Secret Warranties
Before we pillory the automotive industry on lemon issues, we need to make one thing clear. In our economic system, the primary goal of a business is to make money, either for the owner(s) or the stockholders. Sure, they fill a need, but if they didn’t, they wouldn’t make money. Some even reward their employees very well, because if they didn’t, they’d make less money. It’s economics, it’s not politics, it’s not religion. If businesses take steps to not lose money, they do so in pursuit of their goal — to make money.
Your job, on the other hand, is to make sure the products you buy work and prove worth the money you spent on them. That being said, we’ll now discuss some of the tricky tactics auto makers use — to do what? — right, to not lose money.
We’ve talked about basic warranties, drivetrain warranties etc. Now we’ll move to a technique the industry watchers call secret warranties. Auto makers don’t use that term; they call them policy adjustments or good will programs.
Secret warranties are warranty extensions to cover known defects; these programs are communicated to regional offices — not dealerships, not the impacted car owners. Theoretically, a consumer with a defective vehicle off warranty could take the car to an independent mechanic and pay for the repair without ever knowing the service could have been performed under the warranty extension. Or, even worse, that consumer could have gone back to the dealer for the repair and still have paid for the service because the dealer was unaware of the extension.
There are no federal laws requiring notification of secret warranties. In the late 1970s, Ford was having problems with piston scuffing and cracked blocks in 1976-78 Fords. The Federal Trade Commission (FTC) reached an agreement with Ford to notify and compensate owners and to notify all future owners through 1988. The FTC tried the same thing with GM, Volkswagen, Honda and Chrysler but dropped the notification requirement. In 1981, with the onset of the Reagan Administration, all efforts to alert consumers to secret warranties died. The Center for Auto Safetyworked with the Center for Public Interest Law in a class action suit against Toyota over secret warranty issues. Toyota agreed to notify and reimburse all present and past owners of a pulsating brake problem with 1983-87 Camrys.
The only states with laws requiring disclosure of vehicle defects are California, Connecticut, Virginia and Wisconsin. These states require the auto maker to directly notify owners of warranty extensions with terms of the warranty as well as provisions for reimbursement to consumers who have already paid for the covered repairs.
How to Get in on the Secret
Your first clue could be a Technical Service Bulletin (TSB), but the existence of a bulletin covering the issues isn’t proof positive of an extended warranty. The TSB you’ll need, there are often more than one covering the same defect, is the full TSB that provides diagnostic and repair information. If that TSB includes authorization to make the repairs at the manufacturer’s expense, you’ve hit the jackpot. All too often this authorization is known only to the regional factory representatives and not the dealers. If you see the phrase “check for availability of good will assistance,” you’re close to that jackpot.
Another hint that there may be a secret warranty is when owners of the impacted vehicles are treated differently — some receive full repair at no cost, others do not. Again, this isn’t a sure thing. It may be an example of treating good customers well as opposed to those of us who can’t afford to bring our new vehicles to the dealership for pricey oil changes. How you figure out if owners with complaints similar to yours are treated differently is up to you. In this brave new world, nearly every make and model of vehicle available in the U.S. has a blog or a forum. That could be your best source.
Once you’re fairly sure your problem is covered by a secret warranty, take that jackpot TSB to your dealer. Remember that the dealer may not be aware of the “good will.” If you get no satisfaction from the dealer, you have no choice but to go to the manufacturer, or rather the regional office identified in your owner’s manual. If you have trouble getting through to the manufacturer’s representative, the next step is the manufacturer’s customer relations office.
If you get no satisfaction and you’re generally the mild-mannered type, you will have to morph into a complaining monster. Unfortunately, that’s the recommended procedure. Draft letters to the manufacturer’s board of directors, consumer groups, the state attorney general, federal agencies like the NHTSA’s Office of Defects Investigation. In other words, annoy everybody you can think of who is in a position to go to the manufacturer to make you go away.
As a last resort, you can also try small claims court. There’s a fine line between a vehicle with a fixable defect covered by a secret warranty and a true lemon — one that nobody has really figured out how to fix. If you’re not sure where your defective vehicle sits on that line, you may want to consult a lemon lawyer.
If you suspect your vehicle is a lemon, contact us using the form on the right and we’ll help you locate a lemon lawyer.
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