The bankers and mortgage lenders were also doing it back then in 2008 and are still doing it today. But they are going to punish a lonely car dealer. Why did all the bankers and mortgage originators get away with the criminal shenanigans and never went to jail when they brought the whole financial system down ???
Banks are unscrupulous and are still defrauding people! For instance, they say they're loaning a person money for a purchase of a home when they do not. They only want your signature to access the trusts. The loans are actually paid off at the time of closing! Banks loan nothing, but yet want to make people modern day debt slaves stealing a persons labor and wealth in order to pay them using their fiat currency! Even the fiat currency being circulated is nothing more than IOUs! Even the Fed. Reserve who oversees the banking system have publications that outlines how they don't make loans, they can't its against the law! Banks are the ones that have no skin in the GAME. In actually, the Banks are the actual debtors and the home owner are the creditors, which is totally opposite of what everyone is being told! The system put laws into place to protect and assist the Banks and Corporations which screws over people! The system that has been set-up won't tell you that and it uses very careful wordsmithing to hide it!
Yes, I sort of forgot about that. However, if you remember and even if you don't, Iceland told their banks, "Tough $hit!" The Icelandic Government left the banks out to dry. Good for Iceland. God forbid the U.S. do that, oh wait, it was the Bush/ O'Bomba administrations, O.K., now I understand.
If the guy had screwed regular citizens out of their money it would have been no big deal but screw a bank.....different story. Wonder if a dealer had just screwed a 3rd party warranty company would he get the same sentence?
They should just put red lights in the car dealerships. Because just like the red light district Frankfurt Germany. . Everybody that walks in there is getting screwed.
@@ewkabel I got lost in Brussels (late 70s) on a high school "package field trip" to Europe. Four of us (2 girls, 2 guys) got totally lost, and realized we were in a red light district, at twilight. We came from a small rural Southern town, and were horrified to see women posing in tawdry red-lit shop windows. We were already frightened, then things got worse. A tall, well-dressed man approached us and began shouting and berating us...even though we didn't understand the language, we understand the import! We weren't supposed to be there! And, we didn't want to be there! We jabbered at him in English, and beseechingly, showed him our maps. Finally, he left us in peace, to wend our way back to our cheap hotel. Scared us to death. Now, decades later, I look back and wonder, why was this well-dressed man in this area to begin with? He was wearing a suit and tie underneath a tailored wool topcoat. (I knew quality men's clothing from observing my father's wardrobe.) Was he a customer? A procurer? A distressed, but wealthy pedestrian, who shouted at foreign teenagers?
I worked for a dealership in the 70's ( tech ) that was caught double floor planning. The reps from both banks showed up at the same time and noticed they had the same serial numbers busted ! Several times in my tech career I had folks that had purchased a third party warranty. I never had a third party warranty company EVER back up their purchaser and pay for the repairs. Most of the time " it's not covered " even after they sent adjusters to inspect the damage and in the majority of cases it should have been covered. Most common problem ? Blown head gasket. NOT covered by almost all of the third party companies. Thanks for the memories.
I’ve got an even better story in around 2015 i was a dealer double flooring and had that happen not that I’m bragging I was in a jamb and done something stupid trying to save my business
I've purchased the 3rd party warranty on a number of vehicles. Then I got smart and did a cost analysis to see if I was getting my money's worth. I found If I put the money into a savings account each month, the probability was I would have the money in the bank to pay for the repair instead of paying a 3rd party who seldom paid what I thought they would pay. In many cases, I spent a few thousand dollars for the warranty but never needed to spend any money. If I had put the money in the savings account, I would have the money on hand.
I ended up being talked into an extended warranty on a used Honda Accord which I bought with 36k miles on it, basically just out of warranty. The dealer told me, hey, they are great reliable cars, but stuff does break on them, and it gets expensive. The warranty I think was close to $1500 or so, and covered the period from 36k miles to 72k miles. Boy was that a great decision. That car shortly after ate the entire A/C system. Compressor, then dryer, then evaporator. I had several other serious problems with that car. The warranty company ended up covering everything, paid probably north of $4500 in repairs. Just tossing that out there in the rare case where a warranty actually was worth it and actually paid the claims. Bought a couple of more warranties on vehicles after that, which were covered to 100k miles. Nothing broke, never filed any claims, total waste of money. So, I have seen both sides of the equation and didn't buy extended warranties on my last few cars for that reason.
@@BabyGators It was a 1994 Honda Accord. First model year I believe when they went to the VTEC engine. I got the stick shift version, it was a pretty cool car for its time. Didn't have it very long as I ended up with an Infiniti the year after and my brother drove the Accord until it died.
@@gabriel-richardhayman7561 Hell, I've owned the same car since I bought it brand new in 2001. Apparently I had a 20 year warranty on it because I get those calls too!
@Rich Wightman Things have tightened up. My refinance THIS time has required a lot more documentation. I think the last time there was a whole lot less involved.
I've got another complaint with one of those 3rd party warranties. I bought a Dodge minivan many years ago and got the extended warranty from the dealership. A few months after buying it, the starter went out. Tone It Up to the local mechanics shop, he contacted the warranty company. The bottom line was that I was responsible for a deductible, as well as a portion of the labor cost. They quoted me something along the lines of $200 to replace the starter. I told them no thanks. Went by the local auto parts store, and bought a starter myself right off the shelf for 30 bucks, and installed it in the driveway in about 20 minutes. Warranty was absolutely useless. I suppose if the entire engine or transmission had exploded, it may have come in handy. But for the most part, it really wasn't worth the paper it was written on.
@@ripvanrevs He readily made offshore deposits to hide his money, he once bragged to us that he had millions squirreled away and that if things ever got too intense he would just bail on everyone. I think he got caught before he could dip out.
The way it seems to go these days: they tell you what a great car it is how reliable it will be and that you’re doing the right thing. And then the person..I don’t know what their title really is that does all the paperwork tells you that you need an extended warranty because the car has so many Issues that are going to be very expensive to repair and that those repairs always take place right after the warranty expires. Looking back I wish I would’ve stood up and said well it sounds like this car is a piece of junk and I’m not buying it so you can just shred all that paperwork I’m gone. The guy was obviously going to make a Lotta money for selling that extended warranty. What a racket. I hate buying cars
Plenty of barren desert space to build more... Better yet, build them in the Antarctic and don't keep Cold Whether gear in the Cell Block Buildings... No way you're breaking out of Prison if the local temp is 30+ below 0 Fahrenheit and the nearest camp/settlement is 300+ Miles away in an unknown direction...
