Well, that's a no-brainer. Don't sign the contract.

It's good to see the method they employ, though.

If you keep your car properly maintained, you shouldn't have to spend exorbitant amounts on auto repairs. Stuff does break down eventually and some components are expensive (e.g., transmission)but keeping a properly maintained car over several years is less expensive than a new car every 2-3 years.

If a customer were to sign up without being given the opportunity to read the contract, there is likely an argument that there was no "meeting of the minds" and thus no valid contract formed. I have no sympathy for people who get screwed by not reading contracts, however that changes when the person isn't even given the opportunity to read the agreement. However, you have to be pretty stupid to sign up for a service knowing that you won't know the terms until after you sign on the dotted line. While I feel like that's incredibly irresponsible and the person arguably should be held to the agreement, contract law is fairly clear that there must be a meeting of the minds before a valid agreement is formed. It's pretty tough to argue that occurred when one party doesn't even have access to the terms at the time the agreement is made.

Not surprising. Most extended auto warranties are worthless. Sure, they like to quote things like "fixing the AC in this car cost this guy $2,250, but this guy paid nothing." First of all, spending $2k to fix an ac in a car that is worth 5-6k is a waste of money. Either trade it in, sell it, or just deal with the heat. Like consumer reports says...you are better off just saving up 2-3k for auto repairs. Unless you bought a real lemon, you probably aren't going to need it enough to justify the cost.

Reminds me of AOL back in the day -- you had to establish an account & log on before you can read the TOS that you agreed to by logging on.

I'm willing to wager that they don't actually have a drawn up contract...which is super shady.

@Jesse: Who is recommending that we buy a new car every 2-3 years?

I have a coworker who purchased an extended car warranty (I don't know from what company). He said one of the terms was that you had to change the oil every 3000 miles and have the receipts. If you couldn't prove that you did, they would deny coverage, even if it was something not related to oil, like the transmission.

With terms like that, you can see why they wouldn't want you to read the contract.

@Jesse: And wiping your butt with toilet paper is cheaper than wiping it with 100 dollar bills. I'm not sure what point you're making here...you made a huge leap from "car repair on a 7 year old Camry" to "buying your biannual new car".

@BWoodle: My parents do.

@BWoodle: The government.

Is this actually legal?

@Jesse: What? Maintenance is not guarantee against breakdown. Repairs which are costly are dependant upon the type of repair itself, not maintenance. Things wear out although maintenance may help make things last reasonably longer.

@Smashville:

My point wasn't clear. I was trying to point out that some people will neglect a car then have to put more money than necessary into it. Others in order to avoid putting any money into a car will just trade up every 2 years or when the warranty runs out.

@floraposte: Isn't this the same as when you sign up for health insurance? You typically make your decision based on a "Summary of Benefits."

I wish that this were NOT legal. It seems rather outrageous that you are legally entering into a contract without being aware of what you are agreeing to.

With most employer-sponsored health care, you have a limited enrollment window, so if you do sign up for coverage, once you get the full details on your coverage, it may be too late to cancel or switch.

Similarly, when you apply for a credit card, you don't get the details and exclusions until after you are approved for the card and receive the mouseprint booklet of terms and conditions.

@floraposte: I don't think it is illegal under contract law that you HAVE to read a contract before you sign it; think reasonably and don't hurry into signing anything before reading the contract. But only a fool would agree to the type of manipulation that USfidelis is using. A Sears salesman tried to pull this on me in November of 2007. He basically did the same thing that this letter said USfidelis did. I needed a new furnance and vent system in my attic. He wouldn't let me see the contract without fully agreeing that Sears was to do the work. He was a fat POS and I never agreed to such a sham contract. As he left my housse he griped that I should have given him gas money for the time he drove to my house.

@Esquire99: "there was no "meeting of the minds" and thus no valid contract formed." Yep,,,exactly what my Prof would have said too.

@Esquire99:

Stupid or just young and inexperienced. I'm only 22 and I just graduated school. When I relocated to another city as part of a job program, a lot of my friends were in a HURRY to sign legally binding contracts. It made my hand spend. Leases, utilities, cable, insurance, car purchases, credit cards.

Not everyone did things impulsively, but when I first went shopping for an apartment I felt an incredible amount of pressure from the owner, the apartment hunter, and my potential roommate to sign a lease at the very first place we visited! Of course, they told us that if we didn't sign NOW that low low price was going to evaporate. They also told us that the apartments were going so fast that someone else was going to take the one they wanted. And finally they filled our heads with all sorts of crock about the competition.

