Our goal is to shed a light on an industry that has been operating without many regulations for nearly two decades now. The automotive warranty industry, as well as other aftermarket services purchased for motor vehicles remains unchecked and has been very prosperous in its efforts to sell any and every consumer it can reach. It would be simple to prove that many of their practices are fraudulent, taking advantage of elderly consumers, and withholding refunds from American Citizens.
Consumers purchase warranties, service contracts, GAP Insurance, maintenance plans, paint and dent removal plans, upholstery or even wheel and tire coverages from their car dealerships. Many are sold on the fact that they “need” these plans when vehicles come standard with coverage from the manufacturers. Most consumers are not explained the overlapping coverage and purchase it unnecessarily, sold primarily on fear tactics of “what could happen without coverage.”
Consumers are then approached aggressively by third party selling companies via mail, phone or email. These companies state that their coverage is expiring, call now or loose the opportunity, last chance, etc. All of these tactics are false advertisements and not explained to the consumers. The target demographic for said companies are 65 plus years of age. Many consumers state they are elderly, have third party participants that handle their funds, they are in assisted living, had strokes or are not of sound mind when being sold. Plans are marked up over 300% at times and are chiseled away to make the sale. Multiple levels of coverage are available and, in most cases, coverage is not thoroughly explained. Consumers are forced to make a decision on the call or threatened they will not be coverable if they end the call or lose their “first time caller/ activation savings.”
Once a down payment is collected, the selling party finances the remaining portion through one of several payment processing centers. Plans can be spread anywhere from 2 to 24 payments, with some companies financing as long as 36 months. The payment companies are provided the customer and vehicle information. Again, these parties have data that one would think morality and proper ethics would prevent unaware consumers from having duplicate coverage, but it does not. These payment institutions will set more than one active plan up for the same customer. There is nothing in place to prevent this.
What happens after the purchase? Plans themselves can be beneficial for those that understand them and purchased a high-quality coverage. The plans function as any other insurance. The coverage administrators do tend to have loop holes and agendas to decline or deny claims based of pre-existing nature or anything that can be called “wear and tear.”
The most concerning and questionable practice is both the sale and cancellation/ refund process. When consumers trade or get rid of their covered vehicle, there is no one assisting them. Unlike car insurance that one calls to transfer to their new vehicle or stop paying on, most consumers forget about these plans or just cancel them without recourse. Dealerships do not explain there is refund due, therefore they never receive it. Third party selling companies make it their mission to avoid refunding the consumers. If a customer requests to cancel, they are thrown into a retention department with the sole purpose of keeping the customer on the books. If that fails, their goal is to end the call without any conversation of returning funds.
This industry operates on a “don’t ask, don’t tell” motive. The paperwork clearly states the consumers are required to send in documentation with ending miles, but plans are lengthy, and many consumers carried them for years. Ending a call without any refund procedures given means the selling company holds the funds. No letter of cancellation, means no refund.
There are hundreds of outlets selling coverage. From dealerships, to credit unions, to those companies that call and mail every day, there are millions of dollars due back to customers sitting in limbo, held ransom due to a letter not being sent in.
My company helps advocate for these consumers, but being an insider myself, I am constantly under attack by selling companies. I meet resistance at every turn. Even with signed letters of authorization these companies refuse to cooperate, call and harass the consumers, or take months to send funds back.
We take the necessary steps to help consumers that have purchased these services to not only locate who or where their money went or is going, but to also recover the refunds they should have been issued. We are not talking about $10 or $20. Many times, consumers are due back well over $500 or more.
We have examples of consumers we have helped that are over 80 years old, that have had 7 policies they were talked into purchasing, totaling over $15,000. Another elderly couple was sold 14 plans in a matter of 12 years and paid nearly $23,000.
We hope our message reaches the right persons ears and he or she understands it is not the wealthy or wise that are suffering at the hand of these programs, rather it’s our nation’s elderly. It is someone’s mother, daughter, niece, neighbor, friend, veteran, boomer that needs the money to pay for medicine or put groceries on the table.