ARA Calls on FTC to Investigate Warranty Restrictions

In a letter to Federal Trade Commission (FTC) Chairman Jon Leibowitz, the Automotive Recyclers Association (ARA) is calling on the United States government to investigate possible violations of the Magnuson-Moss Act by automotive manufacturers.

The Magnuson-Moss Act of 1975 provides specific rules when warranties are provided, including restrictions on to what extent manufacturers may require consumers to use or not use components by brand, trade, or corporate name.

“Tying warranties to the use of new, authorized replacement parts is illegal under the Magnuson-Moss Act," states ARA CEO Michael Wilson in a news release. Wilson adds that the “unfounded disparagement of recycled original equipment manufactured parts” by automakers also is a potential violation of the Lanham Act, a piece of legislation that defines the scope of trademarks.

In its letter, the ARA asks the chairman for additional action beyond the FTC’s December 2010 consumer alert titled “Auto Warranties, Routine Maintenance, and Repairs: Is Using the Dealer a Must?”

The alert was helpful, says the ARA, but it did not specifically consider the issue of recycled OEM parts. "These potential violations of federal law that harm consumers, especially those least likely to be able to afford expensive replacement parts, need to be completely examined," says Wilson.