Recently, I received the letter below from a company named "Program headquarters (SPD)." Perhaps you have received this letter, too:
At first, I was not going to write about this, but after receiving two letters from SPD a blog post seemed appropriate. I hadn't heard of SPD before, and the way the company listed its name in the letter seemed odd.
A quick Google search found an entry about SPD at the Better Business Bureau website. SPD, which has an "F" rating, goes by the names "Service Protection Direct" and "Protection Direct." When a company uses several names, the names on its letterhead and website don't match, and the letter fails to provide a website address that is usually a red flag alert to me. This letter reminded me a lot of my experience with Shelton & White (a/k/a Larson Keller).
While most of the complaints against SPD on the BBB website appear to have been resolved, the nature of the complaints was troubling:
"Complainants primarily allege misleading sales or advertising practices, in many cases claiming that they were led to believe that this firm was associated with the manufacturer or dealer, when they are not, difficulty canceling contracts and obtaining refunds, that the firm failed to cover needed repairs, poor customer service and that they received harassing sales calls or solicitations, even after the consumer requested that they cease."
That didn't sound good. My Google search also found this St. Louis Business Journal article from 2009:
"Despite an agreement last year between the Missouri attorney general’s office and one of St. Louis’ largest vehicle service contract companies, the BBB said Thursday it has received 80 complaints about the firm so far this year. That’s up from the 60 complaints received in the four months before the state’s agreement with Service Protection Direct, now known as Protection Direct and owned by TXEN Partners..."
So SPD or Protection Direct has been doing this form of marketing since 2008. Maybe things have gotten better during the three years since. In March 2010, the Missouri Attorney General's office stated that it was:
"... creating a task force to look at sales practice guidelines designed to stop auto service contract fraud, the number one complaint to the Attorney General's office in 2009... the Department of Insurance, Financial Institutions & Professional Registration began regulating service contract providers and administrators in 2008, but some independent marketers are not licensed and have continued to run roughshod over consumers... these marketers have used misleading letters, postcards, and telephone sales marketing to lure consumers into purchasing service contract coverage without providing basic information about that coverage... while consumers believed they were extending auto warranties, they were actually purchasing service contracts or automotive additives."
While complaints in Missouri about auto warranty/service programs have dropped due to prosecution, the Missouri Attorney General's office on February 25, 2011 still listed auto warranty/service scams in its the top 10 scams listing. So, there are several companies operating in the auto warranty/service program space, besides SPD. The reverse side of the SPD letter I received mentioned several states: New York, Wisconsin, Texas, and Florida. So, Protection Direct is marketing in several states.
Next, I visited the Protection Direct website to see how it addressed any of the above concerns. My experience at the website wasn't much better than the letter. The Service Facts page seemed to only list the costs of various auto repairs. That was technically accurate, but not very helpful. And, it seemed like a scare tactic.
The News page included an April 4 item about the poor BBB rating above, with a general promise that the company is working with the BBB to improve that rating. I completed the "Find Your Plan" form on the home page, and the results page didn't deliver any plan information. Instead, the results page linked me to another form page. That was not helpful, and it seemed to me like a slick attempt to get website visitors to reveal more personal data without delivering a quote or any real value first.
To learn a little more, I called the phone number on the SPD letter. The representative that answered was very polite; not pushy at all. When I asked how SPD got my name and auto information, she said, "SPD has access to the same databases as auto dealers." That answer wasn't helpful. I asked what that meant and the phone representative said she didn't know. Not good.
I expect more from a company. It should be able to sufficiently explain where it got my name and auto information from. The reverse side of the letter I received included this fine print:
"PRESCREEN & OPT-OUT NOTICE: This "prescreened" offer of credit is based on information in your credit report indicating that you meet certain criteria."
What? I wonder how accurate that statement is. If it is true, SPD should not have contacted me because it shouldn't have been able to access my credit reports. I placed a Security Freeze on my three credit reports three years ago. And, I opted out of pre-screen credit offers years ago. Perhaps, SPD obtained my name from one of the smaller, regional credit bureaus.
More likely, SPD purchased my name and auto data from the state registry of motor vehicles. Many consumers don't realize that many states do sell this driver data. This lawsuit highlighted the fact that many states sell driver information to marketing companies. If true, then the disclaimer on the back of the SPD letter is misleading and inaccurate.
The phone representative (and the letter) mentioned Marathon Financial Insurance as a provider of coverage for SPD. To the good, Marathon has a far better BBB rating: A+. That is encouraging, but the BBB "F" rating for SPD and my negative experience far outweigh that.
While on the phone, the rep promised a quote if I answered a few questions. After answering about four questions, that seemed again like an attempt to get more personal data out of me. I refused to answer any more questions and asked for a quote. I'd already provided my auto's mileage, year, and general condition -- which should have been enough. The rep declined politely and said that she needed to ask all of these questions to get to a quote. I asked for a quote range instead, and again she declined. At that point, we agreed to end the phone call.
About five days later, a different phone rep from Protection Direct called me at home and provided a quote: about $3,800 over three years. Then, the phone rep explained what repairs were covered and discounted the quote to $2,800 to get me to sign up immediately. I asked for a contract to review first. The rep said the Protection Direct doesn't send out contracts due to cost reasons, and offered a 30-day trial instead. I could cancel in 30 days and get a refund.
I thanked the phone rep for his flexibility and repeated my request to see the contract first. At that point, we decided to terminate disucsson as Protection Direct and I couldn't agree on how to proceed. If there is one thing I have learned while writing this blog, it's that the contractual fine print is critical. It always lists what is provided and what is covered/reimbursed.
Should consumers buy an auto replacement warranty/service program? Only you can decide that for yourself. You know your needs and budget best. Me? I'll pass. I don't see the value. The amounted quoted by Protection Direct was about the same amount as I would have spent anyway on auto maintenace and repairs. Protection Direct's clumsey letter, unhelpful website, and refusal to provide a contract first were obstacles.
If my auto needs repairs, I get it repaired at an auto dealer. If the repairs are expensive, I'll get several estimates first; and then get my auto repaired at the shop with the lowest estimate. If the repairs are prohibitively expensive, I'll just buy another used car.
What is your opinion of Protection Direct? If you purchased a warranty program from Protection Direct or another company, what was your experience?