ILLEGAL CONDITIONED AUTO WARRANTY CHARGES SETTLED BETWEEN FTC AND BMW

FROM:  U.S. FEDERAL TRADE COMMISSION
BMW Settles FTC Charges that Its MINI Division Illegally Conditioned Warranty Coverage on Use of Its Parts and Service

BMW of North America LLC has agreed to settle Federal Trade Commission charges that its MINI Division violated the Magnuson-Moss Warranty Act by telling consumers that BMW would void their warranty unless they used MINI parts and MINI dealers to perform maintenance and repair work.

In an administrative complaint, the FTC alleged that BMW, through its MINI Division, violated a provision in the Warranty Act that prohibits companies from requiring that consumers – in order to maintain their warranties – use specific brands of parts or specified service centers (unless the part or service is provided to the consumer without charge).

“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,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “As a result of this order, BMW will change its practices and give MINI owners information about their rights.”

The proposed order settling the FTC’s complaint prohibits BMW from violating the Warranty Act and the FTC Act in connection with any MINI Division good or service. The settlement also:

bars BMW, in connection with the sale of any MINI Division good or service, from representing that, to ensure a vehicle’s safe operation or maintain its value, owners must have routine maintenance performed only by MINI dealers or MINI centers, unless the representation is true and BMW can substantiate it with reliable scientific evidence; and requires BMW to provide affected MINI owners with information about their right to use third-party parts and service without voiding warranty coverage, unless BMW provides such parts or services for free.
The Commission vote to accept the consent agreement package containing the proposed consent order for public comment was 5-0. The FTC will publish a description of the consent agreement package in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through April 20, 2015, after which the Commission will decide whether to issue the order on a final basis. Interested parties can submit written comments electronically.

NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $16,000.