Michigan Auto Warranties
Michigan is the ancestral home of the U.S. auto industry, and Detroit is still the city most identified with American cars. This makes it interesting to note the attention that the state’s Attorney General (AG) has given to publicizing fraudulent extended warranties. As part of the AG’s responsibility to keep the public apprised of misleading, deceptive or unfair business methods, Michigan’s top law enforcement figure posted a special Consumer Alert on the state’s Web site concerning these practices in the extended warranty industry.
The alert advises consumers that companies offering these so-called warranties are in actuality marketing service contracts, a completely different animal. The U.S. Federal Trade Commission (FTC) calls the guarantee from the auto manufacturer a warranty, and it does not cost anything extra. On the other hand, extended warranties are actually service contracts offered by automakers, dealerships or other third-party firms. These products are also sold and serviced by still other firms, and none of them reflects any product guarantee from the car company. These products cost from several hundred to several thousand dollars, and range from honest and reasonable through fraudulent and overpriced, like products and services in any other field.
Tips to avoid scams
Consumers in Michigan, like many states, are covered by various forms of legislation. Some laws are specifically oriented to auto products and services, while residents of the state also derive protection from Michigan’s comprehensive consumer protection statutes. In addition to enforcing so-called lemon laws and other prohibitions on unfair practices, the state AG expends a good deal of effort trying to educate citizens on how to avoid scams related to car warranties. The following tips are included in the aforementioned Consumer Alert:
Do not reveal personal financial data to any callers. This makes sense in every situation, including ones in which callers tell you your car warranty is in danger of expiring. Remember that some people will even claim to be from your dealership or car manufacturer, so do not be deceived.
Get as much information about the caller and the firm he/she represents as possible. Make notes about the call, when it came (date and time), what was said or claimed and, if possible, the caller’s number. If you have been registered on the national Do Not Call Registry for at least a month, you can report the call at once at www.donotcall.gov.
Always shop around. Even before shopping, you should do some research into available products and services, as well as determine exactly what you need in the way of protection on your car. Coverage and costs vary quite widely, and knowing the lay of the land is important before any purchase. It could be difficult, sometimes impossible, to cancel coverage or get refunds after making a purchase of this kind.
Find out exactly who will make the coverage decisions when something occurs. The people selling the service contract will more than likely not be the same ones that administer it day-to-day, decide what is covered or determine how much is paid out for repairs or parts. The entity making these decisions will be referred to as the plan administrator or provider, which you need to note for every coverage plan that you review in your shopping-around phase.
Common sense works well
Of course, before doing business with anyone you should check out both the seller and the administrator of the service contract. The Michigan AG widely advertises its Consumer Protection Division’s phone number (877-765-8388), and consumers that call can get up-to-date information about any complaints filed against the seller or administrator of the contract. You should also contact the local or regional Better Business Bureau (BBB), or visit the national group’s Web site at www.bbb.org, to get additional information on the companies you are considering. In addition, you can use any of the powerful Web search engines (Google, Bing, etc.) to find references to the companies on the Internet.
Similar advice applies after you make your purchase, as well. Even reputable firms can make mistakes or mismanage certain matters, so do not be shy about calling for help if you encounter problems in dealing with your service contract (extended warranty) provider. Reputable firms applaud states like Michigan and others that have sent a strong message to scammers to stop defrauding its citizens with worthless car coverage plans. Leading service contract firms (in the auto field as well as appliances, homes, etc.) are committed to doing business within the laws of the states and the country, and their trade group, the Service Contract Industry Council (SCIC), has even helped state legislators by developing a Model Act that about three dozen states have used as a basis for legislation.
Michigan consumers who are having trouble with their auto service contracts can log on to the AG’s Web site to file a report with the Consumer Protection Division. Phone numbers are also provided, and the address to write to is Consumer Protection Division, P.O. Box 30213 in Lansing, MI 48909.