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What to Know About Auto Service Contracts and Extended Warranty Scams
By: Colleen Tressler, FTC, Division of Consumer and Business Education
You may think buying an auto service contract can help ease the burden of costly repairs. While a service contract might sound like a good idea, it could duplicate coverage you have through your manufacturer’s warranty. And you might actually pay more for a service contract than you get back in benefits. What’s more, some companies pitching warranty extensions are scammers. Read on to learn more.
An auto service contract is a contract to pay for some repairs or services. Service contracts are sometimes called an “extended warranty,” but they’re not a warranty as defined by federal law. They’re sold by car manufacturers, dealers, and independent companies. You can buy them anytime.
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