The FCC says “If you own a car and a phone,” you are a target for predatory marketing that offer extended warranties over the phone and in the mail. Here’s who some of these companies are, how they operate, and how even the organizations that are supposed to be monitoring their ethics don’t help.
Tracking down exactly who some of these companies are is like smashing cockroaches with a bootheel. Every time you find one, another three scurry off under the baseboards. In the communication you receive, unless you read every single word carefully, it’s difficult to track down just who you’re communicating with.
What is “Department of Automobile Records”?
This example — which was sent for a car that is under a factory Volkswagen warranty for the entire time period and mileage of the lease signed in April of 2016 — came from the official-sounding “Department of Automobile Records.”
The red “DEMAND”-style letter has all kinds of frightening language like “Our records indicate you have received multiple notices…” and “you will be at risk of being financially liable for any and all repairs.”
No such “department” exists, and the “Department of Automobile Records” isn’t a company at all.
On the second page of the document, which contains an “EXAMPLE” invoice for $12,914.75, there’s fine print at the very bottom. (Typically, anything official is going to have the sender’s name, address and phone prominently at the very top of the letter, so that’s a good indicator that a letter like this is completely bogus.)
Who is Interstate National Dealer Services?
“The administrator/Obligator of the vehicle service contract is Interstate National Dealer Services, Inc.” reads the fine print.
Interstate National Dealer Services is located in Atlanta, and lists “Honesty and Integrity: We do what we say we’re going to do” as one of its core values. The company appears to be legitimate, with a real, live, human executive team posted right there on the website. You can learn more about its team here.
It even has a bona fide equity partner in Golden Gate Capital, the private equity firm that has an interest in a lot of large American companies like Red Lobster, Payless Shoe Source and Eddie Bauer.
The Better Business Bureau awards Interstate National Dealer Services an A+ rating, despite the fact that the BBB’s website lists the company as having a 94% negative consumer review rating, and 385 total consumer complaints.
How does that compute? Part of the answer lies in this response to one review on the BBB’s website:
Long story short: Interstate National Dealer Services is the guarantor of a product sold by Endurance Dealer Services, which is aggressively hammering your phone and mailbox. Endurance Dealer Services is located in Northbrook, Illinois, and also has some kind of a presence called “Endurance Warranty Services” in Addison, Texas.
Who is “Endurance Warranty Services”?
Endurance has a similar A+ rating from the Better Business Bureau, and has a much better overall review rating from consumers, but still has plenty of complaints, almost all due to its marketing techniques:
Endurance is helmed by Paul Chernawsky and Jordan Batt, both of whom were selected as one of Ernst & Young’s Entrepreneur of the Year in 2017, presumably for the success of the company. (Note: Ernst & Young is one of the “Big Four” accounting firms, and in 2015, it settled lawsuits with both the states of New Jersey and California related to its alleged professional malpractice involving the Lehman Brothers collapse in 2008.)
There’s little to go on about the history of the Endurance, other than it was founded by the pair in 2006. The most illuminating thing you’ll probably find on either of the two is Batt’s Twitter feed, which is a largely unanswered string of political rants.
Who is the Vehicle Protection Association?
The last three sentences in the BBB complaint response from Interstate National Dealer Services refer to the Vehicle Protection Association, a non-profit entity that “is the leading trade organization for companies that sell, finance and administer vehicle service contracts.”
The VPA publishes Standards of Conduct for companies like Endurance, which is supposed to provide consumers with some comfort that the companies aren’t a scam. Within those standards is a section on marketing. In that section, we found three fairly blatant examples where this piece of marketing runs afoul of those standards:
In this letter, though, the company uses “Department of Automobile Records” as a smokescreen for what this really is. It’s true it’s not a “DBA,” but you can’t get more “deceptive or misleading.”
Similarly, the Standards of Conduct suggest that companies certified by the VPA should not use the name “Warranty” anywhere in the name of the company:
However, “Endurance Warranty Services” is listed in the fine print on the second page of the letter.
Finally, the VPA’s Standard of Conduct states that in this kind of marketing, there shouldn’t be any “false sense of urgency,” regarding the vehicle’s original warranty:
However, in the letter from Endurance, the text explicitly creates a false sense of urgency.
The car in question has over a year of its original warranty left in time, and more than 75 percent in mileage. The owner is an 88-year-old woman, who leased the car in April of 2016 and it currently has 6,500 miles showing on the odometer.
Regardless, when we looked at the VPA’s “Certified Companies,” which had completed the VPA’s “Certification-Audit Program” and and received “Gold-Level Certification,” Endurance was the third company on the list.
The Federal Communications Commission does have a lot to say about these aggressive marketing tactics to sell “service contracts.”
In fact, the FCC calls marketing like this a “scam,” flat out.“If you own a vehicle and a phone, you may receive calls from scammers posing as representatives of a car dealer, manufacturer or insurer telling you that your auto warranty or insurance is about to expire. The call will include some sort of pitch for renewing your warranty or policy.”
DO NOT, warns the FCC, provide any credit card numbers, social security numbers, bank routing numbers or any other type of financial information. At best, you will have signed up for a service for which you already may be covered by the manufacturer’s warranty. At worst, you could be providing credit card information to a “criminal,” according to the FCC. “Criminals may engage in caller ID ‘spoofing’ – deliberately falsifying the information transmitted to your Caller ID display to disguise their identity.”
We’re assuming that most of you that have read this far, you’ve got your act together and you wouldn’t fall for something as blatantly cheesy as this pitch.
But the people who brought this to our attention were all seniors. They’re at home during the day, and they’re barraged with phone calls from companies like this. They have a lifetime of conditioning that forces them to treat every piece of mail and every phone call as important, and they’re particularly vulnerable to come-ons like this.
If you have seniors in your family, talk to them about communications like this so they understand exactly what they are. You could save them thousands of dollars that does a lot more good in their pocket.