government affairs blog

Educating Consumers on Their New Car Warranty Rights

Posted by Aaron Lowe on June 02, 2014

Consumer Reports (CR) recently published a blog that appeared on several prominent websites, including Yahoo, warning motorists against using non-original equipment oil filters on Kia produced vehicles. In the posting, CR cites a technical service bulletin (TSB) issued by Kia that states: “Customer concerns as a result of incorrect oil viscosity or use of aftermarket oil filter should not be treated as a warranty repair and any related damage is not warrantable, nor is changing engine oil and filter to isolate this condition.” CR recommends to its readers that:


  1. When dropping your car off for service, make sure you don't authorize the dealer to perform repairs without speaking with you first. This way you won’t get a surprise bill for an oil and filter change.
  2. If your Kia is still under the powertrain warranty, considering taking it to the dealer for oil changes. Yes, it probably costs more than the quick-lube store, but you’ll avoid any potential problems with oil- and filter-related warranty claims.
  3. Consider buying Kia-approved oil filters and either using them when you do your own oil changes, or have your mechanic or quick-lube store use the Kia filter and not their own.


Lost in the Consumer Reports article or the Kia TSB is the fact that the Magnuson-Moss Warranty Act specifically prohibits the conditioning of a new car warranty on the use of an original equipment part or service. Put another way, the use of a non-original equipment part on a vehicle cannot by itself be used by the car company or dealer to deny warranty coverage. Further, the act places the onus on the vehicle manufacturer not the consumer, to demonstrate why the use of the non-OE part caused the problem which resulted in the need for a warranty repair.


Kia’s directives circumvent this process entirely: the mere presence of an aftermarket oil filter automatically voids warranty coverage for the oil change parts and services, as well as any damage Kia says “relates” to oil filter function. Making matters worse, Consumer Reports jumped on the bandwagon, urging consumers to adhere to the anti-consumer and anti-competitive TSB from Kia.


The Auto Care Association along with the Automotive Oil Change Association, Tire Industry Association and Service Station Dealers of America sent a letter in May to the FTC urging them to force Kia to withdraw the TSB and to issue a statement that use of aftermarket filters will not void a new car warranty. The groups further have called on CR to issue a correction to its readers on this issue. You can find copies of the letters on the Auto Care Association website.


Of course, Kia is not the only vehicle manufacturer to issue statements which mislead or scare consumers into thinking that use of a non-original equipment part or service will violate their new car warranty. Further, we constantly receive phone calls from repair shops and even consumers from time to time complaining that a dealer refused warranty coverage for a vehicle issue simply because the car owner patronized a non-dealer for maintenance. In most cases, the car owner gets caught in the middle between the dealer or manufacturer and the independent service shop. Often the independent takes the hit and pays for the repair fearing they will lose the business of their customer.


The auto care industry must take action to understand the current law and to educate their customers that car companies and their authorized dealers on the Magnuson-Moss Warranty Act and car owner’s warranty rights under the law. A great resource for both industry and consumers can be found on the FTC website: http://www.consumer.ftc.gov/articles/0138-auto-warranties-routine-maintenance. The industry also should let us know if you or your customers are subject to misinformation or warranty threats by the dealer or vehicle manufacturer. Please email information on any warranty related issues to Aaron Lowe at aaron.lowe@autocare.org.

Time for the FTC to Step Up Enforcement of Magnuson Moss

Posted by Aaron Lowe on May 20, 2013

The Magnuson Moss Warranty Act was enacted by Congress back in 1975 to ensure that consumers are protected from misleading warranties being offered by manufacturers. The act does not require that companies offer warranties, but only regulates how the warranties are disclosed to the public if they are offered.


During the development of Magnuson Moss, Congress was concerned that companies would deceive consumers by telling them they must use a parts offered by the manufacturer in order to maintain their product’s warranty. A provision was included to the act that prohibited the conditioning of a warranty on the use of any of the manufacturer’s parts or services needed to maintain the product. Under interpretations by the Federal Trade Commission (FTC), the only way that a warranty could be denied based on the use of a non-original equipment part would be for that non-OE part to have caused the failure. Further, the onus is on the manufacturer of the product to prove that the non-OE part caused the failure.


