The Crittenden Automotive Library

Announced Actions for January 3, 2003

Agency: Federal Trade Commission
Date: 3 January 2003

Commission authorization to send letter regarding used car warranties: The Commission has sent a letter to the National Independent Automobile Dealers Association (NIADA) stating its views on the applicability of the Magnuson-Moss Tie-in Provision to certain types of used car warranties. The letter was sent in response to a request from the NIADA for an FTC opinion regarding split-cost warranties. Such warranties are commonly called "50/50" warranties because they apportion half of the costs for warranty-related repairs to the dealer and half to the buyer. NIADA specifically asked the Commission whether such warranties violate the "tie-in" provision of the Magnuson-Moss Warranty Act, because their terms also require that the selling dealer perform the warranty repairs.

According to the letter, which is available on the Commission's Web site as a link to this release, the Act's tie-in provision (Section 102(c)) and Section 700.10 of the FTC's Interpretations of the Magnuson-Moss Warranty Act do not prohibit 50/50 warranties or other warranties under which the warrantor pays a percentage of the costs for covered repairs from requiring that the warrantor perform all covered repairs. The Commission vote to send the letter to the NIADA was 5-0. (File No. P864207; staff contact is Lemuel W. Dowdy, Bureau of Consumer Protection, 202-326-2981.)

Media Contact:

FTC Office of Public Affairs
202-326-2180