How is it that the Federal Trade Commission kicked that car warranty scam extremely hard in the junk, yet they can afford to saturation bomb my teevee with new ads?
Discuss.
***Update***
Apparently the phone scam and the TV scams (which I assume is a scam since they present customer ‘testimonials’ without showing or naming any actual customers) are run by different firms.
***Update 2***
How profitable can dubious car warranty scheming possibly be? It must bring in more dough than I guessed if the economy can support that many firms at once.
James Bickley
I assume you are talking about the US Fidelis TV commercials. They were not involved with the robo-call issues.
Fencedude
I loved getting those Robocalls at work.
And I work a hotel front desk. That always amused me.
Cathy W
The makers of Extenze being found guilty of fraud hasn’t slowed them down, either… or was that some other incredibly similar scam?
(ETA: alas, it was Enzyte. I gather Extenze is exactly the same racket, so hopefully it’s only a matter of time.)
KG
well, with all those deposed African princes out there, there’s just a lot of money available to bankroll the scams…
grimc
I’ve got a related question. Who needs to worry about extending their car warranties when we’re all part owners of GM? Just go to a dealer and tell them you’re picking up your company car.
malraux
More profitable than legit car warranty schemes. The whole point is that they get you to pay, then refuse to provide repairs. At least, that’s my assumption assuming these work anything like other extended warranties (only much less reputably).
asiangrrlMN
@grimc: And, if we all own GM, then I shouldn’t have to pay late fees on my GM credit card. Hell, I shouldn’t have to pay it back at all.
BombIranForChrist
You know, maybe I am just a big cold-hearted fascist. Fair enough. But I want to basically take all white collar crimes and add an extra 20 years to the end of the criminal’s sentence. Too many people simply see fines and the loss of licenses as the cost of doing business. If you started throwing these clowns in real prison, white collar crime would drop 50,000%, I guarantee.
Anyway, not sure if that is relevant here, but I am really tired of this crap.
Anne Laurie
I guess it’s not actually a Ponzi scheme if they collect money today which they have no intention whatsover of putting towards their victims’ car-repairs tomorrow. Still, free money! — if half a cent on each of many many many bank accounts is a sum worth scheming to steal, it’s all about the volume.
Calouste
@malraux:
Extended warranties are pretty much a scam in themselves. Some retailers derive a serious part of their profits, say 1/4 to 1/3, from the sale of extended warranties.
TheFountainHead - 'Easily Led'
I know this is Hockey land, but is anyone else watching the NBA finals and see the GM commercial that played? Boy they put that into production fast!
Deborah
The warranty calls have tapered off, but today I got my first “You have won a cruise! And a vacation to Walt Disney World! Free hotel stay! Lots of other stuff! Totally legit, which is why a tape recording is informing you of your unusual distinction!” call in quite a while. So they’re just moving on.
(Yes, I am on the Do Not Call List and re-upped when I heard about the 5-years-and-off thing.)
asiangrrlMN
@TheFountainHead – ‘Easily Led’: I’m watching the b-ball game, but I mute commercials so I missed it.
@BombIranForChrist: If you’re a fascist for wanting that, then I am doubly one for wanting them to have to do hard labor whilst in jail.
hal
Thank you! I’ve been getting those damn calls for months and months, and I don’t have car.
Calouste
@BombIranForChrist:
Holding executives personally repsonsible for corporate manslaughter like they do in China would also discourage incidents like salmonella infested peanut butter.
Scruffy McSnufflepuss
Assuming it’s not just one company with many subsidiaries to create the false impression of competition. “Company X screwed me over; now, I use company Y! (*fine print: Company Y is a wholly-owned subsidiary of Company X.)”
malraux
@Calouste: Exactly. In general, the extra coverage plan that legit stores offer is pretty close to a scam. And certainly Best Buy, Sears, etc want you to come back to the store, so they have to at least occasionally cover stuff. I can’t imagine these car warranty companies care about anything but making a bunch of money quickly then declaring bankruptcy to avoid any payouts.
Joshua Norton
I read that they’ve pulled down $10 million so far.
Gives you something to think about.
