Why You Don’t Have to Use a Dealer for Repair Attempts

February 10, 2011

“It’s a common misconception that only car dealers can perform the maintenance services on a newer vehicle that is under warranty,” said Rich White, executive director, Car Care Council. “The recent FTC Consumer Alert is very clear on the issue. Consumers can have maintenance services performed by their local independent repair shop or even do the work themselves without affecting the warranty, even if dealers and manufacturers suggest the opposite. It is also important to note that using aftermarket parts does not void the warranty.”

The law Mr. White is referring to is 16 C.F.R. 700.10. The Code of Federal Regulation (CFR) are rules about and interpretations of the bills passed by the federal legislators. So the Magnuson-Moss Warranty Act is United States law enacted in 1975 agreed to by the House of Representatives  and the Senate, while the Federal Trade Commission (FTC) has the power to explain and enforce that law.

The federal lemon law prohibits “tying arrangements,” that is, making it a condition of the warranty that a consumer has to use a certain brand or product to get repairs. The FTC explains:

Under a limited warranty that provides only for replacement of defective parts and no portion of labor charges, section 102(c) prohibits a condition that the consumer use only service (labor) identified by the warrantor to install the replacement parts. A warrantor or his designated representative may not provide parts under the warranty in a manner which impedes or precludes the choice by the consumer of the person or business to perform necessary labor to install such parts.

No warrantor may condition the continued validity of a warranty on the use of only authorized repair service and/or authorized replacement parts for non-warranty service and maintenance. For example, provisions such as, “This warranty is void if service is performed by anyone other than an authorized ‘ABC’ dealer and all replacement parts must be genuine ‘ABC’ parts,” and the like, are prohibited where the service or parts are not covered by the warranty. These provisions violate the Act in two ways. First, they violate the section 102 (c) ban against tying arrangements. Second, such provisions are deceptive under section 110 of the Act, because a warrantor cannot, as a matter of law, avoid liability under a written warranty where a defect is unrelated to the use by a consumer of “unauthorized” articles or service.

Some manufacturers, however, try to avoid liability by claiming that a consumer used an “unauthorized” part, or did not go to an “authorized repair facility,” which caused the damage. But the burden should be on the manufacturer to prove the part or service caused the damage – not the consumer’s burden to prove it didn’t. If the manufacturer cannot meet this burden, then it has refused to repair the vehicle, itself a violation of the federal lemon law.

What is a Technical Service Bulletin (TSB)?

January 27, 2011

A Technical Service Bulletin, often abbreviated TSB, is an instruction, issued by manufacturer, about a specific repair issue on a particular year, make ad model vehicle. Think of them as a midpoint between a normal repair attempt and a Recall.

Sometimes, the manufacturer identifies a defect with a vehicle, but it judges the problem is not a serious safety concern.  So the manufacturer prepares a TSB, which details how to fix this known problem, and sends it to dealerships and mechanics. The next time a consumer comes in complaining of this defect, the dealership is supposed to apply the TSB to take care of the problem.

While a recall generally applies to all vehicles of a certain year, make, and model,  sometimes only certain vehicles in the production run demonstrate the actual defect. This is another situation in which a TSB might be issued. The cost of a full recall is judged too expensive, because not every vehicle actually needs the repair. But the manufacturer knows about the problem, so it issues a TSB, which it knows will only be applied if a consumer shows up at the dealership complaining about that problem.

If enough people complain about the same problem with their vehicles, a manufacturer may issue a TSB even though it did not previously believe a problem existed. The TSB may contain research by the manufacturer’s engineers about how to eliminate the problem or how to diagnose if the problem is identical to the one other consumers have reported.

A TSB can be issued without the manufacturer having a solution to the problem.  A TSB could merely contain the manufacturer’s position as to why the problme is not really a defct that needs to be repaired. A TSB may just inform mechanics that the problem is known to be widespread, but a solution is still being developed. A TSB may be issued with a proposed solution for the complaint, but prove to ultimately be ineffective in fully and finally resolving the problem .

The Wikipedia article on TSBs suggest that they contain no obligation to fix a vehicle for free, but the fact a manufacturer saw fit to issue one creates  legal issues. For example, failing to fix a vehicle subject to a TSB may breach an implied warranty or be considered an unfair or deceptive trade practice. If a problem persists past the expiration of warranty, a TSB may be proof that the repair was not completed or at least not completed properly. In that case, the manufacturer issuing the warranty may have an obligation to now complete the repair, even if the vehicle is outside the warranty period.

