Royal Protection Plan Sounds Alarm on Extended Warranty Scam

OCEAN, New Jersey –  Auto Insurer Royal has issued a warning against falling into the trap of unscrupulous individuals who trick vehicle owners into buying what are essentially useless extended warranties. 

Michael Shaftel, Royal CEO, said that these con artists use the shotgun approach in baiting their victims. They sound legitimate considering they have the person’s basic information, including the make and model of your car, the date when you purchased auto insurance and other pertinent data. 

They get the information using phishing, hacking, or simply buying bulk personal data from websites. 

“Scammers also use fancy titles representing official-sounding departments from your insurance company,” he says. “They then dump some legal and technical jargons to confuse their intended victim some more. They will tell the victims that their auto coverage is about to expire and that they are candidates for an extended auto warranty.”

To pressure the intended victim some more, they will impose a deadline of 24 hours or less. Sometimes, they will even threaten to report the vehicle owner because of an expired insurance. 

Driving Without Insurance in the State Of New Jersey Carries a Stiff Fine

The New Jersey Compulsory Motor Vehicle Insurance Law slaps a minimum of $300 fine for the first offense and up to $1,000 for succeeding offenses, along with community service and suspension of license for at least one year. This is covered under NJSA 39:6B-2. 

The threat of being fined and license suspension will prove too much for some vehicle owners that they immediately purchase what these scammers are offering, he says.

Service Contract from Third-Party Sources

Instead of extended auto warranty, however, they will be handed a service contract. Auto dealers also offer a service contract although it still comes from third-party sources. The list of repairs or car parts that will be covered is itemized in the contract. Companies are gambling that the repairs will cost less than the cost of the contract.

“Of course, these companies have been doing this for so long and just like a saying often used in casinos, the house always wins,” the executive explains. “One way to do it is to list the car parts that sound important like the timing belt or chain, the alternator or the starter, but these have long lifespans.”  

“The extended warranty scam is hit-and-miss operation. Sometimes the vehicle owner tries to verify the information and in which case, they just hang up the phone pretending to call back but they just actually move on to another victim.”

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