Robocalling for warranties on people’s pets, perhaps.
KG
@8: “the loss of licenses”, you say that like half these assholes have licenses to begin with. Or as if they weren’t operating like a lot of the mortgage bastards here in California were, with three different licenses (yes, California has three different licenses which govern lending and/or brokering real estate transactions). When the shit hits the fan, they call their lawyer, find out which one comes with the least penalties under the facts, and lo and behold, that’s the license they used.
I wish I were joking.
asiangrrlMN
@TheFountainHead – ‘Easily Led’: Hey, can you tell me if the blonde next to Nicholson is his date? ‘Cause if she is, I’m going to hurl.
grimc
@asiangrrlMN:
Exactly. You can just pay me back when you can. Cash, preferably.
TheFountainHead - 'Easily Led'
@asiangrrlMN: I am almost certain that is his daughter. The crazy dude with the beard on his other side is Lou Adler
Martin
BestBuy was pulling 100% of profits off of extended warranties, at least for a while.
The most astonishing thing I read recently is that Apple’s 10,000 sqft 5th avenue retail store pulled in $440M in sales last year, or about 1/3 of what Palm earned in worldwide sales, or about what TiVo earned for the last two years.
Just that store. $44,000 per square foot per year.
Put another way, if Apple had 25 stores performing that well, they’d have annual sales equal to all Starbucks worldwide.
gbear
I made the mistake of buying one of those with my last vehicle. I thought it would be a good investment for a 4wd truck. WRONG. The times I had a major claim, they wouldn’t accept the dealership’s word that the work needed to be done. They had to send out one of their own reps to inspect the (undrivable) vehicle. I wound up with a two day charge for a loaner and then they denied the claim so I had to pony up for all the work too.
Under no circumstances would I ever purchase an additional warranty ever again.
I just got a notice to renew my warranty in the mail yesterday. They must be desperate for cash. The old warranty ran out years ago.
MikeJ
So just like medical insurance then?
grimc
@TheFountainHead – ‘Easily Led’:
Oops. I always thought that was Donald Sutherland.
Tom Levenson
I got wholly scammed on a car that really needed not just an extended warranty but a latex body suit, not to mention magical elves — the ones that ward away all material objects as they approach within five feet of your auto. It was an Audi A6, and not cheap to fix, and I spent over 2 grand to buy the damn warranty.
In my case the scam was the simplest possible: the dealer sold me the warranty, pocketed the money, and then closed that (but not all of his car lots). The company whose warranty he sold was separately a scam, so by the time I figured this out, they were gone too — and my lawyer advised me that the two grand I was chasing would cost many times that to pursue in court. So I sucked it up and vowed never again to buy a used car that did not come certified from the company. Did that with our Volvo V40 with great satisfaction.
This is a crappy business; almost everything but a car you buy from a guy selling cars is a waste of money.
asiangrrlMN
@TheFountainHead – ‘Easily Led’: Oh, thank god. You can never tell with Nicholson.
peaches
Mr. Tim.
You don’t seem to understand this one credo:
If you aren’t cheating, you aren’t trying.
It works for sports and business.
Ask any MBA.
Krista
Funny coincidence, actually. I got Blue Cross recently to cover prescription stuff, eyecare, and other stuff that my provincial health plan doesn’t cover. My very first claim was for glucose monitoring slips, and I filled out the form and sent in the receipt. You can’t buy these things over the counter — they have to be prescribed. And those asshats still declined my claim because I didn’t also provide a doctor’s note indicating the diagnosis.
I wanted to write back and say “Excuse me, fucksticks, but if my doctor prescribed these for me, then the reason why they’re prescribed is none of your goddamn business.”
I honestly do NOT know how you guys can manage with only private health insurance. They are just awful to deal with, and will look for any excuse to deny a claim.
DaBomb
@asiangrrlMN: I have to say that Nicholson does have a penchant for picking some real ugly women.
Martin
Which Blue Cross? Each state (or combination of states) is different. Some are decent and some are horrible.
