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Vehicle Protection Plans

The Auto Warranty Scam Myth

The auto warranty scam is largely a thing of the past, thanks to the efforts of ethical industry participants who banded together to protect the integrity of the vehicle service contracts industry.

But years ago, "auto warranty scam" and "car warranty scam" were frequent leads in the nightly news -- all because a few unethical companies decided that it was OK to rip-off their customers. Consumers were mad, regulators were mad, the Better Business Bureau was mad -- but nobody was angrier than the many companies who had always followed all the rules and treated their customers right. Suddenly, because of a few bad apples, the reputation and integrity of the entire industry was at risk.

That was then. This is now.

Consumers can now purchase vehicle service contrasts knowing that the company they are buying from is an ethical vendor that will treat them right. It's a simple matter of choosing to do business only with certified companies that have agreed to adhere to agreed-upon industry standards of conduct.

Consumers are protected now, in large part, because the Vehicle Protection Association (VPA), an industry trade association, defined industry standards of conduct and implemented the VPA certification program with input from federal and state regulators, as well as key members of the National Association of Attorneys General.

Among other things, our industry standards require: compliance with Federal and State laws; maintenance of adequate cash reserves to meet customer obligations; and appropriate refund policies and procedures. Marketers are prohibited from making misrepresentations and from advertising in a misleading function. There are many other requirements, and you can read the full VPA Standards of Conduct to learn more.

The VPA's efforts to clean up the industry and prevent bad actors from joining were aided by the aggressive prosecution of those bad firms (e.g. US Fidelis) that broke the law and did not live up to their obligations. Those business owners are in jail now, which serves as a serious deterrent to anybody else who might try the same thing. The VPA and its members have applauded and supported this criminal prosecution since the beginning.

So, the "auto warranty scam myth," as some industry insiders refer to it, dates back to 2006 but auto warranty scams are now largely a thing of the past and will stay that way, provided that the industry and law enforcement agencies stay vigilant. Nobody disagrees that there were in fact auto warranty scams back in 2006, when a few bad actors marketed to consumers in a highly misleading -- and highly illegal -- fashion. Common tactics included robo-dialing, a tactic in which an auto-dialer would deliver a recorded message to a consumer informing them that their auto warranty had expired. Postcards were also sent, informing consumers that their car warranty had expired. These were just outright lies. In addition, the companies gave the impression that they were affiliated with the car manufacturer, which was not the case. If this sounds unethical and illegal, that's because it is: as mentioned above, the executives who perpetrated these frauds are now in jail. But the industry has changed -- it has adopted standards that ensure that consumers are treated well and it has taken actions that prevent bad actors from entering the market.

The VPA, and the industry as a whole, invite you to learn more about the many actions we have taken to protect consumers. Peruse our entire site and learn more.

Rest assured. There will be no "extended car warranty scams" under our watch. In fact, you may be interested to know that the phrases "extended car warranty" and "extended auto warranty" are no longer used by VPA members. That's because a car warranty is created by the vehicle manufacturer and cannot be extended by any other company. Instead, the industry now uses the phrase "vehicle service contract." Ironically, consumers are still searching the web for phrases like "extended car warranty" instead of "vehicle service contracts" -- as a result, ethical vehicle service contract vendors are at a disadvantage.

So, if your vehicle is important and you want to protect against a worst case scenario, get in touch with a VPA-certified vendor today. They'll be happy to debunk the auto warranty scam as a myth, and they'll explain how they can help you protect your vehicle.

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