Some Auto Warranty Offers May Be Fraudulent

The bold text proclaims "final notice," "motor vehicle notification" or "priority level: high."

What's not explained is that those who respond to the extended auto warranty offers - either by mail or on the phone - may risk losing thousands of dollars.

Tennessee's Division of Consumer Affairs is warning that what seems like a legitimate pitch for a warranty from car dealers or automakers may in fact be an attempt to rip off the customer or obtain personal information such as credit card and bank account numbers.

The scam first gained publicity in Tennessee when several Nashville-area residents alerted the NewsChannel 5 television station.

In a segment that recently aired on the TV station, two people explained how they had lost money in the scam.

Mary Blackburn paid $2,000 for an extended warranty that was supposed to cover all repairs on her car. When her car broke down, the company didn't pay for anything.

"There's too many people like me without money who are putting money into this and getting nothing out of it," Blackburn said.

Tennessee's Division of Consumer affairs released its own warning within days of the broadcast.

"Some of our staff have gotten the mailings," said Shannon Ashford, a public information officer for the division.

According to Ashford, postcards seem to be the most common form the scam is taking in Tennessee. Many of these postcards feature a 1-800 number. When recipients call the number on the postcard, they are pressured to make a down payment for the warranty before they can find out more information.

In other areas of the country, consumers have reported getting repeated phone calls from auto warranty sales representatives who hang up if they are asked to put a supervisor on the phone. In the most extreme cases, consumers received calls several times a day, late at night or on their cell phones. Missouri's attorney general is reported to be suing more than half a dozen auto warranty companies, accusing them of deceiving customers.

For those who want to avoid the scam, Tennessee's Division of Consumer Affairs offers a few tips. Consumers should beware of any correspondence from out of state and check with their car dealers before purchasing an extended warranty. Senior citizens, who often are targeted for these scams, should be especially careful.

Article by Jessie Pounds, KnoxvilleBiz.com

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