Menu

Car Warranty Robo Calls Investigated

The telephone calls flood people every day around the country: A computerized voice tells them that their car warranties are about to expire and that they should sign up for new service plans.

The calls target people regardless of whether they have warranties or even own cars and have become such a nuisance that officials in 40 states are investigating the companies behind them. The Better Business Bureau said that last year it received more than 140,000 complaints about the car warranty calls, which come even if a person has signed up for the national Do Not Call registry.

U.S. Sen. Charles Schumer wants a federal investigation into what he calls "robo-dialer harassment."

"Not only are these calls a nuisance, but they tie up land lines and can eat up a user's cell phone minutes, possibly leading to a higher cell phone bill due to overage charges," said Schumer, D-N.Y.

Michelle Corey, president of the Better Business Bureau in St. Louis, Mo., said the industry is based largely in the St. Louis area. She said a group of companies in Missouri in the mid-1990s began offering extended repair warranties to people whose manufacturer-issued warranties were about to expire. Within a few years, she said, about 35 firms were offering similar services.

"It's a very lucrative industry," Corey said.

The companies offer contracts akin to insurance policies, pledging to pay for car repairs in exchange for fees paid up front. They call numbers randomly and leave messages telling people that their auto warranties are about to expire.

Some companies also send out cards that mislead recipients into thinking that their vehicles have been subject to safety recalls, Corey said.

If people call back and agree to buy policies, Corey said, the companies often don't let them see the contracts until they agree to pay. And some scam victims don't learn until it's too late that the deals don't cover many types of repairs, Corey said.

"Some people are losing thousands and thousands of dollars in purchasing a product that turns out to be useless," she said.

The Federal Trade Commission, which already operates the do-not-call list, should work with state and local authorities "to find the scam artists and shut their operations down," Schumer said.

"This is an annoying scam whose perpetrators have found a way around the do-not-call list," he said at a news conference in his Manhattan office. "The FTC has to track them down and then shut them down to put an end to this nuisance once and for all."

Missouri authorities filed a lawsuit last month against one of the largest car-warranty companies, Wentzville, Mo.-based USfidelis Inc., charging that company officials ignored a subpoena demanding that they answer questions about their business.

A spokesman for USfidelis, which has more than 1,000 employees, said Sunday that there was "some confusion about the appearance date." The spokesman, Ken Fields, said USfidelis "treats every customer fairly and honestly."

The company stopped making unsolicited marketing calls last year and now relies mostly on television advertising, he said.

Corey, of the Better Business Bureau, said it is often difficult to know who is making the calls because companies change names frequently and use telemarketing subcontractors.

Schumer, who received a call last week, said a federal crackdown is needed.

"A few states have tried, but we need national action," he said.

Alison Southwick, a spokeswoman for the Better Business Bureau, says the calls even come to her office — though she doesn't own a car.

"Personally, I don't know of anyone who hasn't received phone calls telling them their auto warranty is about to expire," she said. "My friends start bringing up four-letter words when I bring up the topic."

Click here for more auto news and reviews from FOX Car Report