge or claims you’re locked into payments for some administrative reason, that’s when you should start considering other options.
File A Complaint
If you find the company’s customer service to be less than satisfactory, consider making a complaint. Customers often post their experiences with companies on consumer review sites like the BBB or Trustpilot.
If that doesn’t get the company’s attention, you can file a complaint with the FTC, which protects consumers across all industries. The Federal Communications Commission (FCC) also fields reports of scam calls if consumers feel like they’ve been scammed via phone.
Make Some Calls
In the event of being scammed, you want to make sure your personal information is protected. Here’s a list of information scammers often ask for:
- Credit card numbers
- Computer passwords
- Social Security number
If you did give out some of this information, call your bank to cancel your cards and protect your bank account. The Social Security Administration (SSA) can also assist if you’re worried about your Social Security number being used for fraud.
Take Legal Action If Needed
When all else fails, you have the option to pursue damages in court. Keep in mind that hiring a lawyer and levying a suit in civil claims court may exceed the amount of money the scammer obtained.
How To Find The Best Extended Auto Warranty Companies
If you’re considering extended warranty coverage but have worries about a potential provider making negative headlines, here are a few tips to find reputable companies:
Look At Industry Reviews
One of the best ways to ensure you’re working with a reputable aftermarket car warranty provider is to read reviews. The BBB and Trustpilot can have hundreds to thousands of customer reviews depending on the company, and the BBB even issues a letter grade for how well companies process complaints.
It’s also common for a provider to broker warranty services from other companies, which means it’s not the true administrator of your contract. Do some homework to see what insurance company backs the service contract. Next, check the insurer’s AM Best financial strength rating, which can be an indicator of how likely the extended warranty provider is to be able to pay a claim.
Review The Contract
We mentioned above that reputable providers usually post contracts online. Besides telling you what the warranty covers, a sample contract will include:
- Coverage exclusions
- Transfer policies
- Eligible repair facilities
- Information on deductibles
- Cancellation policies
Reviewing the contract should also tell you what duties the company is responsible for versus the burdens of the car owner.
Know The Claims Process
Knowing when you can file a warranty service claim and how it’s approved is important information to get the most out of your vehicle protection plan. In the event of a covered repair, part of the load falls on the customer to make sure the warranty provider has all the information it needs to approve the claim.
It also helps to know your deductible so you’re aware of the out-of-pocket costs when a warranty claim is approved.
Review The Payment Plan
Price out your warranty before you commit to making a purchase. It’s not uncommon for an extended auto warranty company to ask for the entire warranty cost up front, but many offer monthly payment plans. Keep an eye out for potential interest charges, as well.
Top Recommendations For Extended Auto Warranties
Now that we’ve covered how to identify the worst extended auto warranty companies, we can talk about reputable companies that actually provide peace of mind. Our warranty experts identified Endurance and CARCHEX as two smart choices for customers considering extended warranties. Both regularly top industry reviews and have positive reputations for customer satisfaction.
Endurance: Best Coverage
Our pick for Best Coverage is Endurance. The company champions customer service and transparency by using a direct-to-consumer model, which means it administers its own service contracts.
Endurance offers six vehicle protection plans that range from covering crucial engine components to offering coverage that rivals the factory warranties that come with new cars. Included with the price of a service contract is one year of Endurance Elite Benefits, which gives customers access to perks like tire repair or replacement.
Endurance also has a good reputation with customers. It has a 4.4 out of 5.0-star rating from over 3,300 customer reviews on Trustpilot.
To learn more, check out our Endurance warranty review.
CARCHEX: Best For Used Cars
Car owners with high-mileage vehicles may want to consider CARCHEX. The company provides service for vehicles up to 250,000 miles, which is one of the highest mileage limits in the extended car warranty industry.
CARCHEX offers five auto warranty plans and includes a No-Haggle, Low-Price Everyday Guarantee™ so customers know they’re getting a good price. It also has a great reputation with customers. CARCHEX has an A+ rating from the BBB and a 3.3 out of 5.0-star consumer rating on Trustpilot.
Read our CARCHEX review to see if this independent provider is right for you.
FAQ: Worst Extended Auto Warranty Companies
How We Rate Warranty Providers
Our review process aims to deliver consistent and unbiased assessments of extended auto warranty providers. While there are multiple qualities that make a warranty company successful, our review team focuses on those we believe are the most important for consumers:
- Cost: Cost can be difficult to compare between providers because so many factors impact vehicle service contract pricing. To determine our cost score, we perform a secret shopper analysis for a variety of vehicles and plans and consider available deductibles.
- Coverage: Our team of experts looks at the number of extended warranty plans available, as well as term limits, exclusions, and added benefits like roadside assistance. Ratings also take into account the availability of maintenance coverage.
- Reputation: It’s important that an extended car warranty company is able to meet its claims obligations. Companies with a strong rating from the BBB score well in this category. Established providers with a long history of reliable service also receive positive marks.
- Customer Experience: We listen to real customer sales calls and comb through reviews on sites like the BBB to learn about customer experiences. Warranty companies with a low volume of complaints score well in this area. We also consider the availability of mobile apps and chat features.
*Data accurate at time of publication.