Used Mercedes Car

Extended Service Contracts Sold by Used Car Dealers May Qualify for Protection Under Magnuson-Moss Warranty Act

Vehicle purchases can be stressful. Used vehicle purchases, which involve their own unique tricks and intimidations, are no exception—especially when the transaction involves a used car dealer. Even the most savvy consumer—one who employs painstaking research, vehicle inspections and test drives into negotiating the best deal—may drive his/her new car off the lot with a trunkful of doubt. It can take days, even weeks, to digest the reams of just-signed paperwork detailing sale terms, financing obligations and warranty stipulations. Warranty stipulations may come into play later, as many consumers purchase extended warranty coverage offered by the dealership.  Extended warranties provide protection for investments made in older, battle-tested products, including used cars. Extended warranty sales are also a big money-maker for dealerships.

Unfortunately, these warranties aren’t always honored when they should be. Many customers seeking repairs or service under their warranty coverage have been turned away (or were forced to pay out-of-pocket) by the same dealership that sold them the warranty in the first place. The dealer’s refusal to honor a written warranty may involve a misunderstanding of terms, or it may be an intentional fiscal strategy. Often, warranty conflicts arise from situations in which a dealer sells an extended warranty on a used car while paradoxically selling the car “as is”. Buyer beware: this practice is not legal. Consumer products are not required by law to have warranties, but if one is given or sold, it must comply with the Magnuson–Moss Act of 1975. Magnuson-Moss prohibits “as is” warranty disclaimers during the term of any written warranty. If the warranty does not comply, the Act provides the consumer with a cause of action. This cause of action is valid even in instances where the written warranty has already expired, as long as the defects in question appeared during the warranty period. In other words, consumers who purchase virtually any sort of warranty for any type of product are protected by federal law. Written warranties trump “as is” representations. Specifically, Magnuson-Moss creates a cause of action for breach of any written warranty, whether that warranty is “full” or “limited” (all automobile warranties are limited). The statute is remedial in nature and is intended to protect consumers from deceptive warranty practices. 

Under the Act, “written warranty” is defined as meeting at least one of two criteria:
(1) a written statement that a product is defect free or will perform at a specified level of performance for a specified time; or,

(2)a written promise to refund, repair, replace or take other remedial action if the product fails to meet promised specifications. The promise, affirmation, or undertaking must form part of the basis of the bargain between a supplier of the product and a consumer buyer.

To prove a breach of warranty under the Act, the consumer must prove that a warranty was made, that the warranty was breached, and that the breach caused damages. You may have a claim if you purchased a warranty, only to have that warranty disclaimed upon presentation for needed repairs. If you paid for repairs out-of-pocket, or experienced other damages (such as lost wages from missed work), then you may be entitled to recover under Magnuson-Moss. Be sure to ask your attorney about the Act’s provisions for court costs and attorney’s fees, as Magnuson-Moss allows winning plaintiffs to recover both.


Amanda Narvaes

Amanda P. Narvaes, a Partner, joined Drew Cooper & Anding in 2011. Ms. Narvaes is a civil litigator in the areas of complex commercial litigation, lender liability, copyright litigation, and consumer protection. She graduated cum laude from Carleton College with a bachelor’s degree in history. She earned her law degree at WMU-Thomas M. Cooley Law School, graduating magna cum laude, and received Cooley’s Distinguished Student Award. Ms. Narvaes represents clients before Michigan trial courts across the state and in the Michigan Court of Appeals, and before the United States District Courts for the Western and Eastern District of Michigan. Ms. Narvaes has been a guest speaker in Ron Foster’s “Litigation for Paralegals” class. Ms. Narvaes discusses differences between Federal civil discovery rules and Michigan civil discovery rules.