Probe Demanded For Phone Spam Calls

An Indian boy looks for reusable material in the polluted waters of the Yamuna River in New Delhi, India, Sunday, April 22, 2012. April 22 is observed as Earth Day every year as a tool to raise ecological awareness. / AP Photo/Tsering Topgyal

If you've received a phone call from an unfamiliar number warning of an expiring vehicle warranty, you're not alone.

More and more Americans are receiving calls with a recorded voice saying, "This is the final notice. The factory warranty on your vehicle is about to expire," or something similar, several times a day on their cell or land lines.

The calls come even if a person has signed up for the national "do not call" registry.

Alison Southwick of the Better Business Bureau said that her agency received more than 140,000 complaints about car warranty calls in 2008.

Sen. Chuck Schumer, D-N.Y., said today that what he calls "robo-dialer harassment" are a nuisance and should be the subject of a federal investigation.

"Not only are these calls a nuisance, but they tie up land lines and can eat up a user's cell phone minutes, possibly leading to a higher cell phone bill due to overage charges," said Schumer, who noted he's received such calls himself.

Officials in 40 states are investigating the companies behind the car-warranty calls.

Schumer said a federal crackdown is needed. "A few states have tried, but we need national action," he said.

Michelle Corey, president and CEO of the Better Business Bureau in St. Louis, Mo., said the industry is based largely in the St. Louis area and generates thousands of complaints a year.

She said a group of companies began operating in Missouri in the mid-1990s that offered extended repair warranties to people whose manufacturer-issued warranties were about to expire. Within a few years, about 35 firms were offering similar services.

"It's a very lucrative industry," Corey said.

The companies offer contracts akin to insurance policies, pledging to pay for car repairs in exchange for fees paid up-front.

The companies call numbers randomly and leave messages telling people that their auto warranties are about to expire - whether or not they own a car.

Some companies also send out cards that mislead recipients into thinking that their vehicle has been subject to a safety recall, Corey said.

If people call back and agree to buy a policy, Corey said, the companies often don't let them see the contract until they agree to pay.

Some scam victims don't learn until it is too late that the deals don't cover many types of repairs, Corey said.

"Some people are losing thousands and thousands of dollars in purchasing a product that turns out to be useless," she said.

The Federal Trade Commission, which already operates the do-not-call list, should work with state and local authorities "to find the scam artists and shut their operations down," Schumer said.

"This is an annoying scam whose perpetrators have found a way around the do-not-call list," he said at a news conference in his Manhattan office. "The FTC has to track them down and then shut them down to put an end to this nuisance once and for all."

Missouri authorities filed a lawsuit last month against one of the largest car-warranty companies, Wentzville, Mo.-based USfidelis, charging that company officials ignored a subpoena demanding that they answer questions about their business.

A spokeswoman for USfidelis, which has more than 1,000 employees, did not return a call seeking comment Sunday, but the company says on its Web site that it stopped making unsolicited marketing calls last year.

"Frankly, we've identified more effective ways of connecting with our customers," the Web site's "Frequently Asked Questions" section says.

USfidelis charges on the Web site that its competitors "use variations on our name and materials, masking their calls by using the USfidelis name, ultimately confusing and alienating consumers."

Corey of the Better Business Bureau said it is often difficult to know who is making the calls, because companies change names frequently and use telemarketing subcontractors.

There are Web sites on which recipients of these telemarketing calls can post the numbers that are the alleged source of these unwanted pitches.

One such site is whocallsme.com, which lists comments from readers complaining about marketing calls received.