Consumer Car Buying Advice Blog

Complaint alleging that Dealers Warranty and Warranty Finance defrauded thousands of plaintiffs could affect many bad credit car loan customers.

Extended warranties

Here at Auto Credit Express, we believe that many aftermarket “add-ons” that dealers offer to 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. These contracts, if priced fairly and with reasonable deductibles, can offer many bad credit car loan customers the “peace of mind” they need to avoid large, unforeseen repair bills.

Because these contracts are sold through retail car dealers, the customer also has a place they know they can get their car repaired at as well as someone they can talk to regarding disputes. If the customer is dissatisfied or pays the loan off early (if the service contract contains this provision), the customer also has a contact person in the business office where they can apply for a refund of any excess money spent on the contract.

Robocalls allegedly sell useless warranties

A class action complaint was filed today in the U.S. District Court for the Northern District of Illinois by Jonathan J. Sahim, individually and on behalf of other customers who have purchased so-called “extended warranty” vehicle service contracts from Dealers Warranty LLC (also known as mogi and Federal Auto Protection) and Warranty Finance LLC.

The complaint, itself, alleges that the companies schemed to “extract hidden interest charges and penalties from consumers who cancel their service contracts before the term of coverage expires” by hitting customers with large interest charges and “marketing fees” that were not spelled out in their contracts and by doing so violated both the Federal Truth In Lending Act and the Illinois Consumer Fraud Act.

“These Warranty rip-off artists bombard millions of households with calls designed to sell them virtually useless warranty contracts,” said lead counsel Steven L. Wittels. “Then, when customers try to cancel their contracts, Warranty pounces on them with exorbitant hidden interest charges, marketing fees, and cancellation penalties. The defendants have defrauded thousands of consumers across the country with these charges, and this case aims to put a stop to their unethical practices.”

The Bottom Line

At Auto Credit Express, we want our bad credit car loan customers to be aware of the practices of these two companies. At the same time, however, we would like to point out that the deceptive practices of these companies should in no way lead you to believe that all service contracts are bad or all sellers of service contracts (especially retailer car dealers) are deceptive.

If you are in the market for a service contract, do you homework and investigate various coverages and prices 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 service contract policy are applicable to the kind of vehicle you are purchasing.

This entry was posted and is filed under Credit Repair. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.