The National Highway Traffic Safety Administration (NHTSA)  maintains a good resource for checking whether your vehicle has a pending TSB. Your local dealership should also have easy access to a database to check whether the TSBs apply to your vehicle.

Tractor Trailer lemon laws

January 9, 2011

The Missouri lemon law specifically excludes “commercial motor vehicles,” and most tractor trailers are used for a commercial purpose.

Similarly, the federal lemon law only applies to products “normally used for personal, family, or household purposes,” though that phrase does leave some wiggle room.

Only in Wisconsin does the state lemon laws apply to tractor trailers, where there have been other big verdicts in the past.

The idea seemed to be that individuals need the attorney fee-shifting found in the lemon laws, while commercial ventures do not need the same economic lift. Unfortunately, that is rarely true, as many private lessees and owner-operators of tractor trailers do not have their own attorney or cannot afford an attorney’s hourly rate. Losing even a few days because of repair attempts can be the difference between profitability and disaster.

In Missouri, we rely on the Uniform Commercial Code to provide at least some legal protection. The Uniform Commercial Code provides for “implied warranties” as well as a more traditional breach of contract. If the tractor trailer was repaired under a warranty, but was not fully and finally fixed, then the warrantor has not lived up to its obligation. The warranty may not guarantee a perfect vehicle, but if it promises a fix a defect, that means the vehicle should not have similar or additional problems after a repair attempt.

The damages for these cases is still the difference between what you actually paid for your vehicle, and what you would have paid, back at the time of purchase, if you had known then what you know now about your vehicle.

An attorney, like Law Office of Bryan Brody, can still handle the case on a contingent basis, but the fees would have to be subtracted from what the consumer would otherwise be owed, because there is no provision for making the manufacturer or warrantor pay your attorney’s fees. The good news is that if the facts of the case are good enough and the price of the tractor trailer is high enough, then it should make it worthwhile it to pursue a case.

Missouri Merchandising Practices Act

August 13, 2010

The Missouri Merchandising Practices Act  (MMPA) can be a powerful consumer protection statute. It states that the

 The act, use or employment by any person of any deception, fraud, false pretense, false promise, misrepresentation, unfair practice or the concealment, suppression, or omission of any material fact in connection with the sale or advertisement of any merchandise in trade or commerce or the solicitation of any funds for any charitable purpose, as defined in section 407.453, in or from the state of Missouri, is declared to be an unlawful practice.  section 407.020 R.S.Mo.

Almost none of the important terms are defined by the statute. What is considered deceptive? What constitutes an unfair practice? Under Missouri law, if there is no definition, then we should use the ordinary meaning of the terms. In other words, if you can make a reasonable argument, using common sense, then perhaps you can use the statute.

The law requires only that “any material fact in connection with the sale or advertisement”  of the product must be “in or from the state of Missouri” to have a cause of action. If the vehicle as purchased in Missouri, then clearly that is a material fact.

But if the vehicle was purchased in another state, perhaps the money can from Missouri, or the dealership advertised in Missouri, or some of the later repair attempts occurred in Missouri. As long as the vehicle “directly or indirectly affecting the people of this state,” then you might be able to use the MMPA.

The MMPA also only applies to vehicles that are used “primarily for personal, family or household purposes.” The federal lemon law, the Magnuson-Moss Warranty Act, uses similar language.  There are many cases from many states that explain while automobiles are often used for both personal and commercial uses, they should nevertheless be considered a consumer product.  Manufacturers, who make this argument, often for bigger trucks, rarely succeed in preventing a consumer’s claim.

There is one significant pitfall associated with the MMPA. “The court may, in its discretion, award punitive damages and may award to the prevailing party attorney’s fees.” Section 407.025 R.S.Mo. By using the words “prevailing party,” Missouri allows for the possibility of a manufacturer recovering its attorneys fees back from a consumer if a consumer loses an MMPA claim. In that situation, not only would a consumer not win any money from the manufacturer, but could end up actually owing the manufacturer money. The good news, though, is that if a consumer prevails and the jury awards money damages, then the judge can award additional money from the manufacturer to pay for the consumer’s attorney’s fees. 

