May 12, 2009 5:38 pm US/Central
FTC Promises Action On Auto Warranty Robocalls
CHICAGO (CBS) ―
If you've received a phone call from an unfamiliar number warning of an expiring vehicle warranty, you're not alone.
More and more Americans are receiving calls with a recorded voice saying, "This is the final notice. The factory warranty on your vehicle is about to expire," or something similar, several times a day on their cell or land lines.
The calls come even if a person has signed up for the national "do not call" registry.
The Federal Trade Commission says it will take legal action within days against companies that are allegedly violating do-not-call lists and pitching what they call bogus car warranties.
"They talk to you like you are already doing business with them," said Bridgeport resident Tom Pierce. "They are just a pain in the butt."
CBS 2's Vince Gerasole reports an estimated 300,000 consumers nationwide have complained about the automated car warranty solicitations in recent months.
"I don't even have a car so I don't know why I would be receiving these calls," said Rogers Park resident Sarah Thomas.
The calls are also a top complaint at the consumer watchdog site Telemarketer Road Kill.
Forty states, including Illinois, have launched investigations into the companies making what they term harassing calls.
New York Sen. Chuck Schumer said a federal crackdown is needed. "A few states have tried, but we need national action," he said.
Michelle Corey, president and CEO of the Better Business Bureau in St. Louis, Mo., said the industry is based largely in the St. Louis area and generates thousands of complaints a year.
She said a group of companies began operating in Missouri in the mid-1990s that offered extended repair warranties to people whose manufacturer-issued warranties were about to expire. Within a few years, about 35 firms were offering similar services.
"It's a very lucrative industry," Corey said.
The companies offer contracts akin to insurance policies, pledging to pay for car repairs in exchange for fees paid up-front.
The companies call numbers randomly and leave messages telling people that their auto warranties are about to expire - whether or not they own a car.
Some companies also send out cards that mislead recipients into thinking that their vehicle has been subject to a safety recall, Corey said.
If people call back and agree to buy a policy, Corey said, the companies often don't let them see the contract until they agree to pay.
Some scam victims don't learn until it is too late that the deals don't cover many types of repairs, Corey said.
"Some people are losing thousands and thousands of dollars in purchasing a product that turns out to be useless," she said.
The Federal Trade Commission is now promising legal action and encourages consumers to report their complaints directly to its Web site.
Click here to file a complaint.
Click here to make sure both your landline and cell phone are registered on the do not call list at the FTC.
CBS 2's Vince Gerasole and WCBS-TV in New York contributed to this report.
(© MMX, CBS Broadcasting Inc. All Rights Reserved.)
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