We’ve had Kaiser Permanente in SoCal for a decade and a half now. They’re fantastic. No paperwork, nothing is ever denied. Good doctors.
peaches
Mr. Tim.
It is the expansion of the mortgage scam, just dumbed down to the next level.
Borrow money against you house and lose? That grabs a number of people.
That market falls out? Look to snag a large population: people who owe money on cars,
“You have equity in your car! Cash in!”
It’s the same American values at work. Fuck them before they fuck you.
Darkrose
The warranty calls drove my office insane. We’re the central campus help desk, and the calls would come in on the ACD line, usually when the queue was hip deep. I’m thrilled that someone finally nailed those assholes.
peaches
@Martin
Krista is a Canadian, so who knows what is up with her experience.
The Dangerman
Been to one Laker game, long ago. Nicholson was there and this BABE walked down to “have a quick chat”; the crowd was, shall we say, interested in this interaction. Think Jack got a standing ovation (from the Guys, at least).
The Other Steve
I don’t do extended warranties.
Although I did get myself talked into one on my Yamaha Majesty, but it was only $400 for 4 years I figured why not.
Joshua Norton
No reimbursements without the correct diagnosis code numbers. They’ve spent the last 30 years developing a billing system chockablock full of code numbers, sub code numbers, alternative code numbers, combined code numbers. One Dr. visit could easily entail 10 or 15 codes. And then the insurance co. bureaucrat has to plug everything into their “screw the customer” program to determine the lowest dollar amount they can pay from juggling and combining the codes together (or separating them out if that is cheaper).
So the Dr. spends about 2 hours figuring out code combinations that will increase up his reimbursement. Then the ins. co. spends about 2 weeks trying to deconstruct everything so they’ll make more money, and pay out the least amount possible.
Single payer or bust, Mr. Obama!
omen
does somebody have a handbook on how to avoid getting stuck in moderation?
MikeJ
Footwear, workers owning the means of production, three roman tens in a row, for a start.
Michael D.
I get about 5 calls a month from them – at work. Never at home.
Ecks
@omen: Besides don’t comment?
Oh, you were looking for a USEFUL answer.
Er, the most effective known method involves virgin sacrifice, chickens, and doing unmentionable things to monotremes. Note, this is also the least-effective known method.
SenyorDave
At one time I worked for an insurance company as a pricing actuary. We did the data analysis to set rates for a warranty company (we actually were a subcontractor). The standard rating methodology was to set rates at about 150% higher than expected losses (if it cost $1,000 they expect to pay $400 in losses for the life of the policy). Warranty companies tend to have a very high profit margin. Many peple buy extended warranties at the time the purchase a car and just figure that it’s another thousand dollars or so. They don’t realize that the price of an extended warranty is also negotiable.
Bottom line is that an extended warranty is a very expensive insurance policy. Its never a good deal.
Martin
Oh right. Krista probably doesn’t know that US insurance doesn’t pay when you break your hoser while curling, or when you get poutine stuck in your (Cole defined) hoo-ha.
Martin
Bottom line is that all insurance is profitable for the insurer and not the customer when averaged over all cases. Only insure when costs have the potential to exceed what you can afford, or the law requires. I can’t think of a warranty case where this would apply.
gbear
Just did some credit card damage over at Amazon and finally remembered to come here first to use the link. Don’t spend it all in one place, guys.
Michael D.
@Krista:
Krista: Most people in the US don’t know that we have our own crap to deal with re: Private health insurance in Canada. My dad had to dish out $500 out of pocket for a 10k ride in an ambulance. His medication costs him dearly. And he can afford it, unlike many.
Which is why I believe in universal health care. What I don’t believe in, however, is that it can work.
I DO believe though, that it would be cheaper than what we have here now.
Edit: Clarification – I DO believe universal health care can work. I just have no idea how and haven’t heard any ideas about how. Yes, France has a good system. Would that work here? I don’t know. I guess it’s easy for me to not have to think about it so much when I have terrific insurance. On the other hand, my ex-partner’s parents, who I love to death, have NOTHING.
