Six-Month Fight Over Car's $2K Prepaid Service Plan

Cris Lozano in San Jose asked Envision Honda in Milpitas to change her Honda Civic’s oil and rotate the tires.

“Simple things,” she said. “Basic things that I knew I had paid an additional amount to cover.”  

Cris says the service department billed her about $140. She pushed back because she expected her Honda Care service plan to cover the full cost.

“They said, ‘Oh, we’ll look into it,’” Lozano said. “And then they said they didn’t see anything, that they didn’t find anything in the system.”

Cris said she showed Envision Honda its own contract from the day it sold her the Civic. It shows she prepaid $1,995 for Honda [Care] Sentinel. A Honda Care brochure says the Sentinel plan does cover things like oil changes, tire maintenance, and more. 

Here’s the hitch: “They said it was never activated,” Lozano said. “And that they didn’t see it in the system. So, they couldn’t honor it.”  

What We Have Here is a Failure to Activate

Whose job was to activate it? The dealer, Envision. Cris wanted to cancel and get her two grand back. She says she filed a cancellation form. Six months later: nothing. 

“I got silence,” she said.  

This isn’t Cris’s first problem with Envision Honda. In 2022, a few months after Cris bought the same Civic, her paper tags expired. Cris says Envision didn’t register the car and stopped responding to her. 

“Who’s the next email I sent? To you,” she said at the time. “And then, all of a sudden, within eight days… my tags actually ended up in the mailbox!” 

Cris contacted NBC Bay Area Responds again-- about her service plan.

We contacted Envision Honda and Honda corporate.

Honda & Dealer Take Action

Honda headquarters told us Cris’s troubles were not ”representative of a typical experience.” 

Honda said dealers should activate service contracts within 48 hours of selling a car. Then, two to four weeks later, buyers should receive their contract in the mail. 

Neither of those things happened for Cris. Why?

An Envision rep pointed to a management swap. He said Cris, “purchased a vehicle the day after we bought Honda Milpitas.” He noted all “new processes and people.” 

All Fixed (With a Bonus)

Envision said it took action for Cris as soon as NBC Bay Area Responds called Honda corporate in February. Envision gave her her $1,995 back, plus a bonus for the inconvenience. 

“$100 more,” Lozao said with a chuckle. “I finally won, but I still feel as if I was so frustrated. I shouldn’t have gone through all that… twice!”  

Service contracts and extended warranties can be lucrative for car dealers.

100% Markup?

An Auburn University at Montgomery Economics Professor wrote about an “average markup of 100 percent.”

So, it’s no surprise that some car salespeople might come on strong -- pushing a service contract.

A car dealer consultant isn’t shy about it. Its website tells dealers: “There are countless ways your dealership could boost its profitability. One of the easiest is to simply offer vehicle service contracts to your customers.” 

If you cave under pressure from a car salesperson, here’s some good news: you can change your mind if you bought a service contract and regret it.

You Can Cancel & Get Your Money Back. It's the Law.

“California law gives you an absolute right to cancel a vehicle service contract for any reason,” said Deputy Insurance Commissioner Michael Soller. “We call it a ‘free look’ period.”   

Soller says you get all your money back, minus any claims you made, if you cancel during your “free look” period. For new cars, it’s 60 days after you receive your contract; 30 days for used cars. 

But wait! There’s more!

“Even if you go past that period, you can still get some of your money back,” Soller said.    

After the “free look,” you can still cancel and possibly get a partial refund. Soller said the seller might prorate your refund by time or miles. They might also charge a fee, but no more than $25.

Exactly how much you’ll get back should be in your contract. “The contract is the ultimate guide,” Soller said.   

If you buy an “extended warranty,” “service contract,” “protection plan,” or whatever they call it, make sure you get your contract. If you don’t, follow up. Honda, for example, told us Honda Care buyers who don’t get anything in the mail within 30 days of buying a car should reach out. 

Extended Warranty Problem? Open a State Investigation

If you’re spinning your wheels with a service contract, you can ask the California Department of Insurance to investigate.

The number is 1-800-927-4357. Or visit its website.