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Worst Extended Auto Warranty Companies

When looking at vehicle warranty providers in the U.S. we found that U.S. Fidelis and Direct Buy Auto Warranty are the worst extended auto warranty companies.

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04/22/2024 12:00 AM

The Gist:

  • Before committing to an extended car warranty provider, make sure to do your research and gather quotes from multiple companies.
  • You can avoid the worst extended auto warranty companies by looking for transparency on its website in the form of sample contracts and by looking at customer reviews on pages like Trustpilot and the Better Business Bureau (BBB).
  • Never be pressured into purchasing an extended warranty plan.

A significant part of owning a car is paying for repairs to keep it on the road, which creates the perfect in for companies to call you about coverage. Although this by itself isn’t necessarily a warning sign of a sketchy provider, there are signs that can tip you off to the worst extended auto warranty companies.

In this article, we’ll cover what to look out for when choosing a warranty provider and provide examples of the worst extended auto warranty companies. Our team of experts has researched and reviewed the best extended car warranty companies in the industry based on their cost, coverage, reputation, and customer experience to help you know how to identify reputable providers.

Reputation: 4.5/5.0
Coverage: 5.0/5.0
Price: 4.5/5.0
Customer Experience: 4.5/5.0
idée Endurance is our first choice for extended warranties
  • Best Plan Offerings
  • Mileage Covered: 200,000 miles on the odometer
  • Free Cancellation: Full refund within 30 days
  • Plan Options: 6 different plans to choose from
  • Longest Plan Term: Up to 8 years
  • Discounts: $300 same-day signup discount, $250 shopping voucher, and others
Plan coverage includes Endurance Elite perks™
Exclusionary plan One-year membership for free
Powertrain plan Tire repair and replacement
Maintenance coverage with Endurance Advantage Key fob replacement
Roadside assistance Total loss protection
Towing Collision discount
Rental car $250 rewards voucher
Trip interruption coverage Endurance Protect app

The Worst Extended Auto Warranty Companies

It’s not hard to find examples of auto warranty companies with poor business practices. From forcing customers into contracts they don’t need to failing to provide refunds to customers, scams are not exempt from the extended warranty industry.

Below are a couple examples of companies that were caught deceiving consumers:

U.S. Fidelis

What started as a company between two brothers ended in federal charges from state authorities and the Federal Bureau of Investigation. In 2012, Darain Atkinson pleaded guilty to felony charges of conspiracy to commit mail and wire fraud and for filing false tax returns. 

He received an eight-year sentence while his brother, Cory, was sentenced to 40 months on similar charges. In addition to jail time, both Atkinson brothers were ordered to pay fines of over $4 million.

According to the Federal Bureau of Investigation, the crux of the investigation alleges U.S. Fidelis employed deceptive marketing tactics by telling customers they were getting comprehensive extended warranties from the car manufacturer. The FBI also cited mailers as a main component in the scheme.

Direct Buy Auto Warranty

Direct Buy Auto Warranty paid $810,000 to the state of New Jersey in a settlement after it refused to pay customer repair bills. Part of the settlement included ending business operations in New Jersey.

Direct Buy Auto Warranty advertised that its service contracts would pay for all auto repairs, which wasn’t true. In actuality, the contracts had lots of exclusions that shifted car repair costs to the customer.

The company would later file bankruptcy following the settlement.

Worst Extended Auto Warranty Company Warning Signs

When you’re trying to gauge whether a provider is a reputable extended warranty company, there are a few warning signs to keep an eye out for. The red flags that can identify the worst extended auto warranty companies include:

Lack Of Transparency

One way to tell if a warranty provider is trustworthy is by how much information it shares online. Reputable companies like autopom! and CarShield post sample contracts of their protection plans on their websites.

This not only allows customers to see detailed overviews of the coverage plans and their exclusions, but also provides information about additional perks like towing and rental car reimbursement. If a company won’t share specifics about its vehicle protection plans (even in fine print) until after you buy a warranty, that’s a solid warning sign.

