Watch Out for Home Warranty Scams

Watch Out for Home Warranty Scams

Read the fine print if you get any letters that appear to come from your mortgage provider. If it’s informing you that you need to take action on your home warranty, it’s likely a scam.

The Better Business Bureau recently has received reports of deceptive solicitations for home warranty services. These letters attempt to mislead homeowners into signing up for a warranty they might not need. So you need to know how to spot these scams to avoid them.

Find out how some warranty companies are attempting to deceive homeowners.

How home warranty scam works

There are a variety of deceptive tactics that some home warranty companies are using, according to BBB. One scheme is a letter that appears to come from your mortgage provider with a claim that your home warranty has lapsed. These letters tend to suggest that your mortgage will be at risk if you don’t take action to renew your home warranty. They often includ language such as "final notice" or "immediate response requested."

However, according to reports filed with BBB, the small print at the bottom of these letters states that the company is not affiliated with your current mortgage and that not all consumers who receive letters currently have a home warranty. So you might not even have a warranty that needs to be renewed. The company is just using deceptive advertising tactics to get you to pay for a new warranty, according to BBB.

Another version of the scheme is “Renewal Fee Voucher” that appears to be a check for $199. However, it’s not a check. It’s just another misleading sales technique to get homeowners to sign up for a home warranty.

In particualr, BBB has received complaints about Home Warranty Direct, US Home Guard, Like New Home Warranty and American Home Warranty for their misleading advertising. And state attorneys general have taken enforcement actions against the following home warranty companies for misleading marketing practices: Integrity Admin Group, Amazon Home Warranty, Complete Care Home Warranty, First Premier Home Warranty, Priority Home Warranty, Response Indemnity Company of California and Total Home Protection.

How to avoid home warranty scams

The BBB cautions against doing business with any companies that use deceptive marketing practices. Here’s how to avoid falling for their tactics.

Check directly with your lender rather than calling the number provided in a letter notifying you about a lapsed home warranty or any sort of home warranty offer. Use the contact information on your monthly mortgage statement or look up your lender’s number on its website to call and ask whether it has attempted to reach out to you about a home warranty or issues with your mortgage.

Beware of scare tactics. If a company or person is claiming that you have to act immediately to avoid a negative outcome such as losing your home, it’s likely a high-pressure sales tactic to get you to take action without thinking. Instead, take time to investigate. Call your mortgage provider to discuss the letter you have received.

Do your research before signing up for a home warranty. Visit to check out the ratings and customer reviews for any home warranty companies that send you solicitations. Also, get details in writing about the home warranty being offered before signing up and sending money.

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