We just don't have enough prisons because they are already full. Maybe full of people who don't really belong there in some cases. We have a ridiculously large number of laws. It is enough that an entire wing of a library can be devoted to that all by itself. It is just crazy!
I bought a car from this dealership right before all hell broke loose (great car, had it three years before trading up, did NOT get an extended warranty :-). I don't follow local news so I actually didn't know he got sentenced to prison. Glad I found this, it was very informative, thank you!
As he is usually lol And also just to mention, all the major floorplan banks send an auditor to the dealership lot every month to inspect/audit the inventory
You did an excellent job of explaining this, thanks so much! Appreciated the info that the warranty co may be acting properly....scam came from the dealer. Very educational.
Hello Steve. Here in Minnesota we had our own car dealer court drama. A dealer in the Minneapolis/ Saint Paul area was convicted and sentenced to 10 years for fraud. I think the court case was in either 2010 or 2011. He was ordered to pay $31 million in restitution.
Some of the general managers really deserve to be in jail. Similar to what happened in the movie Fargo. That's what happened to an owner and the general manager I know in Auburn California without the murder part. The troubling part is the criminals in California go to club fed in this state for their sentence.
The blank third party warranty scam is similar to what some lawyers will do with title insurance, by charging the buyer for it but failing to provide the paperwork. If the buyer comes back to them later on, the blame it on the secretary who failed to complete it and put it in the paperwork package, and they they will fill it out and give it to the complaining customer. Yes, I've had that happen to me. It took me three trips to the lawyers office to get the paperwork before he gave in and processed it right there on the spot.
Last new car purchase the dealer pushed INSANELY hard for me to buy their $1700 extended warranty. Deal has been struck and I'm in with the paperwork/payment lady and she starts the sell. I keep saying "no" and she explains "you really need to understand, the manufacturer's warranty only does so much and it's really not that good--you NEED this warranty." I tell her, "odd, since the salesman out there repeatedly told me how this is the best warranty from any maker, and absolutely anything that goes wrong will be covered--sooooo, now you say 'not so'--maybe I should think more about this car before I buy it?" She backpedaled so flippin' fast... Price was down to $1000 when I finally got her to shutup by saying "print me a copy of the actual contract I'll be signing and I'll read it over the weekend and let you know Monday". I didn't say "yes" on Monday. The fine print in the contract was every bit as ridiculous as I figured it would be, and effectively said the warranty covers nothing if they don't want it to, and many common actions automatically void the entire warranty (like if you EVER drive off a paved public road--good luck if you visit a friend in a rural area, or have a gravel driveway). Which jives perfectly with all the stories you hear of claims being refused for anything expensive.
I have to say that in my ONE experience with aftermarket/third-party auto warranties was EXCELLENT. I usually buy my cars new, but about 10 years ago I suddenly needed a minivan, but did not want to spring for a new one. The dealer had a previously leased one that the original 'owner' had recently returned when the 3 year lease was up. Because I had the willies over buying a used car, I let the dealer talk me into buying the third-party warranty, which was equivalent of a new car warranty, similar duration and coverage, but starting with a clean slate and reset 'clock' from the time of my purchase. As I recall, it cost either $1300 or $1800, and I felt like I had been suckered before I even got the van home. But then the problems started with he van. Power windows failed. Then all power locks failed. Brake system had major leaks and nearly the whole system needed replacing. The 3-zone HVAC needed all coolant lines & fittings replaced. Front wheel bearings were bad. Each time I took it in, and the dealer called to tell me the bad news, and how much the repair would cost me, I reminded them about the warranty, they would say "oh, yeah!", call the warranty company, who every time said "OK" and paid the full amount (or at least something was worked out between them and the dealer such that I did not need to pay). Lots of other things went wrong, such as a fried ignition system that required dropping the engine and subframe in order to get to the back side of the engine where some ignition modules were located. I figured that they all together would have cost me about $20,000, except for that $1300 or $1800 I paid up front. But I always thought it suspicious that the dealer never seemed to recall the warranty until I reminded them. I suppose it is possible that they never sent the warranty in, and when I called them on it, they just decided to take care of it themselves.....
I wonder if it's a statistical gamble. Perhaps so few vehicles actually require work, that they can afford to cover the ones that do. So glad this worked for you, obviously worth the upfront purchase of the warranty. Also possible that your dealer was a reliable sort, that only provided warranties in a reasonable manner to the warranty company. Except that you had to remind them??
Having worked for a good 3rd party warranty company that also offered a “true coat product” I can say that IF the company ONLY accepts electronically remitted contracts by daily uploads the consumer is better protected. We would still see same day claims but they were usually for nails in tires.
That’s why many Third Party Warranty Companies don’t leave active Policies or Warranties with the Dealer, they only leave the “Applications” and they are clearly marked as an Application and instructed to call and verify coverage. Typically those went to non-franchised Dealers where the risk on no-cert claims is higher.
The dealer warranty thing is interesting. I work for a credit union, and we sell ancillary products like warranties on our automobile loans. However, our commission for the sale isn't held back. If the warranty costs $1500, for example, we have to send the insurance company that provides the warranty $1500. After compiling all the monthly warranties sold, they remit back to us our commission the following month. I think part of it is because our commission is a sliding scale based on number of warranties sold. But, in any case, we don't have the capacity to just hold onto a warranty fee. The warranty is completed through the insurer's website. To provide a warranty package to a borrower, we have to complete the online application for it, so the company knows the warranty has been issued from the minute the borrower leaves the office. Then, we get billed for it at the end of the month. No idea why warranty companies don't do the same thing with car dealers.
I work for a third party warranty company, and can confirm that this happens a lot. One particular dealer sold a bunch of warranties, did not remit them, and then filed for bankruptcy. We still have to honor those contracts.
I had a dealer pull some shady stuff on me years ago. I couldn't ever get proof of the purchase of an extended warranty. I had been warned by a relative that the warranty he had purchased from the same dealer had never been filed. After two months the dealer came back to me that they needed a document on my trade in. I held that document hostage until I got the warranty proof from the provider.