3/4 of us signed the lease (I was 1/4), a week after we goot here despite having temporary housing for a month. As a young person, I can wholeheartedly say that young people are dumb. One girl already regrets her decision because she could have avoided her hour commute each way to work if she'd just waited.

Unfortunately this is not the only kind of business that does this. Have you ever asked to see the text of an insurance policy (car, home, life, whatever) before you buy it? It's the same deal; you can't see it until you buy it, and then if you don't like it you can cancel it. This is to prevent comparison shopping and to get people to commit, knowing that they probably will keep the policy once they've paid. Quite the racket, no?

So which is worse, not being able to see the contract like with USFidelis, OR Being presented with a consent for treatment form that strictly prohibits any alterations by the patient but allows them for the hospitals at UT Southwestern medical center in Dallas?

I was at a Chevy dealership Saturday about to buy a Camaro. I got sales down to MSRP (they're selling everywhere at $4k over, insane) and giddily filled out my credit application. The finance guy comes over and says since my car wouldn't be there for 9-10 weeks, I would need to put down a $500 deposit. Sure, of course, my down payment was going to be more than that anyway.

With credit report in hand I ask about the APR, and he said he wouldn't be able to secure that until it arrives in 10 weeks. How do they expect me to agree to buying a car without knowing what the financing terms are? I can't tell you how hard it was to walk away from that after having sat in two Camaros. So pretty, so delicious smelling, so big, such unreasonable financing standards... :( Is that SOP for ordering vehicles?

While I can't speak to the merits of this particular company, a 30-day "free look" is pretty standard among insurance policies. I'm not saying this is a good practice, but it is quite widespread, and used even by quite reputable insurance companies.

SirWired

@Jesse: Tell that to my '99 bonneville, please. Was well maintained by the first and only previous owner, a neighbor of ours we know fairly well and still a bunch of [expensive] stuff broke within a few months of owning it, with only 49k miles on it when I got it. No amount of maintenance and love can change a POS car, sadly. Had it been my choice in buying (someone else was paying, sadly) I wouldn't have picked it. ("But it's such a good looking car, honey". "It still doesn't change the fact that it needs $2k in engine work, gramps.")

But on the more topic side, I am glad to hear from somewhere that this warranty service is in fact, crap. And i'm guessing most of these other after market companies are too. Was wondering if they'd be worth it to get my car fixed. Guess not. Personally i'd like to just replace it with something newer but, with the current work market out there, a $400 junker is probably the best I could do. $400 junker a year might be cheaper than maintaining this thing though, lol.

I called the number for US Fidelis after seeing a commercial, since I have a 1998 Rodeo with 120,000 miles and I know how much repair bills can be. I thought it sounded too good to be true, but I figured I should at least call and check it out.

When I reached an salesman, I gave my information, and after checking with his supervisor, I was told I qualified even though my car had over 100K miles on it, and it would be X amount of dollars up front and another monthly payment for 24 months. Now here is where I knew something was up. I told the salesman I wanted to look over the numbers and think it over, and he told me, well, we won't be able to give you this price again, and your car won't qualify for a warranty if you don't take it right now.

That was enough for me. Any company which deserves your business won't make a one time offer that you can't review for yourself. Sure sign of a scam.

@madanthony: oil & transmission aren't entirely unrelated. the powertrain is a system designed to deliver motion, & as we learn in physics, placing stress on any one component within a system will exhibit stress across the entire system.

i know that in regards to warranty claims, it's just a bullshit way to get out of paying a claim, but not changing your engine oil can cause harm to your transmission.

@floraposte: Is there anything done by these high-dollar car warranty cold-calling companies legal?

@Jesse: I make my own cars at home!

There are several companies that do things like make you mail for the details of a warranty or service contract . Especially on stuff like appliances & TVs . I don't wether that's to get your e-mail address or to see how interested you are . It also makes shopping harder but little or no information you are off my list as far as I am concerned .

@takes_so_little: You're still making cars? I walk everywhere.

@me and the sysop: You are awesome for walking away. It is hard. I've done it over a $200 dealer markup on a used car; the extra fee was penciled in after we'd agreed on price. Found the same car soon after, for less money and in a better color.

@Saboth: Amen. This is exactly my car philosophy. The AC broke in my '98 Ranger and I just sweated it out for 3 years...until I totaled it in a wreck. Used the insurance check to get a 2003 Mitsubishi that runs like a dream!