It’s my guess that very few car owners have any idea that the Magnuson Moss Warranty Act exists or that there is a federal law that prohibits tie-in sales. Further, the agency charged with enforcing Magnuson Moss requirements, the FTC, has shown little interest in taking any enforcement action on the issue. Hence, many car companies have been ignoring or skirting the tie-in prohibition, and they are becoming more daring every year.


Here are some examples of efforts by car companies over the past several years to convince motorists that the use of an aftermarket part could jeopardize a warranty; and that the original equipment part is the only way to ensure their future warranty rights:


    • In 2010, Honda issued the following Position Statement: “American Honda recommends that all maintenance and repairs are performed using Honda recommended procedures and Honda Genuine parts. Other parts — whether aftermarket, counterfeit or gray market — are not recommended. The quality, performance, and safety of these parts and whether they are compatible with a particular Honda vehicle are unknown.”
    • In 2011, Mazda issued a statement that it “does not recommend the use of aftermarket parts (or imitation parts) for any Mazda maintenance or collision repair… These aftermarket parts are generally made to a lower standard in order to cut costs and lack the testing required to determine their effectiveness in vehicle performance and safety.”
    • Then 2012, Kia issued a Technical Service Bulletin that stated that, “Kia does not test or approve any aftermarket filters and recommends the use of Kia genuine parts that are designed to operate as specifications set forth during engine lubrication design and testing. If the engine oil has been changed recently and a noise condition has developed, perform an inspection of the oil filter and or customer oil change maintenance records to help you in determining if an aftermarket filter or the wrong oil viscosity was used. If the vehicle is equipped with an aftermarket oil filter, perform and oil change and filter using the correct oil grade/viscosity and a replacement genuine KI oil filter at the customer’s expense.”


AAIA, along with the Automotive Oil Change Association (AOCA), Tire Industry Association (TIA) and the Service Station Dealers Association, have forwarded all of the above examples to the FTC for investigation, but thus far, no action has resulted. The result of FTC’s inaction is that manufacturers appear to be pushing the tie-in sales envelope even further.


The most egregious example to date in my opinion comes from BMW this year. As part of its owner’s manual for the 2013 model year vehicles (at least for the Mini, 3 Series and Coup), there is a statement that, “Oil changes should only be performed by a BMW Center.” No beating around the bush here, only BMW dealerships are qualified to perform an oil change. Why, you may ask? Well, there really is no explanation anywhere that I have been able to find.


Our hope is that by pushing the law too far, FTC will take action against BMW for what appears to be a clear violation of Magnuson Moss. However, that may be just wishful thinking. Thus far, the only action taken by the commission has been the placing information on the rights of car owners regarding new car warranties on their website. That information can be found at: http://www.consumer.ftc.gov/articles/0138-auto-warranties-routine-maintenance.


However, the FTC must also ensure that the car companies are getting good information to consumers. Many consumers find auto repair intimidating and therefore, a dealer or car company recommendation or alert can be taken as the truth, even though there are few facts to back it up. Therefore, it is critical that the FTC take action to require that the car companies act more responsibly in their owner’s manuals and releases. This includes mandating that the car companies place clear disclosures in their warranty booklets and owner’s manuals regarding the rights of consumers to have maintenance performed using non-original equipment parts and service.


Further, and maybe most importantly, the FTC must send a clear signal to the car companies that they will not tolerate misleading consumers on their warranty rights. Specifically, the FTC must enforce the prohibition on tie-in sales by prosecuting car companies that attempt to use their warranties as a marketing tool for their replacement parts. It may be the only action that gets the attention of the car companies to stop the growing trend of misleading statement that are not fair to the independent aftermarket, but more importantly, not fair to consumers.