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.
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.
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?
@@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.
@@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.
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!
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.
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.
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.
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.
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 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??
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.
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
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.
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.
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.
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 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!
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.
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.
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.
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.
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.
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 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.
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.
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.
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.
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
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.
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.
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.
@@GoLakers3900 I like the FAA, at least when they get to do their jobs. It's when they were told (by Congress) to let the big companies (Boeing) self-certify that things went sideways. Or down, like 2 crashes, stock price, layoffs. True, the pandemic was a brutal second blow, but the 737 MAX fiasco was Boeing shooting themselves in the foot, for not following government safety regulations.
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.
The other side of the coin. The company I worked for said, to move up, I needed a two year old or newer car. I went to three dealerships and each one lied threw their teeth, tried to scam me and I walked out of each one. I didn't know what to do because I only had a week left to get the car. A friend said go to Hertz . I did, they treated me like royalty and I ended up with a two year old Chevy Citation at a very reasonable price. The car looked brand new and it came with a 12 month power train warranty. At 11 months, the engine blew. They towed the car in and two days later, I got a call saying they were going to put a brand new engine in. They also gave me a car to drive while the work was being done. This was WAY more than fair. Two days later, I got another call and the manager said that higher ups decided not to install a new engine but rather rebuild the existing engine. That was still fine with me. They never tried to back out of the warranty nor screw with me. I got the car back on the day they said I would. I have tried to buy a new car 5 times in my life and each time the dealerships were unscrupulous so I walked out. Every time a friend wanted a new car, I told them to first go to Hertz.
Hertz may not have the stellar reputation they used to have. Recently they have billed customers for things the customer never used nor requested. In some cases they charged a customer for "smoking in the car" even though the customer was a non-smoker. Every company needs to live up to its promises but when they stop, never use them again. Unfortunately many companies are in dire straits due to the impact of the worldwide pandemic and the adverse affect on employees as well as parts availability.
@@OfficialGoldenboy I'm not in the business, my recommendation wouldn't have value. I'd buy a new Toyota, which I could sell in 3 years for the same price.
In a prior life I was a mechanic. I purchased a car with a bad transmission. Before I bought, it called a 3rd party warranty company and explained the whole thing - I was a mechanic, the car was not drivable and needed a transmission. They told me I could still buy the warranty. I bought the car and the warranty, filed my claim, after a bunch of run around, they sent me a used transmission. :)
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.
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.
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.
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….
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.
Andy Says, "WRITE IT UP!" I live just outside Erie and know this case well. This guy had a gold mine and threw it away over this scam. I almost feel sorry for him, but not...
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.
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.
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.
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.
How does this work at the larger dealerships? There you would have salesman that are selling the cars, perhaps a sales manager might get involved, but does the owner get involved? Is the owner instructing his sales team to do this?
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.
I’m an auto dealer. You are correct it is an insurance policy. Therefore it is regulated by the state’s insurance commission. When you sign the warranty YOU HAVE A WARRANTY. That is the chance the third party warranty company takes. If the dealership does not send in the paperwork the warranty company will catch on pretty quick and cut them off. Inflating income on a credit application, some dealers may do that, but if you do it once and you get caught, you go to prison. We sell thousands of cars a year. One car deal is not worth it.
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.
I bought a used car from a dealer and bought the 3rd party warranty through the dealer. A couple of weeks later I had a problem and called the dealer. They said "Bring it in this afternoon." then I said that I have the 3rd party warranty and they said "Hang on a sec...bring it in...let's see... September 3rd" It was May.