@Yurei:

My last car, a 2000 Grand Prix was somewhat of a money pit too when I owned it. Maybe it was something to do with those turn of the century GM cars.

@dwasifar: And don't forget the friendly credit card companies.

You know the same industry that renamed CONTRACTS to the flowerery sounding "Terms and Conditions" so psychologically people would less be likely to give a damn...

@me and the sysop: As an aside, this is why you should hit a credit union, affinity group (like AAA, AARP, USAA, etc), or even bank to be prequalified for a loan prior to filling out the order paperwork. That way you can order the car secure in your financing and then bargin with the dealer sourced finance when the car is delivered. Remember the dealer gets a cut of the finance rate for providing you to whatever bank or company which finances you. Last new car I bought (now ex-wifes '01 Durango) I had a finance rate from USAA lined up and told the dealer if he could beat that rate, I would go with their source. They beat it by 3/4 of 1% so I went with their bank (which sold the loan to another bank anyhow after 9 months.)

This story and some of the comments above on USFidelis show someone in government best step in immediately to shut them down before too many consumers are scammed. Sounds like their sales people pull every dirty trick in the book. How many red flags do you need?

@me and the sysop: Since you're not actually taking the loan until the car is delivered, this makes some sense. The dealership can't know exactly what rates will be like in 10 weeks, but they should have been able to agree to a clause that says "If rates at or below X% are not available, I can get my $500 back and walk." Their finance guy should be able to have a pretty good idea of what you'd qualify for based on your credit report, and make sure X is a higher rate than that (since of course he'll try to talk you into a higher-rate loan than the best you'd qualify for... he's got kids in college, or gambling debts to pay.)

@PLATTWORX: The article points out that the Missouri A.G. is taking legal action against them. (See [ago.mo.gov]) The FTC has made noises about investigating them, too. Not sure they ever will, but the MO A.G. is on the case, even if no one else is.

@Saboth: Those adds piss me off and should be banned because the truth is the AC cost the one guy $2250 to fix and it cost the other guy a $2700 insurance policy! Fucking liars.

Na,I think this is a case of a rep wanting to close quickly. What the chance of someone calling back and getting the same rep?

@me and the sysop: A similar thing happened to me at Honda, the guy said I was approved, but when I asked him at what rate he wouldn't answer me.

Very weird. I didn't buy from them either.

@me and the sysop: Pay cash for a car. Why do people have to drive a $30,000 car?

@PsiCop:

And oh no, the BBB gave them a failing rating! The sky is falling!

... oh wait, like 80% of business on there have a failing rating. What happens to them? They pay their dues to the BBB and...?

[www.carsponsorships.com] does the same thing. They make you pay a fee to view their "contracts" of what companies are willing to sell you to pimp out your car. Viewing the contract means you've agreed to it. In reality you're giving them money to get small discounts on car parts, and if you enter your car into a contest and win, you get to keep the parts for free.

I was scammed by them a number of years ago, even alerted MySpace admins (their ads are all over myspace) to their shady business practices. There was a nice long argument on the BBB between myself and one of their representatives. There was no resolution.

I attempted a chargeback, but because carsponsorships.com had indeed showed me what they call "contracts" which I "agreed" to, my credit card company judged in their favor as services were rendered.

I wish I knew about consumerist back then. :(

If a company won't let you see a contract before you sign it, stay the hell away from them.

@Mr_Mantastic: Find me a serviceable vehicle that will carry me, my wife, and our seven kids, plus room for cargo and an occasional friend as a passenger for under 30k. I'd love it. My options are limited to Econoline, Express, or Sprinter vans. Sprinter has a nice fuel-efficient diesel option - for $42k. Otherwise I'm down to 12.5 MPG.

It's not always so simple.

its funny i was very close to being suckered into this scam but i searched online first, and seen how it said nothing but bad things about them. sad how they can still be in business.

@Saboth: I tend to "finish the sentences" on commercials.

"fixing the AC in this car cost this guy $2,250, but this guy paid nothing...because we eventually paid after a lawsuit and court order"

@okcancel: OK, I can't stop laughing at that.

@harvey_birdman: Bunk. Folks were trading in cars after the warranty period long before the word 'bailout' became dirty again.

Yeah! And eat cabbage...why do people have to eat steak? And wear burlap...who needs cotton? And drink water, use dialup for the internet, get all your books from the library, rent a cot at the YMCA -- you don't HAVE to have anything more!!!!