Recently I heard from a couple of riding buddies that a Harley dealership had refused to honor the warranty on their motorcycle because they had it serviced at an independent shop or because they had used non Harley parts. This didn’t seem legal to me so I did some quick research and discovered there is a law that covers vehicle warranty issues such as this. The law is called the Magnuson Moss Warranty Act (15 U.S.C. 2302(C)) http://www.ftc.gov/bcp/conline/pubs/buspubs/warranty.htm#Magnuson-Moss.
There are three prohibitions under the Magnuson-Moss Act. They involve; so-called tie-in sales provisions, deceptive or misleading warranty terms, and implied warranties.
Tie-in Sales Provisions
Tie-in Sales provisions are NOT allowed in consumer warranties. Companies cannot require consumers to purchase items or services from a specific dealer in order to keep their warranty valid. In other words, the consumer cannot be required to exclusively use a dealer or a specific brand of parts to maintain the warranty on the motorcycle. Also, the motorcycle manufacturer or dealer CANNOT state that the bike’s warranty is void if it is serviced by an independent shop or other brands of parts are used. If a manufacturers warranty covers both the parts and labor for making a repair, the Act applies to labor/services. Although tie-in sales provisions generally are not allowed, a manufacturer can include such a provision in their written warranty if they can demonstrate to the satisfaction of the FTC that their motorcycle will not work properly without a specified part or service.
The actual section of the US Code (Title 15, Chapter 50, Section 2302, available at http://straylight.law.cornell.edu/uscode/) that deals with tie-ins says:
(c) Prohibition on conditions for written or implied warranty; waiver by Commission No warrantor of a consumer product may condition his written or implied warranty of such product on the consumer’s using, in connection with such product, any article or service (other than article or service provided without charge under the terms of the warranty) which is identified by brand, trade, or corporate name; except that the prohibition of this subsection may be waived by the Commission if:
(1) the warrantor satisfies the Commission that the warranted product will function properly only if the article or service so identified is used in connection with the warranted product, and
(2) the Commission finds that such a waiver is in the public interest. The Commission shall identify in the Federal Register, and permit public comment on, all applications for waiver of the prohibition of this subsection, and shall publish in the Federal Register its disposition of any such application, including the reasons therefore.
The interesting thing to note about the tie in sales provision is some HD dealerships will tell you that you MUST use HD motor oil. If you read the bold print above in section (c) you’ll see that if a company requires you to use a specific product they have to provide that product for free. So when a dealership insists you must use HD motor oil tell them they are required by law to provide it for free. I’m guessing they’ll change their mind on requiring it!
Deceptive or Misleading Warranty Terms
Deceptive or misleading terms must not be contained in warranties. A manufacturer cannot offer a warranty that appears to provide coverage but, in fact, provides none. For example, a warranty covering only “moving parts” on an electronic product that has no moving parts would be deceptive and unlawful.
Disclaimer or Modification of Implied Warranties is prohibited. This means that no matter how broad or narrow the manufacturer’s written warranty is, the customers will always receive the basic protection of the implied warranty of merchantability. If a dealer sells a consumer product with a written warranty from the product manufacturer, but they do not warrant the product in writing, they can disclaim their implied warranties (these are the implied warranties under which the dealer, not the manufacturer, would otherwise be responsible). Regardless of whether the dealer warrants the bikes they sell, as a seller, they must give their customers copies of any written warranties from the manufacturer.
Two other features of the Magnuson-Moss Warranty Act are also important. First, the Act makes it easier for consumers to take an unresolved warranty problem to court. Second, it encourages companies to use a less formal, and therefore less costly, alternative to legal proceedings. Such alternatives, known as dispute resolution mechanisms, often can be used to settle warranty complaints before they reach litigation.
The Act makes it easier for purchasers to sue for breach of warranty by making breach of warranty a violation of federal law, and by allowing consumers to recover court costs and reasonable attorneys’ fees. This means that if a company loses a lawsuit for breach of either a written or an implied warranty, they may have to pay the customer’s costs for bringing the suit, including lawyer’s fees.
Because of the stringent federal jurisdictional requirements under the Act, most Magnuson-Moss lawsuits are brought in state court. However, major cases involving many consumers can be brought in federal court as class action suits under the Act.
I’m sure most dealerships try to do the right thing for their customers in regards to warranties; however there are some who attempt to take advantage. The best defense against these dealers is understanding your rights, and being willing to demand that you be treated fairly.