Powerful Legal Advocacy

Watch Out For These Three Types Of Warranty Fraud

On Behalf of | Jan 20, 2023 | Auto Dealer Fraud

When you find just the right car, you want to protect your investment. One way to do that is by purchasing extended warranties.

Unfortunately, shady car dealerships may engage in different warranty fraud scams. Be aware of the following tactics.

Keeping the buyers’ money

Buyers can add additional services to their sales contracts when purchasing a vehicle. Some common items are:

  • Extended warranties
  • Service contracts
  • GAP insurance

Third parties sell many of these products. These suppliers require the dealership to collect fees at the time of sale and then purchase the plans on the buyers’ behalves. Sometimes, dealers do not buy the desired products at all or purchase the minimum coverage and keep the balance of the money.

Making false routine maintenance requirements

There are several options for servicing vehicles, including dealerships and third-party businesses. Owners have the right to choose where to bring their vehicles for service. Occasionally, car dealers tell owners that having any business other than the dealership perform maintenance voids the warranty. This tactic forces car owners to spend money only at the dealership.

Declaring that after-market parts void the warranty

Car owners like to add after-market products to their vehicles. Corrupt dealers might tell consumers that adding these items voids the warranty. However, the act of installing these parts does not void most warranties. If the after-market product damages parts covered by the warranty, car manufacturers and dealers can deny warranty coverage of those parts if they can prove causation.

Consumers that believe auto dealers committed warranty fraud may have the legal right to pursue lawsuits to recoup their money.