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By Herb Weisbaum ConsumerMan
msnbc.com contributor
updated 3/26/2008 3:04:46 PM ET 2008-03-26T19:04:46

The phone call didn’t make any sense to Anita Topolinski of Seattle. The recorded message said the extended warranty on her car had expired and it was unsafe to be on the road without it. She knew that wasn’t true because her new Toyota Prius is under warranty.

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“They were just trying to cheat me and steal my money,” she told me.

Mrs. Topolinski didn’t take the bait. Many others have. More than a thousand unhappy customers have complained to the Better Business Bureau. They say they were tricked into buying an extended warranty or unable to get a refund when they tried to cancel.

Eloise Bangert, who lives in Kirkwood, Mo., says she got pressured into buying. “I kept saying I can’t afford it, and the salesman kept lowering the down payment,” she recalls. “He just kept pressing and saying, ‘Who’s going to pay for it if something happens to your car?’ ”

She reluctantly agreed and gave the salesman her credit card number for the $250 down payment. Later she did the math. With the down payment and 15 monthly payments of $145.93, it was going to cost her more than $2,400 for protection she didn’t need; she already has an extended warranty on her car.

Bangert tried to cancel numerous times, but still hasn’t gotten her money back. “It’s awful to push people into things that they don’t really want and don’t need,” she says.

‘Operation Taken for a Ride’
Last month, I warned you about the phone calls, postcards, and letters being used to sell overpriced and often unnecessary extended warranties. Since then, readers of the ConsumerMan column have e-mailed asking me why someone in law enforcement didn’t go after these crooks. Well, someone has.

Missouri Attorney General Jay Nixon sued seven companies operating in his state, accusing them of using deceptive sales tactics. For some reason — no one seems to know why — close to 100 telemarketers pitching extended car warranties are based in Missouri.

In a news release about the lawsuit, Nixon said, "Many consumers — confused, but not wanting their car warranties to expire — went ahead and purchased the new, but in most cases, unneeded service contract the company was hawking.” The lawsuits ask the court to stop the allegedly misleading sales practices and order the companies to make refunds to unhappy customers.

Here’s a trick some of the dishonest salespeople use. They will make it sound as if they are connected to your dealership or auto manufacturer, when they are not. Lois Hartness, of Florissant, Mo., says the telephone salesperson told her straight out that his office was located at the car dealership. “He had me thoroughly convinced that he was legitimate,” Hartness says. “But he was lying about everything.”

When she realized she had been taken — her Honda still has three years left on the bumper-to-bumper warranty — Hartness called back to cancel. “They just screamed in the phone,” she says. “They wouldn’t listen to me at all.”

This is not unusual. People who try to get a refund are often told to “go jump in a lake,” says Scott Holste, a spokesman with the Missouri attorney general’s office.

In many cases, the postcards and letters car owners get have the correct make, model, and year of their vehicle. My wife and I have received several of these postcards and each one had it right. This certainly adds to the air of legitimacy. So how are these smarmy telemarketers getting this information?

According Holste, they may get it from credit bureaus, auto dealers, or even quick lube places. “There are also companies out there that track this information and then sell it to these businesses.”

The salespeople promise you the service contract covers virtually anything that can break on the car. Consumers who buy the coverage complain that it’s not nearly that extensive and often difficult to use. Because you can’t read the contract before you buy it over the phone, you don’t know what’s actually covered and what restrictions might be in the fine print.

“One of the businesses we sued specified that in order to get coverage you actually had to use a specific brand of oil when you changed your oil,” Holste says. “Otherwise this contract that you were paying a couple of hundred dollars a month for was no good.”

Confessions of a former salesman
David was the general manager at one of the companies sued by Missouri’s attorney general. He told me he wrote the sales scripts and trained all the new hires. We spoke at great length about the tactics used to sell these extended warranties.  David (he asked that I not use his real name) said the public is “getting hammered” by salespeople who “misrepresent things” and “say whatever they have to say” to make a sale.

“Those sales floors are like boiler rooms,” David explained. “The managers are jumping down their throats to ‘Get the sale!’ If you’re not closing at 10 percent, you go to training. Go to training three times and you’re still not closing at 10 percent — you’re fired.”

I told David that when I called the company the salesperson put me on hold to talk to his manager about the price. “That’s a crock,” he said.  It’s a routine part of the sales pitch called “a take-away” and it’s designed to create a sense of urgency so you’ll buy on the spot. By the way, the “manager” is really just another salesperson playing the role.

What to do if you’ve been taken
If you’ve feel you’ve been misled, tricked, or high-pressured into buying one of these service contracts, file complaints. The Missouri attorney general’s office wants to hear from unhappy customers who bought from a company located in that state. If the company is in another state, contact the attorney general or consumer protection office in that state.

I encourage everyone to file a complaint with the Federal Trade Commission. You should do this even if you didn’t buy, but received the sales call on a cell phone, or home phone that is on the national Do Not Call Registry.

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