FTC Emphasizes Stance on When Dealers/OEMs Can Refuse Warranty Claims

WASHINGTON, D.C.  - 

While the message delivered recently by the Federal Trade Commission about vehicle warranty rejections is aimed toward consumers, it still highlights reminders for some dealers and automakers.

Addressing the question “Auto Warranties, Routine Maintenance and Repairs: Is Using the Dealer a Must?” the FTC stressed that dealers and automakers cannot legally reject a warranty claim or invalidate the warranty altogether for the sole reason that a third party (or the customer himself) performed routine maintenance or repair work instead of going to the dealer.

The FTC is the enforcer of the Magnuson-Moss Warranty Act, a law that “makes it illegal for manufacturers or dealers to claim that your warranty is void or to deny coverage under your warranty simply because someone other than the dealer did the work.”

That said, there is a bit of a caveat.

The FTC gives the example of a belt being replaced by a third-party mechanic or the consumer. Say the belt was not correctly fixed and ended up wrecking the engine. At that point, the dealer or OEM can refuse the warranty claim.

“However, according to the FTC, the manufacturer or dealer must be able to demonstrate that it was the improper belt replacement — rather than some other defect — that caused the damage to your engine. The warranty would still be in effect for other parts of your car,” officials explained in the FTC Consumer Alert.

The FTC also delved into the use of aftermarket or recycled parts by the consumer. Again, per the Magnuson-Moss Warranty Act, dealers and automakers cannot negate a warranty or reject a claim on the sole basis that the owner used a recycled/aftermarket part.

Like the maintenance/repair piece, though, there are exceptions.

The FTC stressed that “if it turns out that the aftermarket or recycled part was itself defective or wasn't installed correctly, and it causes damage to another part that is covered under the warranty, the manufacturer or dealer has the right to deny coverage for that part and charge you for any repairs.

“The FTC says the manufacturer or dealer must show that the aftermarket or recycled part caused the need for repairs before denying warranty coverage,” it added.
 
To view the alert, visit www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt192.shtm.

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