How To Avoid Getting Ripped OffTheir solicitations often come by way of auto-dialed, pre-recorded phone calls, late-night TV commercials or direct mail letters. These ads are usually filled with a sense of urgency trying to scare uninformed buyers into instant action. "Final notice! Your vehicle's warranty is about to expire! Don't go another day without coverage!"

Third-party extended-warranty companies promise to offer you peace of mind in the event that your vehicle breaks down. But all too often, their shady practices scam people out of their money instead of giving them real coverage when they need it. Not every extended warranty company is out to rip you off, but over the course of our research, we found that the honest ones are few and far between.
Old Habits Die Hard

Chris Thetford, director of communications for the St. Louis Better Business Bureau, said that his office has seen a repeating pattern of complaints against third-party warranty companies. Even when a company resolves individual complaints, it may not be a sign of repentance.

"The fact that a company responds to a complaint does not mean that they have changed their business model," Thetford said.

Thetford added that consumer complaints fall into two general categories: The first is the consumer who purchased a third-party warranty, wants to cancel it, but has difficulty getting a refund. The second is the consumer who buys a third-party warranty, files it away until they need repairs, but then realizes that the repairs are not covered because there are too many exclusions in the service contract.