FTC Charges MINI Violated Warranty Laws

The Federal Trade Commission has decided against BMW USA and MINI USA on charges that the company attempted to require MINI owners to use only MINI branded replacement parts and to only allow MINI dealers to perform maintenance on their vehicles.

Such actions, say the FTC, violate the Magnuson-Moss Warranty Act, which the FTC is charged with enforcing, and which specifically prohibits such representations.

In the complaint, the FTC states that MINI told customers that their warranties may be voided unless they used MINI parts and dealers for their maintenance work. The Magnuson-Moss act states that warranty offerers may only make such proclamations if the service is being performed free of charge, as it was during the three year free scheduled maintenance period provided under many MINI sales agreements. The issue arises during the fourth year of the vehicles' warranty period, when the vehicles are no longer being serviced under the free maintenance plan.

Here is the offending language from the MINI warranty booklet:

“Have maintenance and repair work performed by your MINI dealer. Make sure that maintenance work is stamped in this Service and Warranty Information Statement. These entries are the evidence of regular maintenance of your vehicle and are a requirement for warranty claims.”

MINI agreed to settle the charges with the FTC in March 2015, but the agreement was just now finalized after a public comment period and an agreement between MINI and the FTC to work out the final details.

The order, according to the Federal Register, contains 8 parts.

“The order contains provisions designed to prevent respondent (MINI) from engaging in similar acts or practices in the future. Specifically, Part I prohibits respondent, in connection with the sale of any MINI Division good or service, from violating any provision of the Warranty Act, including, but not limited to, the anti-tying provision. Part II prohibits respondent, in connection with the sale of any MINI good or service, from misrepresenting that vehicles, in order to operate safely or maintain value, must have maintenance work performed by a MINI dealer. Part II also prohibits respondent from misrepresenting any material fact concerning any warranty or maintenance requirements of any MINI good or service.

Part III requires respondent to send notices to all affected consumers informing them that their warranties are not conditioned on repair work being performed by MINI dealers or on the use of genuine MINI parts.

Parts IV through VIII of the proposed order are reporting and compliance provisions. Part IV requires respondent to maintain, and make available to the Commission upon written request, copies of Owner’s Manuals and Warranty Statements for each motor vehicle sold by respondent. Part V requires dissemination of the order, now and in the future, to persons with responsibilities relating to the MINI Division and the subject matter of the order. Part VI ensures notification to the FTC of changes in corporate status. Part VII mandates that respondent submit an initial compliance report to the FTC, and make subsequent reports available to the FTC, upon request. Part VIII is a provision ‘‘sunsetting’’ the order after twenty (20) years, within certain exceptions.”

The final FTC vote was unanimous in favor of approving the final consent order.