I know of a certain Car Dealer who handed over the dealership to the Son. Floorplan was through the Manufacturer. The son "forgot" to send in $ for sold cars to the Manufacturer Floorplan for many months. He shows up to the Dealership one morning, and Manufacturer Reps along with the Police are there. He is escorted to clean out his personal stuff, then hauled off to jail. The Dealership was under Manufacturer control for some time, now it appears to be a successful dealership.
Great video! I deal with aftermarket warranty's working at an independent shop. Almost every company is the same. They will cover a partial of the repair and make the customer cover the cost. Or ship us a part they supply which can take up to 2 weeks when the part is available to us from across the street.
When I was a kid, there was a dealer in my small town who had a High Performance 289 Mustang, 1965. We talked it over with the dealer and agreed on a price. Probably way too much but I was a kid in love with the car. The next day, I went to sign the papers and the doors were chained and padlocked by the IRS or something. I later learned he had at least 2 loans from banks on that car. I was pissed. Although, the way I drove, it probably saved my life or at the very least, kept me out of jail.
Had this 3rd party warranty scam pulled on me…lol. Found out when we moved out of state and called the warranty company to clarify the policy details when we had an issue
Almost all retail businesses that sell physical items to the public have some sort of Floorplan financing, otherwise they'd never be able to have inventory onhand to sell customers.
I got scammed on a third party warranty once. I found out when the warranty company sent me a letter that said they'd gotten the paperwork but no money, and therefore were cancelling. Fortunately, I was able to recover the money from the dealer's surety bond.
I never got rich but still earned a pretty good paycheck honestly without being a sleaze bag, besides, how many Yachts do you need to Ski behind. Why is it that car sales tends to attract scumbags, I feel sorry for those honest dealers out there that gets lumped into this category (sometimes Lawyers are also put into this group, although I like the Lawyer I've used in the past and suspect most are like mine).
I used to work for a guy that did this same exact insurance scam. I was a mechanic and my wife worked a short time in the office that's how I found out. He's dead now killed himself when things started getting really tight around his neck.
I delivered the Detroit news. Free Press at the time was delivered in the morning. Detroit news was delivered in the afternoon (after school). There was no way I was going to get up early (before school) to deliver the paper.
Excellent presentation of the WARRANTY SCAM.. from car dealers...I once was in the car Business.. l love the car business... I hate..an will not do business with any Car dealer that operates in this faction !...
The Toyota dealership I worked at in Florida had a unique way to get expiring incentives. The GM had a business partner in another business buy the vehicles at super discount net net net prices and then keep them in storage. 90 days later the dealership would buy them back as pre-owned inventory and sell them as early lease termination vehicles.
It was about 30 years ago, the used car manager for a local Chevrolet dealership spent a couple years in prison. One of the big warranty companies offered a "Lot Warranty". This is the policy that covers the drive train of for 30 days after the sale, on every used car in inventory.
I've known 3 Finance managers that did that sort of thing often. One did a year and a half and the other two just paid restitution and actually went to work at another lot. The finance guy, that's your criminal at the car lot.
Don't buy the extended warranty . The phone calls you get about your warranty about to run out are also something to avoid. Car Shield is another big rip off . Before they will pay a claim you must first prove your car has had all of its services performed as the manufacturer recommends. So they pay out very little as most owners don't have all the services done on schedule.
@Dave Davis - And their pitchman, Ice T (net worth about $80 million) claims he insures his cars with Car Shield cuz maybe he can't afford car repairs. That alone should set off the BS alarms.
@@wickedcabinboy Actually, whenever a celebrity, pro athlete, TV or radio announcer pitches a product or service with the "I'm a customer" angle, that should always be a red flag.
I bought an extended warranty from a Cleveland area Chev/GMC/Buick dealer for my 2003 Chev Trailblazer. Had a transmission issue two months after the extended warranty expired while vacationing in Rhode Island. The dealer said he’d try to get the repair authorized because of the very low mileage on my car. He returned to inform me that NO extended warranty was on file with GM EVER. Found out upon my return that the now defunct dealer had pocketed the $1800 and never submitted the paperwork to GM. According to a former employee, the dealer would submit the paperwork only if a claim arose during the covered period, otherwise he pocketed the money. I had no recourse because the warranty technically expired before my claim, but I learned a valuable lesson.
i fell for the extended new car warranty. the dealership where i bought the car originally had been sold. when i tried to get a cruise control on/off switch replaced ($175 for parts!), the dealer insisted they had to do "diagno$tic$" which were not covered. no other shop would take it in unless they kept (impounded) the car until they received payment. so, i turned the cruise control on and jammed a toothpick into the switch. worked fine for 40,000 miles. i just chalked it up to $800 tuition for consumer awareness training. I'll never buy a new car again after this experience, it's just to risky for amateur buyers, like 95% of all customers.
I bought a car while on unemployment. The dealer was like have you ever done any job consulting? When I said yes they said ok we can make this work. I didnt question it because I needed a car for an upcoming interview. (I did land the job) I found out later on a credit check that I operate a consulting company. I hope that doesn't come back to bite me.
I bought a 3rd party powertrain warranty for an used 1995 Chevy Caprice, because after a test drive I knew that the transmission was not in good shape and this car had previously been used for towing. Sure enough after about 6 months the transmission was now acting very strangely, it would stay in first gear until you let off the throttle and then it shifted to 2nd gear. So I called up the Warranty people and they directed me to a local transmission shop and for about half the cost of a normal rebuilt transmission I had it repaired under that warranty.
Another element of warranty issues, is with new or used vehicles, the dealership may be aware of defects and not disclose at time of sale because the factory warranty or the unsold 3rd party warranty won't pay them until the vehicle is sold. I have had some experience with purchases and conversation with dealership staff that makes certain.
I sold a lot of cars working for dealerships. Something that happened all the time was that the third party warranty companies went bankrupt all the time. You can buy a warranty from your insurance company. Never buy anything extra from auto dealers. You can buy anything for your car from aftermarket companies for less money.
About 25 years ago a Mitsubishi dealer in Auburn, MA ran the business into the ground. Among other things when they got payment from the financing bank they failed to pay off the loan of the trade-in. They screwed up a lot of people's credit. A real mess. The father and son that owned it went to prison.
Steve: If you, as a licensed lawyer, committed such massive fraud, upon conviction your law license would be suspended and you'd later be disbarred. And the State Bar's Client Protection Fund Is there to protect your defrauded client. Are there similar licensing sanctions against car dealerships and state run client/owner protection funds or surity bond protection claim mechnisms?
