State Warns Consumers About Aftermarket Auto Warranties
ST. PAUL, Minn. (WCCO) -- They are sold to vehicle owners to give added peace of mind in the event of serious repairs, but Minnesota's Attorney General Lori Swanson is warning consumers about extended warranty coverage that fails to live up to the promise.
It seems the fear of an expensive fix after a vehicle's factory warranty has expired is what drives the aftermarket sales pitch.
Veronica Harper bought coverage for her 2003 Buick LeSabre over the phone. But the following day she changed her mind, then waited nearly one year to get her money back.
"That's really why I'm here today," she said Wednesday. "I don't want other people to go through what I had to go through."
Numerous complaints against the Texas company, Enterprise Financial Group, Inc. has prompted the state's attorney general to file a lawsuit in Hennepin County Circuit Court.
Under Minnesota law, customers can cancel contracts within 30 days for full refunds. But the state's suit claims that EFG often gives consumers the "runaround." In addition, it is required to pay a 10 percent penalty on money not refunded after 45 days, but rarely refunds the extra money.
"They're told you can get your money back if you don't like the coverage," Swanson said. "But what the folks in the lawsuit went through was a whole lot of stonewalling and runaround."
Official looking mailings urge consumers to take immediate action or they will risk a lapse in factory warranty coverage.
These motor vehicle service contracts can be very expensive, ranging between $1,600 to $2,600 for coverage.
"In this case, most of the people we were dealing with wanted to cancel," Swanson said. "What they did was got the coverage and then looked at the coverage and said, 'This really isn't covering very much.'"
After canceling her deal, Candy Peterson and her husband waited four months to get their refund.
"I called the next day because he (my husband) was like, 'Why did you do that? We never buy extended warranties,'" Peterson said.
The Attorney General's office has issued a consumer alert, warning Minnesotans to beware of pushy sales tactics.
It recommends consumers look carefully at the total cost of the warranty. What they may find is that many times the vehicle's value may not even be worth the price of the protection. High deductibles and loopholes in the coverage can exclude paying for what may seem like covered repairs.
Consumers are also cautioned not to fall for what may seem like a high pressure pitch that claims you have to act immediately or the offer won't be available.
Finally, the attorney general is urging anyone with complaints or problems seeking refunds from EFG or other similar companies selling extended vehicle warranties to contact the attorney general's consumer affairs division at 651-296-3353.