Home warranties protect homeowners from costly breakdowns and repairs, but some companies try to scam people through identity theft and inadequate coverage. But knowing these home warranty red flags can help protect your home, appliances, finances, and confidential information.
Learn how to protect yourself from falling prey to these common home warranty scams with tips from experts.
What is home warranty fraud?
Home warranty fraud aims to steal money and personal information from homeowners and homebuyers. The primary form comes from fake emails, emails, phone calls, or text notifications from fake home warranty companies aimed at threatening to pay additional fees or coverage, but some scams trick new homeowners into purchasing fraudulent or unhelpful warranty plans.
7 Signs of Home Warranty Scam
Most home warranty scammers use the same tactics, so knowing these seven signs can protect you from a variety of scams.
#1 Claim the warranty has expired
“One of the most common tactics is the use of robocalls or messages that claim a homeowner’s ‘home warranty is expiring,’ even if the homeowner never had a warranty to begin with,” said Santiago Vasquez, director of customer experience at home warranty provider Oncourse Home Solutions. This creates a sense of urgency and encourages homeowners to act quickly. These scams may also include phrases such as “immediate action required” and “coverage expires.”
#2 Use offensive language
Scammers not only use urgent words, but also other offensive words in these letters, text messages, and phone calls. They may say that this is their “final notice” even though it is the first time they have received the warranty. Scammers may also claim that they will cancel your coverage if you don’t respond by a certain amount of time.
#3 Including incorrect personal information in notifications
If you receive a notification regarding a home warranty plan, be aware of the personal and company information it contains. Scams are often vague, leaving out personal information or using false information. When you receive a notice from your home warranty company, check the following:
- your name
- your account number
- Company name and address
- Contact information provided
For example, a scammer might use the name of a real home warranty company, but the address won’t match. Or, our personal favorite, spelling your name wrong.
#4 Request for confidential information
Some scammers will try to scam you out of money, while others will try to steal your personal information. Scammers may request information such as your social security number or bank account information. For scams where coverage has expired or insufficient coverage, the scammer may include a return envelope for the check.
#5 Use of unlicensed or unqualified technicians
When you sign up for a warranty, a company that offers fraud coverage may seem legitimate, but in that case, its technicians may not meet common standards. The technician provided may not have the proper licenses or certifications to complete the repair, so you won’t receive optimal coverage.
#6 Offering unclear contracts or conditions
If you apply for a warranty with a scammer, the terms and conditions may be unclear. “Reputable home warranty companies are transparent about coverage terms, exclusions, partnerships, and cancellation rights, which can help homeowners distinguish legitimate warranty plans from misleading offers,” Vasquez says.
#7 Your company has low or few reviews
Before you get a home warranty, you should especially read the company’s reviews. A company with few or fewer reviews may be a scam. Look for trends in available reviews, such as complaints about technicians, response to complaints, and timeliness. You can find reviews on trusted sites like the Better Business Bureau (BBB).
Home warranty companies reviewed by USA TODAY
USA Today also has a selection of trusted home warranty companies. We have summarized the advantages, disadvantages, and costs of each company, so you can find the coverage that best suits your needs.
Tips to avoid home warranty fraud
If you receive a notice from your home warranty company, you can avoid potential fraud by following these tips.
- Please carefully check your personal information for any discrepancies.
- Beware of offensive or urgent language
- Pay attention to what kind of actions or information you are requesting
- Request a sample contract from the home warranty company
- Ask about standard billing procedures and schedules
- Thoroughly research home warranty companies through trusted resources like the BBB.
If you have any questions about a letter, phone call, or text message you receive regarding your home warranty, be sure to contact the company directly through the appropriate channels. They can see if they contacted you, so you can be sure if the notification is legitimate or a scam.
What to do if you fall victim to home warranty fraud
If you think you’ve been victimized by home warranty fraud, the first thing you should do is cancel your coverage and request a refund. If possible, go through this process in writing rather than over the phone. Report the company to the BBB, the Federal Trade Commission (FTC), and your state’s attorney general’s office. These organizations publish the latest scam information to protect other homeowners.
FAQ
Why do I receive a home warranty?
Some scammers may send letters trying to solicit personal or financial information from you. Please review your company’s communications policy and contact us via an approved method to see if notices are sent by email.
What are some signs that the call is actually a scammer?
If you receive a call from a potential scammer, they may provide vague information, use aggressive language, and make urgent demands. Do not provide any personal or financial information to any sources that are not listed in company-approved communication channels or contracts.
Who are the most reputable home warranty companies?
There are many reliable home warranty companies. You can review articles from trusted sources like BBB and USA TODAY to find the one that best suits your needs.