Many states require dealers to be bonded. But the bonds are small and the bonding companies often defend the claims and refuse to pay without MORE litigation.
In my younger days I worked in motorcycle dealerships, more than one dealer was caught falsifying "floor plan" inventory by selling new units but kept the crate the unit came in intact to give the impression the unit was still in the crate, seldom did auditors look in crates they merely checked rolling units on display, in one instance a bank officer was in on the scam.
My Toyota dealer is gonna be sued by me for a slip and fall that destroyed a laptop if they give me any grief. Back in 2005, a Chicago area MAJOR VW dealer chain, falsified my income on a VW credit app. I didn't find out until after the purchase and realized they sold me a CPO "Lemon". Always get a copy of your credit app from the dealer - they may be falsifying it without you knowing.
When I purchased my last vehicle, the bank refused to finance any extended wty, so the dealer had to redo all the paperwork and “sell” the car newly a month after I took possession, this time without the extended wty.
That warranty scam seems easy to fix by the warranty company. They just require the dealer AND the customer to submit copies of their forms. They then send out an approved warranty policy for the customer to bring to any repair shop. Likely the dealers would stop using that warranty company then. So it would probably require the states to mate that type of process mandatory. Which of course then the auto dealers lobbyists would try to prevent from happening by paying/bribing the politicians.
As an independent shop I don't deal with aftermarket warranties. They always want steep labor discounts, they argue over parts prices, they want cheap junk installed almost never OE parts, and the car usually sits around for days waiting on them to decide what to do.
Similar to the pay for a warranty but dealer doesn’t send it in, I was employed and paying for health insurance for almost a year when we needed hospital care! The insurance co ended up refusing to pay because my employer had “forgotten” to send in the money deducted from my check for a year! Had to sue , then settle for 1/2, because they threatened to drag the case out and the hospital and doctors had started collections and liens!
You didn't touch on this but I made the mistake of trying to deal with the 3rd party warranty company from the other side once. I ran a small 2 bay shop back in the 80/90's and had a new customer come in with his newly bought used car covered under one of these. After a year I got a check for half of what they agreed to pay and gave up after that. Never dealt with one again, told the customers that they covered his car, not my shop.
Sadly bother the bank loan fraud and rebate fraud is very common. I know a friend where they mess with the rebate to get the loan approved and to pay off the old loan on the car they traded in. It was a big Ford dealer in the area. They all do fraud to get a sale, just how it is in the industry. It what happens when you leave it in the dealers hands, they find loopholes.
The dealer ship I bought my explorer from offered me a warranty with a $100 deductible. They said if I bring the car to then for repair they waive that deductible. I wonder if this is why….
in NJ, we have had dealers who play games with submitting titles on vehicles. The problem when they make deals with FIs to do financing is the games dealers play that violate things such as fair lending and reg z can result in the FI getting hit with regulatory actions.
I found out after the fact, but a person who bought my house in 2006 when I was relocating, did what was called a "Liars Loan". They said they were making more money than they really did. I think it was called a stated loan at the time.
I don't want the true coat
Let me go talk to my boss.
The boss told me to take $100 off the Trucoat. Never saw that before.
@@garyfrancis6193 But only today. This is a one time offer.
@@curtisroberts9137 Because I like you.
You betcha.
The bankers and mortgage lenders were also doing it back then in 2008 and are still doing it today. But they are going to punish a lonely car dealer. Why did all the bankers and mortgage originators get away with the criminal shenanigans and never went to jail when they brought the whole financial system down ???
He was fine as long as he defrauded customers and didn't defraud the banks... they don't like competitors.
Because the laws exist to keep the peasants in line, not the powerful
Banks are unscrupulous and are still defrauding people! For instance, they say they're loaning a person money for a purchase of a home when they do not. They only want your signature to access the trusts. The loans are actually paid off at the time of closing! Banks loan nothing, but yet want to make people modern day debt slaves stealing a persons labor and wealth in order to pay them using their fiat currency! Even the fiat currency being circulated is nothing more than IOUs! Even the Fed. Reserve who oversees the banking system have publications that outlines how they don't make loans, they can't its against the law! Banks are the ones that have no skin in the GAME. In actually, the Banks are the actual debtors and the home owner are the creditors, which is totally opposite of what everyone is being told! The system put laws into place to protect and assist the Banks and Corporations which screws over people! The system that has been set-up won't tell you that and it uses very careful wordsmithing to hide it!
what others do does't make it ok for this guy to do illegal activities.
Yes, I sort of forgot about that. However, if you remember and even if you don't, Iceland told their banks, "Tough $hit!" The Icelandic Government left the banks out to dry. Good for Iceland. God forbid the U.S. do that, oh wait, it was the Bush/ O'Bomba administrations, O.K., now I understand.
If the guy had screwed regular citizens out of their money it would have been no big deal but screw a bank.....different story. Wonder if a dealer had just screwed a 3rd party warranty company would he get the same sentence?
Nope
They should just put red lights in the car dealerships. Because just like the red light district Frankfurt Germany. . Everybody that walks in there is getting screwed.
@@ewkabel Frankfurt still using the store front and parking garages for their red light district activity?
That is not true at all. Salesmen and finance managers get in trouble for trying to screw over customers/consumers.
@@ewkabel I got lost in Brussels (late 70s) on a high school "package field trip" to Europe. Four of us (2 girls, 2 guys) got totally lost, and realized we were in a red light district, at twilight. We came from a small rural Southern town, and were horrified to see women posing in tawdry red-lit shop windows. We were already frightened, then things got worse. A tall, well-dressed man approached us and began shouting and berating us...even though we didn't understand the language, we understand the import! We weren't supposed to be there! And, we didn't want to be there! We jabbered at him in English, and beseechingly, showed him our maps. Finally, he left us in peace, to wend our way back to our cheap hotel. Scared us to death.
Now, decades later, I look back and wonder, why was this well-dressed man in this area to begin with? He was wearing a suit and tie underneath a tailored wool topcoat. (I knew quality men's clothing from observing my father's wardrobe.) Was he a customer? A procurer? A distressed, but wealthy pedestrian, who shouted at foreign teenagers?
I worked for a dealership in the 70's ( tech ) that was caught double floor planning. The reps from both banks showed up at the same time and noticed they had the same serial numbers busted ! Several times in my tech career I had folks that had purchased a third party warranty. I never had a third party warranty company EVER back up their purchaser and pay for the repairs. Most of the time " it's not covered " even after they sent adjusters to inspect the damage and in the majority of cases it should have been covered. Most common problem ? Blown head gasket. NOT covered by almost all of the third party companies. Thanks for the memories.