Health care is one of those things I don’t mind rationing and distributing if people can get the minimal coverage they need to at least have a chance at living a happy life (existing is not enough – if healthcare doesn’t make people happy, it’s not worth it. Sappy, but true.) I learned a lot from being with a guy for 6 years who had a family that didn’t have health insurance – a family with a mom who had a heart attack and a dad who has a mental illness due to something that happened to him in the military.
gbear
@The Other Steve:
Ahh! Another scooter fan. I got a People S250 a year ago and it’s the most fun I’ve ever bought.
different church-lady
(pulls out calculator)
Well, to get 10 million bucks, you only gotta fool 5000 people into giving you 2000 bucks each.
If you dial every phone number in the USA, you’re bound to find 5000 suckers.
You’re also bound to get your ass thrown in jail. But rabid D-level marketing weasels aren’t really known for thinking things through.
Martin
Consider that the fuck-ton of spam that we all receive must actually work or else they wouldn’t do it. 5000 is probably just the tip of the iceberg.
Bill E Pilgrim
You’re just trying to sell me a car warranty, aren’t you.
I knew there was a catch with this site.
Bill E Pilgrim
@omen:
Overindulge at every opportunity. You really don’t need a handbook. Just say yes to everything.
CapMidnight
What pissed me off was, when the cops hauled the scammers’ CEO into the station, he used his one free phone call to sell me an extended warranty.
Now I guess I’ll have to buy a car.
TenguPhule
The normal solution in situations like this is to track down the perp and beat them to death in a dark alley.
TenguPhule
I favor making white collar crime and spam generation death penalty eligible.
We wouldn’t make it mandatory, but it’s nice to have the option available.
Ecks
Speaking of spam, why aren’t they setting up unsecured honeypot computers, downloading some illegal software, then tracing back all the people trying to turn the computer into a zombie for their botnets (source of oh so much spam, DNS attacks, etc), and bust their 16 year old asses?
I mean other than the fact that the person running the net is in Vladivostok and you have no way of getting to them physically. But at least you could cut down on the Western end of things.
TenguPhule
Because they use generations of bots now so it’s a whole hiearchy of red herrings and dead ends.
Frankly, when caught, those perps should be given only two options: Serve the US government for life to track down other spammers, or be executed.
There is no option 3.
TenguPhule
Ahem, “Nobody ever went broke underestimating the stupidity of the American public”
iluvsummr
@Martin:
Doesn’t surprise me — it’s a pretty cool store and open 24 hours. A few years ago, my mom’s PC gave up the ghost following multiple virus/trojan horse infections. Tired of trying to diagnose and fix the problems over the phone from Boston, I went to visit & drove her from Westchester to the city. We got to the 5th Avenue Apple store just before midnight, I got her a mac mini, and she has been a happy camper (no calls about computer problems since that day). She loves that store – especially the see-through cube design.
Glocksman
@gbear:
Back in 1999, I bought a 1992 Olds Cutlass Ciera S from the used car operation of the local Toyota dealership.
They sold me a 2 year extended warranty with a $100 deductible for $1500.
The actual underwriter of the warranty was Toyota.
Before that warranty expired, I paid $300 for $4500 worth of repairs.
After it expired, the car went for 6 years without any major problems.
While I wouldn’t purchase a non-manufacturer extended warranty, I would buy one from a manufacturer.
Eric U.
if you follow the link in the story, they were selling extended warranties for $2-3000. The extended warranty from Toyota on my Prius was less than $1000. I contemplated buying that, but didn’t. My wife bought a third party extended warranty back in the ’80s and they refused to pay when the steering column locked up. Don’t remember the reasoning, my interpretation was they just refused to pay for anything.
Fulcanelli
Insomnia commenting…
I bought an extended warranty from API when I bought my Toyota Tundra (one year old), it was over $1000. In over 5 years I never had to use it and I got all my money back when the term was up.
Says a lot for API (who went bankrupt and policies like the one I had is probably why) and Toyota. It’s a 2003 and I haven’t had to put a bloody dime into that truck except maintenance, tires and a battery.
I’d buy an extended warranty if I was getting a used vehicle but not if it was new, with the warranties they offer these days on new vehicles. FWIW, the largest automobile extended warranty company, now that API is gone is GE Financial.