Odd Payment Methods

Some scammers may ask you to complete your payment through an odd method. The Federal Trade Commission (FTC) says scammers may insist you pay via a money transfer company or by purchasing a gift card and relaying the information back to the provider.

A reputable warranty company will make it easy for customers to buy vehicle warranties, so be wary if the purchasingprocess is overly complicated.

Poor Reputation

A quick Google search might tell you a lot about a company. Look for customer reviews and industry ratings from organizations like the BBB, Trustpilot, and federal organizations that protect consumers by informing you about the company’s reputation.

Pushy Salespeople

You’ve probably received your fair share of unsolicited calls asking about your car’s extended warranty. If you’re looking to buy a protection plan and a company representative tries to pressure you to purchase a warranty, you should hang up.

What To Do If You’ve Been Scammed By A Warranty Company

Sometimes it’s not so easy to tell if an extended warranty company is legitimate. If you are a vehicle owner who fell prey to an extended auto warranty scam, you have a few options:

Contact The Company

The first place to start is seeing what the company can do for you. If you can cancel your warranty contract and get a refund, great. If the company won’t budge or claims that you’re locked into payments for some administrative reason, that’s when you should start considering other options.

File A Complaint

If you find the company’s customer service to be less than satisfactory, consider making a complaint. Customers often post their experiences with companies on consumer review sites like the BBB or Trustpilot.

If that doesn’t get the company’s attention, you can file a complaint with the FTC, which protects consumers across all industries. The Federal Communications Commission (FCC) also fields reports of scam calls if consumers feel like they’ve been scammed via phone.

Make Some Calls

In the event of being scammed, you want to make sure your personal information is protected. Here’s a list of information scammers often ask for:

  • Credit card numbers
  • Computer passwords
  • Social Security number

If you did give out some of this information, call your bank to cancel your cards and protect your bank account. The Social Security Administration (SSA) can also assist you if you’re worried about your Social Security number being used for fraud.

Take Legal Action If Needed

When all else fails, you have the option to pursue damages in court. Keep in mind that hiring a lawyer and levying a suit in civil claims court may exceed the amount of money the scammer obtained.

How To Avoid The Worst Car Warranty Companies

If you’re considering extended warranty coverage but have worries about a potential provider making negative headlines, here are a few tips to find reputable companies:

Look At Industry Reviews

One of the best ways to ensure you’re working with a reputable aftermarket car warranty provider is to read reviews. The BBB and Trustpilot can have hundreds to thousands of customer reviews depending on the company, and the BBB even issues a letter grade for how well companies process complaints.

It’s also common for a provider to broker warranty services from other companies, which means it’s not the true administrator of your contract. Do some homework to see what insurance company backs the service contract. Next, check the insurer’s AM Best financial strength rating, which can be an indicator of how likely the extended warranty provider is to be able to pay a claim.

Review The Contract

We mentioned above that reputable providers usually post contracts online. Besides telling you what the warranty covers, a sample contract will include:

  • Coverage exclusions
  • Transfer policies 
  • Eligible repair facilities 
  • Information on deductibles
  • Cancellation policies

Reviewing the contract should also tell you what duties the company is responsible for versus the burdens of the car owner.

Know The Claims Process

Knowing when you can file a warranty service claim and how it’s approved is important information for getting the most out of your vehicle protection plan. In the event of a covered repair, part of the load falls on the customer to make sure the warranty provider has all the information it needs to approve the claim.

It also helps to know your deductible so you’re aware of the out-of-pocket costs when a warranty claim is approved.

Review The Payment Plan

Price out your warranty before you commit to making a purchase. It’s not uncommon for an extended auto warranty company to ask for the entire warranty cost up front, but many offer monthly payment plans. Keep an eye out for potential interest charges, as well.