I’ve got an even better story in around 2015 i was a dealer double flooring and had that happen not that I’m bragging I was in a jamb and done something stupid trying to save my business
I've purchased the 3rd party warranty on a number of vehicles. Then I got smart and did a cost analysis to see if I was getting my money's worth. I found If I put the money into a savings account each month, the probability was I would have the money in the bank to pay for the repair instead of paying a 3rd party who seldom paid what I thought they would pay. In many cases, I spent a few thousand dollars for the warranty but never needed to spend any money. If I had put the money in the savings account, I would have the money on hand.
I ended up being talked into an extended warranty on a used Honda Accord which I bought with 36k miles on it, basically just out of warranty. The dealer told me, hey, they are great reliable cars, but stuff does break on them, and it gets expensive. The warranty I think was close to $1500 or so, and covered the period from 36k miles to 72k miles.
Boy was that a great decision. That car shortly after ate the entire A/C system. Compressor, then dryer, then evaporator. I had several other serious problems with that car. The warranty company ended up covering everything, paid probably north of $4500 in repairs.
Just tossing that out there in the rare case where a warranty actually was worth it and actually paid the claims. Bought a couple of more warranties on vehicles after that, which were covered to 100k miles. Nothing broke, never filed any claims, total waste of money.
So, I have seen both sides of the equation and didn't buy extended warranties on my last few cars for that reason.
@@redbaron6805 what year accord? The 10th gen accords had problems with the ac and Honda extended the warranty to 10 years/100k I believe on the ac
@@BabyGators It was a 1994 Honda Accord. First model year I believe when they went to the VTEC engine.
I got the stick shift version, it was a pretty cool car for its time. Didn't have it very long as I ended up with an Infiniti the year after and my brother drove the Accord until it died.
Gee and I keep getting calls that my car warranty coverage is about to end.
Me too! And, I haven't owned a car in more than 20 years!
@@gabriel-richardhayman7561 Hell, I've owned the same car since I bought it brand new in 2001. Apparently I had a 20 year warranty on it because I get those calls too!
They hung up when I mentioned my Volvo with 600K+
I just got one of those calls 2 minutes ago!
The car they are calling about was totaled in a wreck.
“Stated income” was common in the home mortgage business.
Dodd-Frank led to the 2008 crash by compelling banks to make loans they knew were losers.
@Rich Wightman Things have tightened up. My refinance THIS time has required a lot more documentation. I think the last time there was a whole lot less involved.
they were called 'ninja' loans: no income, no job, no assets...
Nobody can do what countryside can lol
'I put my grandma on speed dial and now I call it instagram' 😂 luv it
Just caught that. I clicked away
I've got another complaint with one of those 3rd party warranties. I bought a Dodge minivan many years ago and got the extended warranty from the dealership. A few months after buying it, the starter went out. Tone It Up to the local mechanics shop, he contacted the warranty company. The bottom line was that I was responsible for a deductible, as well as a portion of the labor cost. They quoted me something along the lines of $200 to replace the starter. I told them no thanks. Went by the local auto parts store, and bought a starter myself right off the shelf for 30 bucks, and installed it in the driveway in about 20 minutes. Warranty was absolutely useless. I suppose if the entire engine or transmission had exploded, it may have come in handy. But for the most part, it really wasn't worth the paper it was written on.
Hahah I used to work for this crazy man. I can tell you, he is guilty of so much more than what he got arrested for. He was a crook.
Probably should check his tax returns!!
@@ripvanrevs He readily made offshore deposits to hide his money, he once bragged to us that he had millions squirreled away and that if things ever got too intense he would just bail on everyone. I think he got caught before he could dip out.
@@feynixgaming2218 When you're hiding money from the IRS, it's always a good idea to tell all of your employees about it
Steve, could watch and listen to your channel all day. But,got to feed the cows 🐄 .
My hometown. His slogan was, "Andy says, write it up". The judge said, Lock him up!!!! He had a nice house but doubt it was worth 1.6 Million.
Kind of sounds like the movie “Fargo” 🤣
Exactly! I hope his wife doesn’t get murdered because of it!
San woodchipper, I imagine...
Ben peeking out from behind right side of "106 FM W4" sign.
I'm still stunned that a car dealer would be involved in fraud?!?!?!?! I've never heard of something like this. ;)
I'm shocked I tell, shocked!
There's not enough prisons for dealers.
Fully support eliminating the current clown circus that's called buying a vehicle.
The way it seems to go these days: they tell you what a great car it is how reliable it will be and that you’re doing the right thing. And then the person..I don’t know what their title really is that does all the paperwork tells you that you need an extended warranty because the car has so many Issues that are going to be very expensive to repair and that those repairs always take place right after the warranty expires. Looking back I wish I would’ve stood up and said well it sounds like this car is a piece of junk and I’m not buying it so you can just shred all that paperwork I’m gone. The guy was obviously going to make a Lotta money for selling that extended warranty. What a racket. I hate buying cars
Yep it pretty much a circus for sure.
Plenty of barren desert space to build more...
Better yet, build them in the Antarctic and don't keep Cold Whether gear in the Cell Block Buildings...
No way you're breaking out of Prison if the local temp is 30+ below 0 Fahrenheit and the nearest camp/settlement is 300+ Miles away in an unknown direction...
We just don't have enough prisons because they are already full. Maybe full of people who don't really belong there in some cases. We have a ridiculously large number of laws. It is enough that an entire wing of a library can be devoted to that all by itself. It is just crazy!
Sure there is. Just release all the people currently in prison who shouldn’t be there. That opens up at least a million spots.
I bought a car from this dealership right before all hell broke loose (great car, had it three years before trading up, did NOT get an extended warranty :-). I don't follow local news so I actually didn't know he got sentenced to prison. Glad I found this, it was very informative, thank you!
I’ve been a used car dealer for more than 10 years with locations in multiple states. Steve is right on the money with what he is saying here
As he is usually lol
And also just to mention, all the major floorplan banks send an auditor to the dealership lot every month to inspect/audit the inventory
You did an excellent job of explaining this, thanks so much! Appreciated the info that the warranty co may be acting properly....scam came from the dealer. Very educational.
