2 Investigators: Beware High-Pressure Deals For Extended Auto Warranties

(CBS) — Car owners beware. A phone call selling you an extended warranty for auto repairs may end up costing you thousands of dollars.

2 Investigator Pam Zekman put the brakes on a bad deal and helped a buyer get a lot of money back.

Lynne Nellemann’s 2010 Mercedes had 112,000 miles on it when the original warranty expired. Then she got a call from Patriot Protection Shield, a company that claims on its website that its extended coverage “covers repair or replacement cost of any auto parts that fail.”

The caller offered her the gold package described as “comprehensive coverage” that would cover the majority of anything that happened to her car, Nellemann recalled.

But to get the special rate of $4,200, Nellemann says the caller insisted it had to be locked in with a credit card.

“It was clear it had to be done that day,” she says.

She says she was told she could cancel up to 30 days after she got the contract, so she reluctantly gave the credit card information and assumed it would not be used until she approved the charge after she got the contract.

“It wasn’t in my mind a purchase. It wasn’t a signed deal until I received that contract,” Nellemann says.

She says she never received the contract.

Bank records show the company charged her credit card the day after she got the call. When she challenged the charge, Citibank finally got her a copy of the contract and she says she saw it for the first time.

She says she would not have bought the warranty, had she seen the contract. That’s because it did not cover breakdowns or repairs due to wear and tear on parts — a common and expensive problem in older cars.

Steve Bernas, the head of the Better Business Bureau, says these kind of complaints are increasing because more people are keeping their cars longer or buying used cars.

“It’s mind-boggling sometimes,” he says. “You think you buy an extended warranty or extended service contract, that it covers everything. It doesn’t. There are so many hidden exclusions, limitations. And sometimes you’re on the hook for it.”

Like others, Nellemann had a tough time getting a refund from Patriot or the Marathon Group, the company that administers Patriot’s service contracts.

“I am so angry and distressed,” she says.

The California Insurance Department is currently trying to revoke Marathon’s license, claiming it “knowingly misrepresented” the terms of vehicle service contracts tied to a fuel additive.

Now, Nellemann wants Illinois regulators to take action.

After CBS 2’s inquiries, Nellemann got a refund of $3,541 from Marathon.

“Were it not for you there would not be this check in my hand,” she says.

Spokespersons for both Patriot and Marathon say their records show the contract was sent to Nellemann and blame her for not calling them when it did not arrive. They also deny she was misled about the terms of the service contract and any other wrongdoing.

And Marathon’s attorney says it “very strenuously denies” the allegations in the California action against them.

Bernas says there are good extended car warranty or service contracts through dealerships and other sources. But consumers must read the contract before they sign up or pay for it, he says.

“It’s a growing problem not only locally but nationally as well,” Bernas says.

You can find out more about extended vehicle service contracts or warranties by checking out these links for the Federal Trade Commission; Consumer Reports; and Edmunds.

More from Pam Zekman

Watch & Listen LIVE