It Pays to Know

July 20, 2022

Federal enforcement is one area for warranty rights, but shop operators can help, too

In 2015, BMW settled a complaint with the Federal Trade Commission over warranty law violations by the subsidiary MINI. The FTC found that MINI ran afoul of the law by telling customers that they needed to use genuine MINI parts and MINI maintenance service in order to maintain their warranties.

Here’s what MINI wrote in its warranty booklet that each vehicle owner received:

“Have maintenance and repair work performed by your MINI dealer. Make sure that maintenance work is stamped in this Service and Warranty Information Statement. These entries are the evidence of regular maintenance of your vehicle and are a requirement for warranty claims.”

Along with other violations, that action led to the FTC’s enforcement of the Magnuson Moss Warranty Act and a 20-year settlement that requires BMW and MINI to, among other tasks, notify MINI owners of their right to use third-party parts and service without voiding warranties. 

That’s the heart of the warranty law for the automotive aftermarket—that consumers can take their vehicles wherever they’d like for quality service.

“It’s against the law for a dealer to refuse to honor a warranty just because someone else did maintenance or repairs on the car,” Jessica Rich, director of the FTC’s Bureau of Consumer Protection, said upon announcing the settlement. “As a result of this order, BMW will change its practices and give MINI owners information about their rights.”

Federal enforcement is one area for warranty rights, but shop operators can help, too. In addition to federal enforcement actions, it’s important for shops to educate customers on what the law allows and doesn’t allow. That way, you’re giving customers more choices for their vehicle service.

Real-World Impacts

The BMW-MINI case is one reason that aftermarket organizations like the Auto Care Association and Automotive Oil Change Association are closely involved in warranty law enforcement. Aftermarket automotive shops want to be seen as a safe and reliable alternative to dealership operations.

When a customer’s owner’s manual tells them to “see a dealer” for oil changes, most customers aren’t going to question that language.

“When you talk about safety and the kind of language they use, it’s very official,” says Tom Tucker, senior director for state affairs at the Auto Care Association.

Tucker and his colleagues advocate on behalf of aftermarket sectors to raise awareness of warranty law rights. He helped set up an informational web page that can help educate shop owners and technicians. More crucially, it can also help technicians speak with customers about the topic.

“What shops really have to do is cultivate that relationship so that it’s more than just giving their word,” Tucker says. “It’s a relationship built on trust and also safety.”

The Customer Perspective

Most shop owners know those customers who tend to be more trusting. They’ll just go with what your technicians recommend for service and say nothing more about it.

At a dealer service center, that same customer might not think twice when a technician tells them that their service needs to be done at the dealer in order to maintain warranties. After all, the manufacturer knows best, right?

“When the technician says you need this, the average consumer doesnt without knowing that this is not necessarily a problem,” Tucker says.

That’s why it’s a great idea to incorporate some nonverbal forms of customer education about warranty rights. Tucker developed an informational poster that shops can put up in a place visible to customers. The poster offers a quick introduction to warranty rights under the Magnuson Moss Warranty Act, but the heading on the poster makes the larger point: Routine maintenance can be done anywhere—not just the dealership.

Having signage like that up in the shop shows customers that you’re not only advocating for your business, but you’re advocating for the customer’s rights.

“Relationship building is important,” Tucker says. “Having the signage is, I think, a key piece. And when the consumer has to go back to the dealer for something they are educated and can stand up for themselves.”

Looking Ahead

Since the BMW-MINI case wrapped up, the messaging around the use of aftermarket parts and services hasn’t improved. When the FTC sought to compile research for a workshop on warranty rights, it received many case studies to look at. According to an FTC report, one research organization found that 45 of 50 product manufacturers appeared to violate a part of the Magnuson Moss Warranty Act.

As a result of its research, the FTC vowed to increase oversight of warranty cases and OEM conduct.

“These types of restrictions can significantly raise costs for consumers, stifle innovation, close off business opportunities for independent repair shops, create unnecessary electronic waste, delay timely repairs, and undermine resiliency,” FTC Chair Lina M. Khan said during a meeting on the matter. “The FTC has a range of tools it can use to root out unlawful repair restrictions, and today’s policy statement would commit us to move forward on this issue with new vigor.”

Tucker and other industry watchdogs have also called on shop operators to be vigilant and report any suspected violations to the FTC. The end goal is for drivers to have better access to quality repairs while maintaining their warranties.

“We all in the industry have a responsibility to follow safe repair processes, because it's our own credibility on the line as well as liability,” Tucker says. “So we all have a stake in safe repair, doing the repair right, and building relationships with the customer.”