Hello Steve. Here in Minnesota we had our own car dealer court drama. A dealer in the Minneapolis/ Saint Paul area was convicted and sentenced to 10 years for fraud. I think the court case was in either 2010 or 2011. He was ordered to pay $31 million in restitution.
Some of the general managers really deserve to be in jail. Similar to what happened in the movie Fargo. That's what happened to an owner and the general manager I know in Auburn California without the murder part. The troubling part is the criminals in California go to club fed in this state for their sentence.
The blank third party warranty scam is similar to what some lawyers will do with title insurance, by charging the buyer for it but failing to provide the paperwork. If the buyer comes back to them later on, the blame it on the secretary who failed to complete it and put it in the paperwork package, and they they will fill it out and give it to the complaining customer. Yes, I've had that happen to me. It took me three trips to the lawyers office to get the paperwork before he gave in and processed it right there on the spot.
Very informative Steve Thank you. Great video.
So the way I understand this, he got 4 years because he was hurting financial institution not so much the customer? Normal people are still fair game.
He hurt normal people by selling them an extended warranty, and not filing the paperwork. So he pockets the 1-5k for the warranty.
Your delivery is like a symphony for law. I'm going to start calling you Lehtoven.
Last new car purchase the dealer pushed INSANELY hard for me to buy their $1700 extended warranty. Deal has been struck and I'm in with the paperwork/payment lady and she starts the sell. I keep saying "no" and she explains "you really need to understand, the manufacturer's warranty only does so much and it's really not that good--you NEED this warranty." I tell her, "odd, since the salesman out there repeatedly told me how this is the best warranty from any maker, and absolutely anything that goes wrong will be covered--sooooo, now you say 'not so'--maybe I should think more about this car before I buy it?" She backpedaled so flippin' fast... Price was down to $1000 when I finally got her to shutup by saying "print me a copy of the actual contract I'll be signing and I'll read it over the weekend and let you know Monday".
I didn't say "yes" on Monday. The fine print in the contract was every bit as ridiculous as I figured it would be, and effectively said the warranty covers nothing if they don't want it to, and many common actions automatically void the entire warranty (like if you EVER drive off a paved public road--good luck if you visit a friend in a rural area, or have a gravel driveway). Which jives perfectly with all the stories you hear of claims being refused for anything expensive.
I have to say that in my ONE experience with aftermarket/third-party auto warranties was EXCELLENT. I usually buy my cars new, but about 10 years ago I suddenly needed a minivan, but did not want to spring for a new one. The dealer had a previously leased one that the original 'owner' had recently returned when the 3 year lease was up. Because I had the willies over buying a used car, I let the dealer talk me into buying the third-party warranty, which was equivalent of a new car warranty, similar duration and coverage, but starting with a clean slate and reset 'clock' from the time of my purchase. As I recall, it cost either $1300 or $1800, and I felt like I had been suckered before I even got the van home.
But then the problems started with he van. Power windows failed. Then all power locks failed. Brake system had major leaks and nearly the whole system needed replacing. The 3-zone HVAC needed all coolant lines & fittings replaced. Front wheel bearings were bad. Each time I took it in, and the dealer called to tell me the bad news, and how much the repair would cost me, I reminded them about the warranty, they would say "oh, yeah!", call the warranty company, who every time said "OK" and paid the full amount (or at least something was worked out between them and the dealer such that I did not need to pay). Lots of other things went wrong, such as a fried ignition system that required dropping the engine and subframe in order to get to the back side of the engine where some ignition modules were located. I figured that they all together would have cost me about $20,000, except for that $1300 or $1800 I paid up front.
But I always thought it suspicious that the dealer never seemed to recall the warranty until I reminded them. I suppose it is possible that they never sent the warranty in, and when I called them on it, they just decided to take care of it themselves.....
I wonder if it's a statistical gamble. Perhaps so few vehicles actually require work, that they can afford to cover the ones that do. So glad this worked for you, obviously worth the upfront purchase of the warranty. Also possible that your dealer was a reliable sort, that only provided warranties in a reasonable manner to the warranty company. Except that you had to remind them??
Having worked for a good 3rd party warranty company that also offered a “true coat product” I can say that IF the company ONLY accepts electronically remitted contracts by daily uploads the consumer is better protected. We would still see same day claims but they were usually for nails in tires.
That’s why many Third Party Warranty Companies don’t leave active Policies or Warranties with the Dealer, they only leave the “Applications” and they are clearly marked as an Application and instructed to call and verify coverage. Typically those went to non-franchised Dealers where the risk on no-cert claims is higher.
The dealer warranty thing is interesting. I work for a credit union, and we sell ancillary products like warranties on our automobile loans. However, our commission for the sale isn't held back. If the warranty costs $1500, for example, we have to send the insurance company that provides the warranty $1500. After compiling all the monthly warranties sold, they remit back to us our commission the following month. I think part of it is because our commission is a sliding scale based on number of warranties sold. But, in any case, we don't have the capacity to just hold onto a warranty fee. The warranty is completed through the insurer's website. To provide a warranty package to a borrower, we have to complete the online application for it, so the company knows the warranty has been issued from the minute the borrower leaves the office. Then, we get billed for it at the end of the month. No idea why warranty companies don't do the same thing with car dealers.
You rock, thanks for explaining things so easily to us.
I work for a third party warranty company, and can confirm that this happens a lot. One particular dealer sold a bunch of warranties, did not remit them, and then filed for bankruptcy. We still have to honor those contracts.
I had a dealer pull some shady stuff on me years ago. I couldn't ever get proof of the purchase of an extended warranty. I had been warned by a relative that the warranty he had purchased from the same dealer had never been filed. After two months the dealer came back to me that they needed a document on my trade in. I held that document hostage until I got the warranty proof from the provider.
There is so much scumbaggery in the auto sales arena!
You not lying as soon as you find one scam there's a whole bunch of others ones its freaking endless !!!
I know of a certain Car Dealer who handed over the dealership to the Son. Floorplan was through the Manufacturer. The son "forgot" to send in $ for sold cars to the Manufacturer Floorplan for many months. He shows up to the Dealership one morning, and Manufacturer Reps along with the Police are there. He is escorted to clean out his personal stuff, then hauled off to jail. The Dealership was under Manufacturer control for some time, now it appears to be a successful dealership.
What a coincidence. I put my coke dealer on speed dial and I call that instagram, too!
