May 13, 2009 – Chicago, IL – There’s much confusion about the status of automobile warranties because major manufacturers, such as Chrysler and General Motors, are either contending with bankruptcy or fighting off the threat of bankruptcy. These conditions invite scammers. The Better Business Bureau of Chicago and Northern Illinois warns consumers to be particularly alert for deceptive telemarketing phone calls and other solicitations. These masquerade as coming from their vehicle manufacturer regarding warranty status.
The BBB has received complaints from people who have purchased a service contract from these extended warranty providers. Car owners found there were so many caveats and exemptions that when repairs were needed, the warranty didn’t cover the required work.
“People across the country are getting solicitations by phone, mail and e-mail claiming that their auto warranty is about to expire and they needed to act immediately to avoid a lapse in coverage; even two U.S. Senators, Charles Schumer, D-N.Y and Mark Warner, D-VA, have received calls on their cell phones. Earlier this week the FTC announced that lawsuits against some companies are forthcoming.” said Steve J. Bernas, president & CEO of the Better Business Bureau of Chicago and Northern Illinois. “They are often led to believe it’s their manufacturer contacting them. However, these companies have nothing to do with the manufacturer.”
One company spotlighted by the BBB in this regard is USfidelis. The BBB notes consumers are especially critical of this company’s letters and postcards that appear to be associated with their manufacturers’ warranties. Records show USfidelis, founded in early 2003, sells extended vehicle service contracts across North America. Its TV and Internet commercials ask car owners to call a toll-free phone number for information. The company also has solicited customers by mail and by phone.
In the past three years, Better Business Bureaus around the country have received a total of more than 33,000 inquiries and more than 1,200 complaints nationally from consumers expressing dissatisfaction with USfidelis or its services.
Consumers say that in some cases they spent thousands of dollars for extended warranties and still ended up paying thousands more for repairs that were not covered under plans sold by USfidelis. A number of state attorneys general across the country have also taken complaints from angry consumers alleging the company’s business practices are unethical and misleading.
“The sheer volume and serious pattern of the complaints involving USfidelis are troubling,” said Bernas. “Consumers have said they were pressured or misled into buying warranty contracts that they didn’t want or need, and the warranties didn’t address many repair issues.”
One example of problems with warranties from USfidelis, which advertises extensively, is the experience of Floyd Barnes, a USfidelis customer from Chicago:
“I bought the warranty after I saw a commercial. They asked me for an initial down payment of $150 and said that future monthly payments would be $109. They would only let me pay through a debit card. They took out the first $150. The next withdrawal turned out to be almost $200 instead of the $109 that I was quoted. They corrected that. I brought the car in for the first claim and was told it was denied because it was a pre-existing situation. This was impossible—I bought the car new off the showroom floor and had never had a problem. I explained that to the customer service rep and he insisted that he was not going to pay the claim. I filed a complaint with the BBB in St Louis and they got me a refund and the company agreed to cancel my policy.”
USfidelis – previously operating under the names Dealer Services and National Auto Warranty Services – is owned by Darain and Cory Atkinson, two brothers from St. Charles County, west of St. Louis. Chris Riley was recently named the company’s chief executive.
BBB offers the following advice for dealing with firms offering extended auto warranty contracts:
- Never give personal information, including Social Security, bank or credit card numbers, over the phone to an unknown telemarketer.
- Read your manufacturer’s warranty, and contact your dealer or manufacturer to ensure that you are not purchasing duplicate coverage.
- When considering an extended service contract or any other type of telephone solicitation, insist on getting a contract in which all terms and conditions are clearly explained before signing up or providing credit card or other payment information.
- To find trustworthy auto warranty companies, consumers can check out FREE BBB Reliability Reports online at www.bbb.org.