Home Warranty Letter Scams
If you’ve received a letter that says your home warranty is about to expire, you may be the target of an attempted scam. Scammers routinely prey on new homeowners and vulnerable populations by means of phishing messages, deceptive websites, or other methods of correspondence. These messages usually include urgent language and vague promises that fool victims into agreeing to fraudulent contracts. Read our guide below to learn how these scams work, how to identify red flags, and how to avoid falling prey to these schemes.
What Is a Home Warranty?
Home warranties are service contracts that cover repairs and replacements of appliances and home systems that break down due to normal wear and tear. They typically cover HVAC, plumbing, and electrical systems, and may also cover appliances such as dishwashers, refrigerators, and ovens. Paying a monthly fee can help you to avoid unexpected repair costs on covered items.
Homeowners should read their home warranty contracts carefully. No home warranty covers all types of damage to all systems and appliances. These contracts contain exclusions, service fees, and coverage caps. Make sure that the benefits of signing up for a predictable premium outweigh the risks of a significant repair bill.
Legitimate home warranties offer valuable protection, but not all contract offers are genuine. Scammers frequently exploit homeowners’ desires for financial security by presenting fraudulent warranty offers that promise comprehensive coverage but deliver little to no value. Homeowners must research and understand the specifics of different warranty options that are available to them.
The Anatomy of Home Warranty Scams
Scam letters frequently look like the products of legitimate businesses, so they can be difficult to identify. Read below to learn how to identify commonplace scam tactics so that you can better protect your money.
Aggressive Marketing Tactics
Reputable companies don’t use high-pressure sales tactics to urge you to buy a home warranty. Never respond to unsolicited calls, emails, or time-sensitive letters that demand credit card information or your Social Security number.
Unclear Service Contract Terms
Legitimate home warranty companies provide contracts that outline coverage details, exclusions, service fees, and claim procedures. Always ask for a sample contract, and read the terms of your contract before you pay anything. If a contract is vague or includes needlessly complex language, ignore it.
Hidden Fees
Beware of home warranties that promise low prices now but hidden fees later. Service call fees, deductibles, and coverage limitations are all parts of legitimate home warranties, but companies should clearly outline these in advance.
Bad Reviews or No Reviews
Research any home warranty company you’re considering online before you buy a service contract. Read reviews from independent review sites, and see what other homeowners say about certain companies’ services and claim resolution processes. Check the company’s Better Business Bureau page for ratings and accreditation statuses. If you can’t find any reviews or information about the provider entity, do not proceed.
No Guarantees
Legitimate warranties typically offer service guarantees, which means a technician will cover a problem that returns within 30 days at no additional cost. Don’t proceed if a contract doesn’t include guarantees, or if you notice limited warranty coverage.
Poor Claim Response
A reputable home warranty company is transparent about the claims process and responds to claims in a timely manner. If customer reviews say that filing claims or communicating with service representatives is especially difficult, don’t proceed.
Unprofessional Technicians
Legitimate home warranty companies send qualified, licensed technicians to make repairs at your home. Ask companies how experienced the technicians in their networks are. Technicians should have undergone background checks and be licensed and insured.
Unsolicited Home Warranty Letters
Scammers use unsolicited home warranty letters to target potential victims with letters that appear right after you’ve moved into a new home. They are attempts to trick you into signing a home warranty contract with unfavorable or even fraudulent terms. Follow the tips below to properly spot a scam:
Scam Letter Appearance
Scam letters often look like messages from legitimate companies and feature company letterhead, logos, and branding. Scammers often use bold red font to generate a feeling of urgency, and use phrases such as “immediate action required.” There may be a call to action that implies inaction could lead to dire consequences.
The paper on which scammers print messages is usually cheap, so the letter might feel thin or flimsy. The letter may look like a check, and feature tear-off sides.
Scam Letter Language
Scam letters use scare tactics in their language, such as “final notice” or “coverage will lapse,” to pressure you into signing a deal. Letters also use vague language to create confusion.
Scammers might claim to be a part of your mortgage company’s home warranty division to appear more credible. Do not call the number or contact any email address that are included in the letter. Ask your homeowner’s mortgage company directly if it sent you a letter.
Some scam letters include small print at the bottom that reads: “Not all consumers have previous coverage. We are not affiliated with your current mortgage.” This is an acknowledgement that neither you nor your mortgage lender has an existing relationship with the scam company. Not all scam letters will have this language, but it is a sign that a shady company is trying to fool you into signing a contract.
Ways To Protect Yourself From Home Warranty Scams
Scams are distressingly common, but you can protect yourself with the strategies below.
- Ask for quotes from at least three reputable companies: Don’t accept the first offer you receive for a home warranty. Compare coverage details and pricing before you make a choice.
- Consult trusted sources: Get home warranty advice from your real estate agent, home inspector, or mortgage company.
- Do your research: If you want a home warranty, research companies on sites such as the BBB or Trustpilot. Look for companies that have a history of positive reviews.
- Don’t respond to unsolicited offers: Legitimate home warranty companies won’t pressure you through unwanted letters, emails, or phone calls.
- Read your contract thoroughly: Make sure you understand the details of what you’re signing before you sign it.
- Verify company information: If a company claims to be affiliated with an organization such as the BBB or your mortgage company, verify the claim.
History of Home Warranty Scams
Home warranty scams have been around for nearly as long as legitimate home warranties. Scammers started by issuing solicitations through telemarketing calls, but have begun using phishing letters and deceptive websites. Scams may come by means of USPS letters, emails, or texts.
Modern scammers use data breaches to access homeowners’ personal information and generally target older adults and new homeowners. The ever-growing access to personal information online has made it easier for scammers to obtain contact details and target specific demographics more effectively. Scammers have learned how to tailor their communication to exploit the fears, concerns, and needs of different groups.
Consumer protection organizations such as the BBB, government agencies, and local news outlets regularly warn homeowners about potential scams. You can protect yourself by staying informed about current scams and being aware of warning signs.
How To Report Home Warranty Scams
If you suspect that you’ve been targeted by a home warranty scam, keep any letters you’ve received from a suspected scammer. Note the date you received it and any other relevant details. Then report it to the parties below.
- The BBB, which is a consumer protection organization allows you to file complaints that could warn others about potential scams. Call your local BBB office or file a complaint online.
- The FBI’s Internet Crime Complaint Center (IC3) if you received a scam text or email. The IC3 takes complaints on all computer-assisted fraud.
- The Federal Trade Commission (FTC), which is the primary government agency responsible for protecting consumers from scams. Report the scam online at reportfraud.ftc.gov.
- Your friends and family, members of which may have received similar letters. Sharing your experience can raise awareness and safeguard others in your community.
- Your state’s attorney general’s office. Find the office’s contact information online.
Perpetrators of scams often rely on the notion that their victims will be too ashamed to file reports. It can be embarrassing to admit you’ve given money to a scammer, but the fault is the scammer’s, not yours. Fraud is a crime, and you can prevent someone else from falling victim to a scam by reporting it.
FAQ About Home Warranty Letter Scams
How can I verify a home warranty company?
You can verify a home warranty service by researching the provider on the BBB’s website, reading customer reviews, and checking up on any claims the company makes.
What is the difference between home insurance and a home warranty?
Home insurance protects your house and your belongings from catastrophic events such as disasters and theft. A home warranty covers the repair or replacement cost of major appliances and systems that falter due to normal wear and tear.
What should I do if I receive an unsolicited home warranty letter?
If you receive an unsolicited home warranty letter, you should report it to the FTC and then disregard it. If you want a home warranty, research reputable companies online.
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