Incredible how much better they are at the metric system than the rest of us.
Gram? That used to last me like an hour before I got clean. I always asked for a game of pool if you catch my drift. Lol
I love your videos stave
@@joshua_J 0 to 0
Great video! I deal with aftermarket warranty's working at an independent shop. Almost every company is the same. They will cover a partial of the repair and make the customer cover the cost. Or ship us a part they supply which can take up to 2 weeks when the part is available to us from across the street.
When I was a kid, there was a dealer in my small town who had a High Performance 289 Mustang, 1965. We talked it over with the dealer and agreed on a price. Probably way too much but I was a kid in love with the car. The next day, I went to sign the papers and the doors were chained and padlocked by the IRS or something. I later learned he had at least 2 loans from banks on that car. I was pissed. Although, the way I drove, it probably saved my life or at the very least, kept me out of jail.
One of the reasons I like Tesla’s model . Goodbye stealership.
I hear you’re going to be on vinwiki tomorrow....that’s awesome!
Had this 3rd party warranty scam pulled on me…lol. Found out when we moved out of state and called the warranty company to clarify the policy details when we had an issue
Lmao. We can't find your trade-in keys sir. Stay in the waiting area for the next four years please.
Almost all retail businesses that sell physical items to the public have some sort of Floorplan financing, otherwise they'd never be able to have inventory onhand to sell customers.
I got scammed on a third party warranty once. I found out when the warranty company sent me a letter that said they'd gotten the paperwork but no money, and therefore were cancelling. Fortunately, I was able to recover the money from the dealer's surety bond.
I never got rich but still earned a pretty good paycheck honestly without being a sleaze bag, besides, how many Yachts do you need to Ski behind. Why is it that car sales tends to attract scumbags, I feel sorry for those honest dealers out there that gets lumped into this category (sometimes Lawyers are also put into this group, although I like the Lawyer I've used in the past and suspect most are like mine).
Never bought an extended warranty, but sounds like you should call them to verify immediately .
So in other words call the warranty people to make sure they got there check!
Yes - very good idea - make sure you get the correct one
Warranty puns are escaping me today - maybe I forgot to send in the paperwork - it happens.
Amazing someone got charged for this. Even here in Australia this has been going on since the 1980's.
Hundo, unfolded, behind the FM 106 sticker and the passenger side of the Turbine car, not in the box, on the top right side of the main cabinet. 718.
2nd ✔🥈🍹😎
OK. You have good eyes and early access. I saw the rolled up bill. Been scanning to see if anyone saw it. Best hiding spot.
I used to work for a guy that did this same exact insurance scam. I was a mechanic and my wife worked a short time in the office that's how I found out. He's dead now killed himself when things started getting really tight around his neck.
Where I worked years ago, it was called Give Them A Raise. And they would change the application. Get approved and turned and sold the paper
Is that 4 years in prison bumper to bumper?
Just 4 years of his rear bumper getting banged up...........
@Steve,... (Warranty story) 😂 LOL are you sure your not a car salesman..... you sound so knowledgeable... so convincing.... hahahahaha
Don't forget the Rust Proofing....an absolute necessity...
I delivered the Detroit news. Free Press at the time was delivered in the morning. Detroit news was delivered in the afternoon (after school). There was no way I was going to get up early (before school) to deliver the paper.
Those people really DID want to talk to you about an extended warranty.
Really enjoy your show. Takes dedication to put out the quantity & quality that you do; on top of trying to make a buck as a lawyer. Good stuff!
Excellent presentation of the WARRANTY SCAM.. from car dealers...I once was in the car Business.. l love the car business... I hate..an will not do business with any Car dealer that operates in this faction !...
The Toyota dealership I worked at in Florida had a unique way to get expiring incentives. The GM had a business partner in another business buy the vehicles at super discount net net net prices and then keep them in storage. 90 days later the dealership would buy them back as pre-owned inventory and sell them as early lease termination vehicles.
It was about 30 years ago, the used car manager for a local Chevrolet dealership spent a couple years in prison. One of the big warranty companies offered a "Lot Warranty". This is the policy that covers the drive train of for 30 days after the sale, on every used car in inventory.
I've known 3 Finance managers that did that sort of thing often. One did a year and a half and the other two just paid restitution and actually went to work at another lot. The finance guy, that's your criminal at the car lot.
Don't buy the extended warranty . The phone calls you get about your warranty about to run out are also something to avoid. Car Shield is another big rip off . Before they will pay a claim you must first prove your car has had all of its services performed as the manufacturer recommends. So they pay out very little as most owners don't have all the services done on schedule.
@Dave Davis - And their pitchman, Ice T (net worth about $80 million) claims he insures his cars with Car Shield cuz maybe he can't afford car repairs. That alone should set off the BS alarms.
@@wickedcabinboy Actually, whenever a celebrity, pro athlete, TV or radio announcer pitches a product or service with the "I'm a customer" angle, that should always be a red flag.
Why is it I always feel I need a shower after leaving a car dealership? Now I know.
3rd party warranty on an RV, for people who do not watch Mr. Lehto.
LMAO, I'm driving and watching(listening) to your video. I yell out "like in Fargo" lol just like 2 seconds before you mention it LMAO.
So the good hair is out from its annual software updates. 😉
Aftermarket warranty companies have a grace period usually attached. Also in Florida it’s only 2% markup on warranties
I bought an extended warranty from a Cleveland area Chev/GMC/Buick dealer for my 2003 Chev Trailblazer. Had a transmission issue two months after the extended warranty expired while vacationing in Rhode Island. The dealer said he’d try to get the repair authorized because of the very low mileage on my car. He returned to inform me that NO extended warranty was on file with GM EVER. Found out upon my return that the now defunct dealer had pocketed the $1800 and never submitted the paperwork to GM. According to a former employee, the dealer would submit the paperwork only if a claim arose during the covered period, otherwise he pocketed the money. I had no recourse because the warranty technically expired before my claim, but I learned a valuable lesson.
i fell for the extended new car warranty. the dealership where i bought the car originally had been sold. when i tried to get a cruise control on/off switch replaced ($175 for parts!), the dealer insisted they had to do "diagno$tic$" which were not covered. no other shop would take it in unless they kept (impounded) the car until they received payment. so, i turned the cruise control on and jammed a toothpick into the switch. worked fine for 40,000 miles. i just chalked it up to $800 tuition for consumer awareness training.