As a percentage of revenue GE makes more money with financial products than it does with all of it’s manufacturing.
Wile E. Quixote
I wonder if I could set up a
scambusiness where I sold wingnuts “anti-Obama” warranties? Would that be illegal or unethical? What if I made a cubic fuckin buttload (metric) of money doing so and threw some John’s way so he could continue running Balloon Juice, paying the highly trained staff so he doesn’t have to lay off Tim, Doug and Anne Laurie and outsource the blog to RedState andbuying food for Tunch so that he doesn’t eat him some night when he’s asleepfeeding Tunch. Would that reduce the illegality and ethical problems with my “anti-Obama” warranty business?AhabTRuler
If this is where people are congregating, I just wanted to point out that after all the kvetching around here, that BART Transit cop who shot a guy on New Years is going to stand trial for Murder.
Brachiator
@Wile E. Quixote:
Unfortunately, the wingnuts have now been whipped into such a frenzy that some are now a clear and present danger.
A hot yahoo news story:
The wingnuts have always been pathetic, and fools like Limbaugh enjoy pushing the envelope when it comes to inflammatory rhetoric, and clearly don’t care that they may be contributing to a dangerous sickness.
Let’s hope that decent people continue to see the worst of this stuff for what it is, and help the authorities where appropriate to flush out the sick and twisted.
asiangrrlMN
@DaBomb: Actually, I was grossed out because of the woman’s age–he has a tendency to “date” really young women. She’s your typical wind-blown blond. Not my thang.
Tim F.
@peaches: If you absolutely have to use a salutation, it’s Dr. Tim.
I did not go to four years of evil medical school (actually, evil cell biology PhD program) to be called mister.
jurassicpork
Those of you who’d followed my last blog may remember that I did a series called “Boolean Bozoism”, a list of some of the most incomprehensible and insane search engine phrases that were used to find my blog.
Well, a year after I started up my current one, I began doing a search phrase safari and it looks like teh unwashed masses of the internets at it again. This time I went back six months and chose only the best and worst for posterity, with a running commentary, of course.
Personally, I’d love to see more people do this with their blogs.
chopper
i still get swarms of telemarketing calls now and then from the guys trying to sell human growth hormone. i always tell them i’m on the DNC list and they hang up on me, so i shoot an email to the FCC.
and a month later it starts all over again. apparently they’re operating outside the country as well trying to get around the rules or something.
Bey
We’re seeing a huge uptick of spam at work. Orders of magnitude huge. It’s also become somewhat more sophisticated with the latest surge being emails purporting to be from UPS reporting a delivery problem.
My favorites are the ones titled Email From A Family Member though.
Da Bomb
@asiangrrlMN: See I was thinking along the lines of Angelica Houston, whom i think looks like a man in drag.
But you are right he does have a tendency to date really young chicks as well.
different church-lady
@TenguPhule:
Contrywide? WaMu? Lehman Brothers? Hello?
The trope is no longer operative.
Smudgemo
I got an automatic extended warranty on the “Certified” used BMW we bought back in ’05. It expired a few months ago, but I spend $50 for a deductible around four times, and walked off with over $2,500 worth of repairs (maybe more.) The last one was a fading dash display for probably $1k. No hassles whatsoever.
I’ve learned three things.
1. BMW honors its commitment.
2. I’m never going to buy a fancy car again. More options just means more shit that can go wrong (and it’s always expensive.)
3. We bought the car with 53k miles and put on all of 25k since then. Even the “good” brands break regularly.
Also, if you try selling your car and get propositioned by Sell It Now Motors, tell them to go f**k themselves. Then do a Google search and find out why I suggest that course of action.
iluvsummr
@Tim F.: Hahahahaha. You just reminded me of the time a confused seventh grader visited a research lab I worked at and kept calling everyone doctor (even though she was told to simply use our first names, the norm in that setting). She was asking medical questions of PhDs with no medical background. Finally someone said to her, “We’re not the doctors that make it better. We’re the doctors that make it worse.” I think we lost a future graduate student right there.