Even with a strong Missouri state lemow or federal lemon law case, it often makes sense to also argue that the manufacturer has violated the Missouri Merchandising Practices Act while additional facts are discovered.

Implied Warranties

May 18, 2010

An implied warranty is the promise that a product meets certain minimum expectations, regardless of whether a written or even verbal commitment has been made.

Consider a refrigerator. The warranty probably does not state that the product will keep things cold. Nevertheless, consumers are allowed to assume that the product will do so. That is the “implied warranty” that comes with the refrigerator.

A vehicle is expected to be safely drivable.  If the vehicle cannot be driven because of defects, there might be a violation of the implied warranty. Furthermore, if a check engine light is illuminated or the vehicle is making unusual noises, it might not conform to a consumer’s reasonable expectations about its performance. This, too, might be considered a breach of the implied warranty.

If a manufacturer or dealer makes a more specific promise about the use of a product, they might have created a different type of implied warranty. For example, a consumer might purchase a truck because it can tow a certain amount of weight. If the vehicle’s nonconformities ultimately prevent a consumer from doing that towing, there might be a violation of the implied warranty of fitness for a particular purpose.

Some manufacturers try to disclaim implied warranties, meaning they do not want to be responsible for this type of promise. In Missouri, it is well-established that if a warranty fails of its “essential purpose,” any disclaimers are void. To the extent a consumer has put up with an unreasonable number of repair attempts, the warranty may have failed its purpose to get a problem fixed.

The federal lemon law (Magnuson-Moss Warranty Act) and the Missouri state Uniform Commercial Code (UCC) provides causes of action for implied warranties.

What is a Consumer Product?

May 17, 2010

The Federal Lemon Law (Magnuson-Moss Warranty Act) defines a consumer product as almost any item that “is normally used for personal, family, or household purposes.”

But it is the common, or normal, use of a product that determines whether it is a consumer product under the federal lemon law.  The actual use the product by the consumer may not necessarily be the same as the “normal” use of that product.

For example, automobiles are often used for both personal and business uses, but under the federal lemon law, they should nevertheless be considered a consumer product. Even if a manufacturer tries to label its product as “commercial,” that by no means guarantees that the majority of consumers actually use the product for a business purpose.

Determining how a product is normally used by consumers can be very difficult. Few manufacturers keep track of how its customers are using its products. Getting the names of all customers may be an invasion of privacy, and calling more than a small percentage of them is likely unfeasible.

With vehicles, it is somewhat easier. The federal government has created specific criteria for a vehicle to be commercial, based on its weight and cargo. Though it sounds strange, some large trucks might therefore be considered commercial products, even if they are only used for personal reasons.

In one important court case in Missouri, the Court of Appeals determined that a jury should decide whether a consumer good is a consumer product. In that case, the consumers has purchased a 1-ton Dodge truck with a dump-truck body. The trial judge found that the vehicle sounded too much like a commercial product and dismissed the case. But on appeal, the consumers got the case reinstated, because that factual decision should  be made by their peers.

Thus, even if it is unclear if your product is primarily used for personal or business reasons, as a consumer, you should be entitled to your day in court.

What is covered under the Federal Lemon Law?

May 16, 2010

If you bought a “consumer product”  for more than $25.00 that came with a warranty, the federal lemon law (Magnuson-Moss Warranty Act) may apply to your item.

A “consumer product” is any item that “is normally used for personal, family, or household purposes.” The idea behind this language is to exclude products that are commercial, that is, normally used for business purposes.

A warranty under the Federal Lemon Law includes written promises, like a warranty booklet that comes with a vehicle, but it could also be an implied warranty or a service contract.

The Federal Lemon Law  creates a cause of action for a consumer who is damaged by a failure “to comply with any obligation” found in the federal statute.  One of those obligations is that the seller must “remedy such consumer product within a reasonable time and without charge.” See 15 U.S.C. section 2304.

Thus, a warranty promises to repair an item, and the federal lemon law requires the repairs to be done in a reasonable time and without charge. When this is not done, the product might be a lemon under the federal lemon law.

Deceptive Extended Warranties

April 20, 2010

The Magnuson-Moss Warranty Act covers “service contracts,” frequently referred to as extended warranties. But the extended warranty most consumer receive is not an extension of the factory warranty, but a new contract from  company that may not have a consumer’s best interests in mind.