I'll never buy a new car again after this experience, it's just to risky for amateur buyers, like 95% of all customers.
I bought a car while on unemployment. The dealer was like have you ever done any job consulting? When I said yes they said ok we can make this work. I didnt question it because I needed a car for an upcoming interview. (I did land the job)
I found out later on a credit check that I operate a consulting company. I hope that doesn't come back to bite me.
Congratulations
SMH- Cat lady, who wanted to co-sign for a grandson's truck, was listed as a professional breeder so that the paperwork would be approved.
Wow, a car and your own business! Only in America....
Can’t wait to watch your video on the vinwiki channel tomorrow, I’m excited for what stories you’ll have to tell on Ed’s channel.
I bought a 3rd party powertrain warranty for an used 1995 Chevy Caprice, because after a test drive I knew that the transmission was not in good shape and this car had previously been used for towing. Sure enough after about 6 months the transmission was now acting very strangely, it would stay in first gear until you let off the throttle and then it shifted to 2nd gear. So I called up the Warranty people and they directed me to a local transmission shop and for about half the cost of a normal rebuilt transmission I had it repaired under that warranty.
1:14 My hometown is in NorthWEST PA. Just a lil correction. Love your content Steve!
A dealer once did me a favor by rounding up my income. I'm thankful they did. I didn't realize it was such a big issue.
We had a similar thing happen in my hometown, except the dealer owner was also convinced of check kiting. When the dust settled millions were missing.
Another element of warranty issues, is with new or used vehicles, the dealership may be aware of defects and not disclose at time of sale because the factory warranty or the unsold 3rd party warranty won't pay them until the vehicle is sold. I have had some experience with purchases and conversation with dealership staff that makes certain.
I sold a lot of cars working for dealerships. Something that happened all the time was that the third party warranty companies went bankrupt all the time. You can buy a warranty from your insurance company. Never buy anything extra from auto dealers. You can buy anything for your car from aftermarket companies for less money.
Yep. I worked FI during law school. I was terrible about selling the warranty- rather kept it all on API.
About 25 years ago a Mitsubishi dealer in Auburn, MA ran the business into the ground. Among other things when they got payment from the financing bank they failed to pay off the loan of the trade-in. They screwed up a lot of people's credit. A real mess. The father and son that owned it went to prison.
Steve: If you, as a licensed lawyer, committed such massive fraud, upon conviction your law license would be suspended and you'd later be disbarred. And the State Bar's Client Protection Fund Is there to protect your defrauded client. Are there similar licensing sanctions against car dealerships and state run client/owner protection funds or surity bond protection claim mechnisms?
Many states require dealers to be bonded. But the bonds are small and the bonding companies often defend the claims and refuse to pay without MORE litigation.
In my younger days I worked in motorcycle dealerships, more than one dealer was caught falsifying "floor plan" inventory by selling new units but kept the crate the unit came in intact to give the impression the unit was still in the crate, seldom did auditors look in crates they merely checked rolling units on display, in one instance a bank officer was in on the scam.
My Toyota dealer is gonna be sued by me for a slip and fall that destroyed a laptop if they give me any grief. Back in 2005, a Chicago area MAJOR VW dealer chain, falsified my income on a VW credit app. I didn't find out until after the purchase and realized they sold me a CPO "Lemon". Always get a copy of your credit app from the dealer - they may be falsifying it without you knowing.
My dealer does that. Fixes the cars he sells.
But no warranty, he just does it. At cost of parts. Love that guy.
When I purchased my last vehicle, the bank refused to finance any extended wty, so the dealer had to redo all the paperwork and “sell” the car newly a month after I took possession, this time without the extended wty.
That warranty scam seems easy to fix by the warranty company. They just require the dealer AND the customer to submit copies of their forms. They then send out an approved warranty policy for the customer to bring to any repair shop. Likely the dealers would stop using that warranty company then.
So it would probably require the states to mate that type of process mandatory. Which of course then the auto dealers lobbyists would try to prevent from happening by paying/bribing the politicians.
As an independent shop I don't deal with aftermarket warranties. They always want steep labor discounts, they argue over parts prices, they want cheap junk installed almost never OE parts, and the car usually sits around for days waiting on them to decide what to do.
ONE down, THOUSANDS to go!
That was a great line in the movie you could see all the life come out of William H Macy’s face got called the damn fucking liar
Similar to the pay for a warranty but dealer doesn’t send it in, I was employed and paying for health insurance for almost a year when we needed hospital care! The insurance co ended up refusing to pay because my employer had “forgotten” to send in the money deducted from my check for a year! Had to sue , then settle for 1/2, because they threatened to drag the case out and the hospital and doctors had started collections and liens!
You didn't touch on this but I made the mistake of trying to deal with the 3rd party warranty company from the other side once. I ran a small 2 bay shop back in the 80/90's and had a new customer come in with his newly bought used car covered under one of these. After a year I got a check for half of what they agreed to pay and gave up after that. Never dealt with one again, told the customers that they covered his car, not my shop.
Erie, Pennsylvania? That's weird!
😂😉
car dealers everywhere: It's not fraud, it's standard practice!
Everybody pays through interest. I’m sure some banks are in on it.
No it’s not. Just a few bad apples.
Sadly bother the bank loan fraud and rebate fraud is very common. I know a friend where they mess with the rebate to get the loan approved and to pay off the old loan on the car they traded in. It was a big Ford dealer in the area. They all do fraud to get a sale, just how it is in the industry. It what happens when you leave it in the dealers hands, they find loopholes.
It’s still fraud, whether or not it’s standard practice
Hell yeah! Steve is gonna be on VinWiki tomorrow folks! Yaaaay.
The dealer ship I bought my explorer from offered me a warranty with a $100 deductible. They said if I bring the car to then for repair they waive that deductible. I wonder if this is why….
First time to the channel. The very first thing I notice, Is the 69 Charger Daytona modal behind him. It's my dream car.
Lehto is the Man. Love your channel.
I was writing a check to Steve for warranty half way thru the video
in NJ, we have had dealers who play games with submitting titles on vehicles. The problem when they make deals with FIs to do financing is the games dealers play that violate things such as fair lending and reg z can result in the FI getting hit with regulatory actions.
I found out after the fact, but a person who bought my house in 2006 when I was relocating, did what was called a "Liars Loan". They said they were making more money than they really did. I think it was called a stated loan at the time.
Congrats on 161 K