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Vehicle Protection Plans

Extended Warranty Scam

How to Avoid Extended Warranty Scams

To avoid being the victim of an extended warranty scam, consumers need to understand the history of automotive extended warranty scams.

You should know that the sale of "extended warranties" is unlawful. Legally, the term "warranty" is not correct (only manufacturers can offer warranties for their vehicles), so the industry now offers "vehicle service contracts". However, this distinction wasn't always applied so carefully.

About a decade ago, a perfect storm of lax business practices and powerful new technologies led to a sudden flood of automated marketing calls for vehicle service contracts. Telemarketers, using the services of third party dialing companies, dialed consumer cellular and land phone lines, greeting them with misleading pre-recorded messages and urging them to purchase automotive service contracts.

Known as "robo-calling," these new auto-dialing practices gave the worst marketers a voice that all but drowned out the ethical marketing companies, insurers, payment processing companies and administrators in the vehicle service contract industry. The egregious practices of a handful of unethical providers violated federal laws governing automated calling and pre-recorded messages, eroding the public's trust in the entire industry.

The FTC then initiated an aggressive series of lawsuits against a major automotive service contract telemarketer, two of its facilitating vendors, and their senior executives to bring a halt to these illegal practices.

How the VPA Cleaned Things Up

The VPA was formed to clean up the automotive service contract industry following the debacle caused by unethical telemarketing practices and extended warranty scams. As a not-for-profit trade association, the VPA became a third-party consumer advocate in the industry and released industry Standards of Conduct to ensure that consumers who purchase vehicle protection services would be treated fairly.

VPA standards cover a wide range of practices in the vehicle service contract industry including the adoption of a consumer complaint process by all VPA members. VPA members are committed to clean industry practices. But if a problem should arise during the course of your business relationship, VPA members are required to address all complaints in a prompt and professional manner, and make a good faith effort to resolve every customer complaint.

Combined with standards governing marketing, advertising, service contracts and other aspects of the vehicle service contract experience, the VPA's customer complaint guidelines empower consumers and providers to participate in the creation of a more fair and civil automotive service contract industry.

VPA Certified Members vs. Extended Warranty Scams

Although they aren't as prevalent as they once were, there are still providers attempting to sell extended warranty scams to uneducated consumers. Your best protection against a vehicle service contract nightmare is to buy service contracts from VPA Certified Companies.

VPA's certification process involves a grueling audit that ensures vehicle service contract companies are fully compliant with VPA Standards of Conduct and industry best practices. Every aspect of the provider's business is examined under a microscope, making VPA certification the gold standard of the automotive service contract business.

VPA's Continuing Efforts

The VPA recognizes that stringent industry monitoring and educated consumers are vital to the health of the automotive service contract industry. As a result, VPA members and certified companies are dedicated to the continuing pursuit of ethical business practices as well as top-notch customer service and education initiatives.

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