America's Advocate for
Vehicle Protection Plans

Vehicle Service Contracts

Vehicle service contracts are an important part of the auto industry, especially in today’s tough economic times. Without the availability of good quality vehicle service contracts, car and truck owners would be forced to contend with the threat of cost-prohibitive vehicle repairs and dramatically shorter vehicles lives.

Although many people mistakenly believe that extended vehicle protection is only available through auto dealerships, there is also a thriving independent automotive service contract industry in the U.S. In fact, the existence of a healthy independent service contract industry prohibits auto dealers from having monopoly power to set prices for prepaid vehicle services.

Here are a few more things journalists and media reps need to know about the vehicle service contract industry:

Vehicle Service Contracts vs. Extended Warranties

The term “extended warranty” is a misnomer. A “warranty” is the vehicle protection plan that is provided to auto consumers at the time of the initial purchase. Any additional coverage that is purchased to continue or augment the manufacturer’s warranty is properly termed a “vehicle service contract”. It may seem like a small difference, but the VPA is diligent about the distinction because the use of terms like “extended warranties” have been used to mislead consumers.

Telemarketing Techniques

Telemarketing is a common tool vehicle service contract providers use to sell their products to consumers. In the past, a handful of unethical providers used illegal techniques like “robo-calling” to exploit consumers, attracting an avalanche of negative publicity to the entire industry. Through the VPA’s efforts, the industry is purging itself of providers that employ unethical and illegal business practices. The use of “robo-calling”, “voice-blasting” and other illegal marketing tactics is the fastest way for members to be expelled from the VPA.

The Importance of Self-Regulation

The vehicle service contract industry is governed by a multitude of federal and state regulations that have been created to protect consumers. Although federal and state regulations are useful enforcement mechanisms, the truth is that they aren’t enough to fully protect consumers and create an ethical industry environment. At the VPA, we believe that self-regulatory measures are the best way to promote integrity and transparency in the automotive service contract industry. Collaborative self-regulation, peer accountability and industry-driven oversight are making a difference in the field of vehicle protection services and giving consumers real value for their buying dollars.

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