Worst Car Warranty Companies: Our Take

While U.S. Fidelis and Direct Buy Auto Warranty are some of the worst providers of vehicle protection plans, there are ways to avoid being scammed. There are good car warranty providers out there that genuinely want to match you with the coverage plan that suits you and your needs best. If you are in the market, we’ve provided some of our recommendations for vehicle service contracts below.

Top Recommendations For Extended Auto Warranties

Now that we’ve covered how to identify the worst extended auto warranty companies, we can talk about reputable companies that can truly provide peace of mind. Our warranty experts identified Endurance and Carchex as two smart choices for customers considering extended warranties. Both regularly top industry reviews and have positive reputations for customer satisfaction.

Endurance: Best Plan Offerings

Our pick for Best Plan Offerings is Endurance. The company champions customer service and coverage by using a direct-to-consumer model, which means it administers its own service contracts.

Endurance offers six plans that range from basic powertrain coverage to protection that rivals a new car’s factory warranty. Included with the price of a service contract is one year of Endurance Elite Benefits, which gives customers access to perks like tire repair or replacement.

Endurance also has a good reputation with customers. It has a 3.7 out of 5.0-star rating from over 8,500 customer reviews on Trustpilot.To learn more, check out our Endurance warranty review.

Carchex: High Mileage Limits

Car owners with high-mileage vehicles may want to consider Carchex. The company provides service for vehicles up to 250,000 miles, which is one of the highest mileage limits in the extended car warranty industry.

Carchex offers five auto warranty plans and includes a No-Haggle, Low-Price, Everyday Guarantee™ so customers know they’re getting a good price. It also has a solid reputation with customers. Carchex has an A+ rating with accreditation from the BBB and a 2.2 out of 5.0-star consumer rating from over 1,500 customers on Trustpilot.

Read our Carchex review to see if this independent provider is right for you.

Worst Extended Auto Warranty Companies: FAQ

Below are some frequently asked questions about the worst extended car warranty companies:

Should you buy an extended auto warranty?

Whether you should purchase an extended warranty plan ultimately depends on your needs for your vehicle. Extra coverage can help you budget for repairs and sudden expenses, but you could also be signing up for coverage you don’t end up using. Before you buy, we recommend doing your research on a warranty provider to make sure it’s the right choice.

Who has the best extended car warranty?

We named Endurance our choice for Best Coverage among independent warranty providers. The company’s comprehensive warranty options and perks for customers make it a great choice. Olive, CarShield, and Carchex also earned high ratings in our review of the best extended auto warranty companies. 

What is a fair price for an extended car warranty?

Our research found that the average annual price of an extended warranty is around $1,005 for an exclusionary plan. That said, the price of an extended warranty depends on factors like the vehicle, your desired coverage level, and the deductible amount.

Are CarShield warranties a rip-off?

Our experts found that CarShield offers some of the most affordable extended warranty plans. The company also offers month-to-month plans, which give customers greater flexibility in their coverage options. 

How We Rate Warranty Providers

Our review process aims to deliver consistent and unbiased assessments of extended auto warranty providers. While there are multiple qualities that make a warranty company successful, our review team focuses on those we believe are the most important for consumers:

  • Reputation: It’s important that an extended car warranty company is able to meet its claims obligations. Companies with a strong rating from the Better Business Bureau (BBB) and a long history of reliable service score well in this category. We also evaluate the availability and transparency of each company’s contracts, as well as whether each provider offers a money-back guarantee.
  • Coverage: Our team of experts looks at the number of extended warranty plans available, as well as term limits, exclusions, and added benefits like roadside assistance. Ratings also take into account the availability of maintenance coverage.
  • Cost: Cost can be difficult to compare between providers because so many factors impact vehicle service contract pricing. To determine our cost score, we perform a secret shopper analysis for a variety of vehicles and plans and consider available deductibles.
  • Customer Experience: We listen to real customer sales calls and comb through reviews on sites like the BBB to learn about customer experiences. Warranty companies with a low volume of complaints score well in this area. We also consider the availability of mobile apps and chat features.

View Pricing from our #1 Provider – Endurance