Consumer Car Buying Advice Blog

The FTC has filed suit against two companies to stop deceptive telemarketing calls that try to sell consumers extended manufacturer warranties.

Extended warranties

Here at Auto Credit Express, we believe that many aftermarket “add-ons” that dealers offer their customers can be a waste of money. We also believe, however, that in many circumstances a service contract that covers the entire length of the loan does make economic sense. But in order to make an educated decision, consumers need to have the product presented in a fair and truthful way. Unfortunately, this was not the case recently, when two companies engaged in a campaign of  deceit designed to pressure customers into buying service contracts.

Robocalling to sell phony extended warranties

On May 14th, the Federal trade commission filed two complaints in Federal District Court seeking an injunction against Voice Touch of Florida (also doing business as Network Foundations of Delaware) and Transcontinental Warranty of Delaware to stop their illegal and deceptive telemarketing campaigns. The FTC contends that both companies engaged in a massive telemarketing scheme using random, pre-recorded phone calls to try and convince consumers that their new car warranties were about to expire. Both companies then tried to pressure them into buying extended service contracts for their vehicles that were falsely presented as an extension of the manufacturer’s warranties.

“This is one of the most aggressive telemarketing schemes the FTC has ever encountered,” said FTC Chairman Jon Leibowitz. “I’m not sure which is worse, the abusive telemarketing tactics of these companies, or the way they try to deceive people once they get them on the phone. Either way, we intend to shut them down.”

Thousands of complaints

According to court documents, five phone numbers associated with the two companies generated a total of 30,000 Do Not Call complaints, with consumers receiving calls at home, at work, and on cell phones. Even government offices and 911 dispatchers were on the auto dialer’s lists.

In addition to unsolicited calls to the Do Not Call list, the FTC charges that the company selling the warranties mails out postcards designed to mislead customers into thinking their warranties are about to expire and leading them to believe they are being contacted by either the selling dealer of the manufacturer by offering to “renew” their original warranties.

The Bottom Line

The good news is that within 24 hours, two judges of the United States District Court for the Northern District of Illinois had issued temporary restraining orders against both companies.

And while this is good news for car buyers and owners, it should also be pointed out that the deceptive practices of these two companies should in now way lead you to believe that all service contracts are bad or all sellers of service contracts are deceptive.

If you are in the market for a service contract, do you home work and investigate prices and coverages on the internet before you visit the dealer and make your purchase decision. By doing this, you will insure that the price you pay will be fair and the systems that are covered under the policy are applicable to the kind of vehicle you are purchasing.

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