Complaints to BBB About Vehicle Service Contract Companies Continue to Mount

Complaints to BBB About Vehicle Service Contract Companies Continue to Mount

Consumer complaints pour in after numerous bad experiences

Better Business Bureau of the Mid-South MEMPHIS, Tenn. — Consumers nationwide continue to contact Better Business Bureau (BBB) with complaints about the vehicle service contract industry. In 2018, BBB received more than 500 complaints involving 50 companies based in the Mid-South.

BBB advises consumers to use extreme caution when entering into an extended auto service contract for your vehicle. Consumers report to BBB they feel deceived by misleading advertising, which includes mailers, telephone sales representatives and radio and television commercials. Consumers also state they have difficulty canceling their policies and that requested repairs were not covered by policy administrators.

An area man told BBB he had to get a lawyer involved before receiving a refund and having repairs covered after he purchased an extended service contract from CarShield, which is based in St. Peters, Missouri. He called the company and bought a policy in December 2017 after seeing one of their TV commercials.

When his vehicle developed problems with its timing chain in March 2018, he took it to a local vehicle dealer, who submitted a $3,500 claim for repairs. The repair was denied. The man said he “got the runaround” from the company as he tried to get them to pay for the repairs. He eventually paid for them out of his own pocket. “It darn near broke me,” he said.

After hiring legal counsel and arbitrating the claim, CarShield paid for the repair and refunded the money the man paid for the policy. The man said he would not recommend buying an extended auto warranty plan. “Run away and don’t believe a word they say,” he told BBB.

Companies receiving confirmed complaints are filed and grades are issued each year. The businesses with the worst records are given an “F” rating, the lowest on BBB’s scale.

Over the past three years, consumers have filed nearly 1,500 complaints against companies in the vehicle service contract industry with BBB in the Memphis Metro area. Complaints against businesses in the industry increased 10.8 percent during 2018.

“Shady companies have been peddling extended auto service contracts for more than a decade,” said Randy Hutchinson, BBB of the Mid-South president, “and consumers have continued to file complaints against their deceptive marketing practices.”

Hutchinson recently received two of the warranty offers from CarShield on a new vehicle that is still covered under the original manufacturer’s warranty.

BBB offers the following tips for consumers considering purchasing a service contract for their vehicles:

• Research any business and its owners carefully before paying any money. Check the company’s BBB Business Profile at bbb.org or by calling 901-759-1300.

• Do not be pressured into making an immediate decision. Beware of any sales offer that requires you to buy now in order to qualify for the best rate.

• Read your manufacturer’s warranty and contact your dealer or manufacturer to make sure you are not purchasing duplicate coverage.

• Do the math. Sometimes the cost of a service contract may be more than the value of the vehicle.

For more than 100 years, the Better Business Bureau has been helping people find businesses, brands and charities they can trust. In 2017, people turned to BBB more than 160 million times for BBB Business Profiles on more than 5.2 million businesses and Charity Reports on 11,000 charities, all available for free at bbb.org. There are local, independent BBBs across the United States, Canada and Mexico, including BBB Serving the Mid-South was founded in 1948 and serves 28 counties in West Tennessee, East Arkansas and North Mississippi.

Nancy Crawford