Scam Companies Selling Vehicle 'Extended Warranties' Face Lifetime Ban From Industry

Photo:  Thomas Barwick (Getty Images)
Photo: Thomas Barwick (Getty Images)

“We’ve been trying to reach you concerning your vehicle’s extended warranty,” is an automatic greeting many of us became accustomed to hearing over the phone in the last few years. The Federal Trade Commission is just as sick of it as the rest of us, and is now proposing via court order to ban the scammiest of these hucksters from offering vehicle “warranties” or working in telemarketing ever again.

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Three companies in particular have caught the ire of the FTC. These companies as well as two individual defendants, face a lifetime ban from the extended warranty industry as well as telemarketing in general, as The Verge reports:

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Under proposed court orders drawn up on March 23rd, three companies — American Vehicle Protection Corporation (AVP), CG3 Solutions, and Tony Gonzalez Consulting Group — and their owners would be permanently banned from both the extended automobile warranty industry and all outbound telemarketing.

In February 2022, the FTC charged AVP and the two affiliated companies with violating the FTC Act and the Telemarketing Sales Rule. In its complaint, the FTC alleged that AVP falsely claimed to represent dealers and manufacturers, offering fraudulent “bumper-to-bumper” and “full vehicle” coverage policies to customers for between $2,800 and $3,400. According to the FTC, AVP placed hundreds of thousands of unsolicited calls to American consumers (including individuals on the federal Do Not Call Registry) and didn’t honor its 30-day cancellation and refund policy. The complaint claims these scams have fleeced US consumers out of over $6 million since 2018.

“AVP misled consumers about who they were and what they were selling and called a large number of consumers who were on the FTC’s Do Not Call List,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection, in a press release. “Today’s order banning five defendants from the industry and imposing a monetary judgment of $6.6 million continues the Commission’s aggressive crackdown on telemarketing fraud.”

Not all extended warranty companies are scams, but some definitely are especially if they are calling folks on the Do Not Call list and failing to uphold cancelation agreements. Check out our resident car shopping expert’s advice on telling which ones are worth it and which ones aren’t. As usual, following the advice of “do the math” is the trick here.

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