Beware of auto warranty, product scams

Published On: Oct 24 2012 09:35:09 PM EDT   Updated On: Oct 25 2012 06:20:00 AM EDT

Have you ever received a robo call with an offer of an extended car warranty?  Many find out the hard way that they bought into a service contract covering only limited repairs, not a warranty from a car manufacturer.

”That is when they figured out, 'Hey this isn't what I thought it was.'  At that point many victims had difficult canceling or even getting the refunds owed to them,” explained U.S. Postal Inspector Dan Taylor.

This unethical practice became so rampant that some states started taking action.

"Various states put restrictions on them and even prohibited some companies from selling in those states," said Taylor.

To get around these restrictions, creative companies turned to the so-called additive warranty: small bottles of coolant or lubricants that come with the promise to "magically" protect your car. 

"This auto additive was valued at several thousand dollars and as an added bonus an auto warranty was included with the package," said Taylor.

Consumers are told to pour the product into their car engine and it will activate the auto warranty.  But it was a trap.  Companies encouraged car owners to use the fluid, knowing it would nullify their chances for a refund.

"If they added the additive to their car they were told they could no longer get a refund because they couldn't return the additive or on the flip side if they didn't add the additive to their car the warranty was not valid," said Taylor.

To protect yourself, inspectors say first, beware of any claims that an additive is worth thousands of dollars.  Second, if an auto warranty is included in the pitch, just hang up.  And third, always ask for a refund policy in writing. 

If you're looking for an extended auto warranty, contact your car manufacturer.