Home Warranty Division Scam: What to Know

Homeowners across the country have reported receiving letters that urge them to renew their home warranty plans immediately to avoid the risk of financial liability. However, the notice — and in some cases, the company sending it — isn’t what it seems.

Despite looking official and containing information like the names of homeowners’ mortgage lenders, the letters are a scam that use common tactics to gain consumers’ personal information and potentially swindle homeowners out of money.

Here’s what you need to know about the home warranty letter scam and what you can do to protect yourself.

A home warranty division scam involves a mailed letter that threatens homeowners in an attempt to get them to purchase a home warranty. The scam is so named because it uses letters that appear to be sent from the home warranty division or department of a larger company or mortgage lender.

Using a letter that resembles an official notice from a home warranty company, the scam tells homeowners that their current home warranty plans are about to expire and that there could be financial risk if recipients don’t purchase a new plan.

The letter often uses terms like “final notice” and “immediate response requested” to create a sense of urgency and pair them with some form of financial liability if the homeowner doesn’t respond. They often emphasize the repair costs homeowners will be responsible for if they don’t respond to the letter, sometimes referring to a “lapse of coverage.”

When a homeowner calls the phone number in the letter, the scammers will try to get them to provide personal information or their credit card information. This could put homeowners at risk of identity theft.

Letters that are part of home warranty scams often look like official notices and might be difficult to identify as a scam right away. There are a few things you can look for to determine if it’s a genuine offer or a potential scam.

Red flags that might point to a scam include if the letter:

• States in fine print that it’s not affiliated with your mortgage company. Some letters state in the fine print at the bottom that they are not affiliated with homeowners’ mortgage companies. This is one of the fastest ways to determine if the letter is truly an offer from your lender or a potential scam.

• Is talking about coverage you’ve never purchased. If the letter says your coverage is about to expire but you’ve never purchased a home warranty, it’s likely a scammer’s way of trying to get you on the phone.

• Suggests an affiliation with mortgage companies or county offices. The letter might imply the company is associated with your lender or a county deed office, which isn’t true. The letter might include the name of your lender, but scammers can find this information in public records. So it’s never a guarantee that the letter is from a source you can trust. And typically, home warranties are not tied directly to a mortgage or mortgage company. 

• References the wrong account number. If the letter has a reference or account number that doesn’t match your loan number or current home warranty account number, it’s likely a scam.

• Says it’s a final notice despite no previous notices. Scammers hope the wording makes homeowners think they’ve missed important letters and need to respond quickly. However, if you haven’t received any communication about the issue from your mortgage lender or current home warranty company, there’s a good chance the letter is a scam.

Even if you think a letter might be a genuine communication from your mortgage company or home warranty provider, it’s a good idea to take a step back and ensure you’re not falling for a scam. Here are four ways you can protect yourself from home warranty division scams.

• Verify any affiliations that are suggested in the letter. If a letter implies that it’s affiliated with your mortgage company, call your lender and ask about it. The same goes for your current home warranty company if you have an active plan. Your mortgage company or home warranty provider will tell you if it’s a legitimate offer or something you should avoid.

• Look for personal information that doesn’t match. Letters might include information like an account number to make them appear official. If the number’s not correct, you’re likely looking at a scam.

• Take a minute to recognize high-pressure language. A common scam tactic is to make a situation appear urgent, which is why the letters often suggest financial liability if homeowners don’t respond. Read letters carefully to identify wording that is intended to make you feel like you have to respond immediately, and ask yourself if that’s likely the case.

• Don’t give out personal or financial information if you’re not certain of who you’re giving it to. Listen to your gut if anything seems off about your interaction with someone who is trying to pressure you into purchasing something or giving them your information.

You can report a home warranty scam to two offices. Your state’s attorney general’s office will want to know when residents receive calls and letters from home warranty scammers. And they need reports from affected consumers to be able to file lawsuits against the companies that are responsible for the scams. The Federal Trade Commission (FTC) also asks consumers to report scams so they can keep track of trends and help other agencies shut down scammers.

If you think you’ve received a home warranty scam letter, it’s best to report it to both your attorney general’s office and the FTC.