The federal Magnuson-Moss Warranty Act is supposed to protect consumers from unscrupulous manufacturers’ attempts to tie the use of expensive “manufacturer-authorized” products to warranty coverage, but several automakers have found a way around it.  So far, it’s been pretty easy.  Few consumers have expertise in Magnuson-Moss, and there are plenty of tactics available to convince them to do what the automakers want without parrotting statutorily-prohibited language.  The strange part is the Federal Trade Commission’s lack of action.

Over the past decade, automakers have increasingly utilized (1) unilateral declarations of their absolution from warranty responsibility without regard for the manufacturer’s burden of proof under Magnuson-Moss, (2) references to ultimate warranty-controlling authority without regard for the anti-tying prohibition under Magnuson-Moss, (3) unsubstantiated aftermarket product comparisons, (4) command form direction, (5) phrases that give rise to unavoidable negative implications regarding aftermarket products and services, (6) non-synonymous alternative descriptions of the manufacturer’s burden of proof that erode the Magnuson-Moss standard, and (7) stonewalling on the production of proof required by Magnuson-Moss prior to warranty denial based on the use of an aftermarket part or service.

Here’s a perfect example courtesy of General Motors (GM):

Unlicensed products have not gone through GM's rigorous testing process, are not monitored for quality, and are not approved or recommended for use in GM vehicles.  Unlicensed product quality and suitability for GM vehicles cannot be guaranteed and, therefore, use of unlicensed products may result in lower levels of performance and engine damage not covered under warranty. (www.gmdexos.com)

In order for GM’s communication to not deceive consumers as a reference to ultimate warranty-controlling authority, consumers would have to first know the text of the MMWA and then understand that no matter the authority-provoking words employed—in this case ‘unlicensed,’ ‘approved’ and ‘recommended’—the automobile manufacturer’s claims do not supersede the anti-tying prohibition under MMWA.  Consumers would also have to recognize that GM omitted any reference to its burden of proof regarding ‘engine damage not covered under warranty.’  The likelihood of an average consumer making this kind of ivory tower analysis is unlikely.  Authority-provoking language is used for a very specific reason: because it is very effective at promoting compliance regardless of accuracy.  AOCA’s recent fast lube industry survey shows consumers agree: New GM vehicle car counts at fast lubes have dropped eighty percent since GM began issuing communications like the one cited here.

GM’s statement also contains an unsubstantiated negative product comparison regarding non-GM-licensed motor oil not being “monitored for quality.”  Of course, GM cannot vouch for other manufacturers’ practices, but would the average consumer recognize the problem and know that they should ignore GM’s assertion?  No.

Why are those automaker tactics so effective? 

Unlike automobile manufacturers, the average consumer has no legal department providing ready advice for navigating the intersection of [Magnuson-Moss] requirements, caveat emptor, and potential trade libel.  Nor does the average consumer have access to product development data in order to scrutinize automobile manufacturers’ proprietary product claims or an automotive services department to challenge their allegations of engine damage when the consumer rightfully chooses not to use proprietary products.  Add to this the burdens associated with America’s current recession and the result is millions of consumers unable to withstand the manipulative, often fear-based tactics designed to pressure them into using manufacturers’ expensive proprietary products.  The average consumer simply can’t afford to lose warranty coverage for major repairs and the automobile manufacturers know it.

In comments to the Federal Trade Commission’s current review of the Magnuson-Moss rules, the Automotive Oil Change Association (AOCA) urged the Commission to update its rules to require automakers to include a plain English anti-tying disclosure in warranties, and put warranty denials in writing, including any Magnuson-Moss-required proof associated with the specific reason for denial.  This isn’t asking for much.  After all, Magnuson-Moss already places the burden of proof on automakers to show that an aftermarket part or service caused engine damage before they can lawfully deny warranty coverage.  They’ve simply been ignoring it, and consumers aren’t in a good position to challenge them.  Consumer Joe versus GM?  Good luck.

Click here to view AOCA's comments to the FTC