Missouri’s Attorney General recently sued 6 local extended warranty companies. The six warranty companies are:

  • National Dealers Warranty, Inc., a.k.a. StopRepairBills.com
  • Warranty Activation Headquarters, Inc., a.k.a. Nationwide Automotive Protection
  • Extended Warranty Corporation, Inc., a.k.a. Key Protection Group
  • Dealers Warranty, LLC, a.k.a. MOGI
  • U.S. Auto Warranty
  • Dealer Warranty Services

Unfortunately, many consumers will not benefit from a lawsuit filed by the government. The Attorney General has asked for “full restitution” for victims, but is unlikely, or unable, to speak to each of those victims individually.

Nor is the deception limited to those companies. Missouri’s Attorney General has also announced “a task force to look at sales practice guidelines designed to stop auto service contract fraud.” A primary concern is a new service contract, billed as an extended warranty, with coverage much worse than what a consumer had through the manufacturer.

One proposed solution is through regulation. In general, it appears most manufacturers and extended warranty companies tend to the bare minimum required by law. If no law exists, there is little financial incentive to try to satisfy consumers.

Another option is for individual consumers can hire their own attorneys to sue the extended warranty companies.

Finally, if a problem was first reported during the original factory warranty, the manufacturer may still retain responsibility for repairing the defect. The manufacturer’s warranty requires the issue to be corrected, regardless of whether the attempts take longer than the length of the warranty.

Extended Warranty Lemon Law

April 19, 2010

The federal lemon law, the Magnuson-Moss Warranty Act, clearly states that a consumer can sue a “a supplier, warrantor or service contractor” to comply with ” any obligation…under a written warranty, implied warranty, or service contract.” 15 U.S.C. § 2310(d)(1). Based on this language, several courts have upheld the right of a consumer to file a lawsuit based on an unreasonable number of repair attempts paid for by an extended warranty.

Even though a consumer can sue, there are still several questions to answer. First, how long does a consumer have to file the lawsuit? Like for other federal lemon law cases, a consumer should have at least 4 years from the date of purchase of the extended warranty, though that date might be extended. How many repairs are unreasonable? Like the Missouri lemon law, four or more repairs is unreasonable, though fewer may also qualify as unreasonable.

The most interesting question is how much a consumer can recover. Many manufacturers and extended warranty companies try to claim that a consumer is limited to the purchase price of the extended wararnty. But that does not seem to be what the legislature intended, nor would it be fair to a consumer. Consider if a nonconformity with a vehicle resulted in the complete l0ss of use of the vehicle. Because the nonconformity would impair the use, value, or safety of the vehicle, not the extended warranty, a consumer should be able to recover the diminution of the value of vehicle itself.

Be sure to investigate the extended warranty company before paying money for their product.

About the Lemon Laws

April 15, 2010

If you own a product you feel is defective or does not meet your expectations, a “lemon law” can provide additional help, beyond just another repair attempt and another repair attempt and another repair attempt…

The word “lemon” has been used to refer to something that is unsatisfactory since Shakespeare, in “Love’s Labour’s Lost,” Act V, Scene II.  The first “lemon law” to protect vehicle owners was passed in Connecticut in 1982. That law is still on the books as Title 42, Chapter 743b of the General Statutes of Connecticut.  Since then, all 50 states have passed a lemon law, including Missouri in 1984.

The Missouri state lemon law covers new vehicles purchased in the last 18 months. If you have been to the dealership four or more times for repair attempts or if your vehicle has been at the dealership for more than 30 days, then you may be able to ask the manufacturer to take the vehicle back and refund your money.

In 1975, the federal government passed a law, the Magnuson-Moss Warranty Act,  designed to protect consumers of almost product, including cars and trucks and electronics and appliances, as long as it came with a warranty.

If your product has had an unreasonable number of repair attempts , or has been at the dealership for an unreasonable length of time, then you may be able to recover money and keep the product to do with as you please.

Furthermore, if your vehicle still has an ongoing problem, then the manufacturer may have breached the warranty, meaning the manufacturer may owe you money because they have been unable, or unwilling, to actually fix the vehicle.

Law Office of Bryan Brody has experience with these laws and more.  Please contact us to obtain more information about how we might be able to help you.

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