Canadian "Car Warranty" Phone Scam

Your car warranty is about to expire – would you like to extend your policy?

If you live in Canada, chances are you’ve received a phone call – or ten – about this very topic. According to the individual on the other end of the line, the situation is urgent – and you only have a limited amount of time to provide your credit card information and receive a special rate of $175 per month.

Unfortunately, if you opt to purchase that policy, you’ll find out that the $175 per month doesn’t get you much. Canadian dealers don’t tend to honour extended warranties from third parties.

Scammers took in $23 million in 2008

Scams like this are increasing in popularity in North America. According to PhoneBusters (the Canadian Anti-Fraud Call Centre managed on a tripartite basis by the Ontario Provincial Police, the Royal Canadian Mounted Police (RCMP), and the Competition Bureau Canada), there have already been 1,273 victims of mass marketing fraud in Canada in 2009 – and almost $2 million in money lost to these scams. Last year, that number was $23 million.

While fewer Canadians are falling for the ‘Nigerian Prince’ scheme – a fraudulent e-mail that asks people to wire an exiled prince money so he can reclaim his fortune – other scams are becoming increasingly difficult to spot. After all, if you received a fraudulent car warranty phone call around the time your car warranty was about to expire – as many Canadians have – you would be tempted to purchase the extended warranty.

Ask questions

Before you offer anyone your credit card information over the phone, it’s wise to ask who you are speaking to. Where are they located, what is their address, and what is their phone number and extension? In the case of the auto warranty scam, if you ask any of these questions the person on the other line hangs up.

It also helps to take a bit of time to think about the offer and call the person back. If they won’t provide a call-back number – or if there’s a sense of urgency to the deal – that should be a red flag.

Use protected payment methods

If you do opt to purchase something, don’t transfer the money through Western Union or other wire transfer companies. Use protected forms of payment such as credit cards or PayPal. Many consumers have had luck reversing fraudulent charges with these forms of payment.

If it’s too good to be true…

Be wary of special offers or deals that seem too good to be true. If you’re offered a free trip, a cash prize, or a new car, it’s likely that you’re being duped. Always do your background research – either by calling the person back, requesting more information, or checking the PhoneBusters website for recent schemes – to keep your hard-earned money out of the hands of fraudsters.