Why is Coast Motor Werk the BMW & MINI Dealership Alternative?
We’re glad you asked!
Our approach to the care and maintenance of your BMW or MINI vehicle is very different from the dealer. BMW builds the very best vehicles and often sells them without much effort – the car simply sells itself. A typical visit to the sales department results in an immediate test drive, and once you drive it, you buy it. Other manufacturers “sell” their inferior vehicles and try very hard to “sell” the customer satisfaction.
The BMW/MINI dealer knows you love your BMW or MINI, but the motivation to keep you loving it is perhaps lacking. The long lines, the wait for an advisor, the 1-2 week out appointment schedule, the long wait for a loaner… A typical visit can take an hour or more just to drop off your car.
Then the repair can take far too long and quite often does not get done right the first time. The expense is very high, and the chances your car comes back to you better than before are low. The “free scheduled maintenance” warranty period can also be very frustrating, as only the indicated repairs can be performed. For example, if the check engine light comes on but there are still 700 miles until the oil service is due, the dealer will not service both. So you’re back to do it all over again a couple of weeks later.
We are here to satisfy you and your BMW and MINI’s needs as painlessly as possible. Bring your car in and it will be thoroughly inspected and notes made – regardless of warranty status. We are simply not conflicted or influenced by the corporate monster that almost all dealerships operate under, and therefore we will tell you everything about your car, whether you decide to repair it or not.
- The recommended repairs and their importance level will be well explained and shown to you by a master mechanic.
- The repair costs and time estimates will be accurate and not pushed upon you.
- When it’s time to pick up your vehicle it will be ready, repaired, and your old parts will be available for you to inspect or keep if you wish.
- We want you to be an informed BMW/MINI owner and completely satisfied with our service, and if not we truly want to know how we can improve.
- Our techs are salaried employees, and are not pushed to complete repairs as fast as possible. We reward them for quality rather than quantity.
- Our specialization in MINIs and BMWs is why we continually satisfy our customers and are known to have a cult following on sites like Yelp.
- Our commercial locations, low overhead and efficiency are why we don’t have to charge what the dealer does. Quite often our prices are half of what the dealer charges for the same service or repair.
How do I make an appointment?
Is CMW open on Saturdays?
We understand that some customers would like to have their vehicles serviced on Saturdays, but we put some thought into the decision not to open on Saturdays. First, parts are in limited supply on Saturdays, as most warehouses are closed and those that are open do not deliver on Saturdays. Second, the dealer is open on Saturdays and requires technicians to work that day. Taking Saturdays off is a great motivator to encourage those techs to come work for us (Really, who wants to work on Saturday?) Last, my daughter really likes spending time with me on weekends…and I want to keep it that way.
Does CMW offer loaner vehicles?
Although CMW does not own loaners for our customers, we do have a very good relationship with a local rental car company. The rental fee is around $30 per 24 hour period with unlimited mileage and usually only adds 20 minutes to the drop off time. In order to make the repair process as convenient as possible, the rental car can be simply left at the shop when you pick up your vehicle and we’ll take it from there.
How long has CMW been in business?
CMW was established in May of 2005 at our Huntington Beach location.
Does CMW use original parts?
Yes, CMW does use original factory parts. The only exceptions are when we determine the aftermarket part exceeds original quality or warranty, or when the customer requests the use of aftermarket parts.
Are CMW technicians certified?
The dealership likes to use this description, but there is no such thing as a “Certified Technician.” We send our technicians to the same training classes that BMW and MINI provide the dealerships for free, which are offered at an expense to independent shops.
Most of the technicians working at CMW are dealership trained, and many have the highest level of training offered by BMW/MINI. In fact, CMW employs more “Level 1 Master Technicians” per capita than any Southern California dealership.
Do you have a shuttle?
Yes, we can drop you off and pick you up locally at home, work, or anywhere you like. Let your service person know if you need a ride.
Do you have a night drop box?
Yes, early morning and late night drop off is available at Coast Motor Werk. After scheduling your appointment, simply lock your vehicle out front. Drop the keys through the mail slot, and we will do the rest.
Repair, Service & Warranty
How long do repairs take?
Most repairs are completed the same day. Sometimes bigger repairs can take longer, we will let you know in a timely fashion and help you make other arrangements if possible.
When will my car be ready?
In most cases, you will be told an estimated completion time when you drop off. If that time changes you will be contacted and informed of the revised time. There are some situations (such as diagnosis) in which a completion time is difficult to estimate. In these cases you will be informed as the repair progresses.
What is your warranty?
Repairs performed at any CMW location are warrantied for 3 Years or 36,000 Miles (whichever comes first). This exceeds the dealer’s warranty by a full year. Maintenance services do not apply, such as oil services, filters, tires, and brakes due to their frequency.
Does it make sense to repair my car or just buy a new one?
This is one of the most common questions we get from customers and we’ve spent quite a lot of time coming to one conclusion: Whether you drive a 1 Series or the very complex “7”, the simple fact is, it is less expensive to maintain almost any car than to replace it with a new one when the vehicle reaches the point when maintenance is needed (usually about year 5). Whether purchased outright or financed, all new vehicles depreciate most in the first 5 years. So it makes the most sense to keep a new car for as long as you enjoy driving it.
That’s what makes your BMW or MINI so great: they’re built to last and to be enjoyed. When properly maintained, your BMW or MINI will continue to perform well after 200,000 miles and put money back in your pocket the longer you keep it.
Over the past few years we’ve studied our customer database and have made some surprising discoveries. When we compare the notion of avoiding the costs associated with keeping your car by selling it after a few years versus keeping it on the road by simply maintaining it, the money saved by keeping your car for 10 years or longer will save you anywhere from $100,000 to $150,000! Imagine what you would do with $100,000! Personally? I would probably buy a classic BMW, maybe a 1973 2002 Turbo! A car that originally sold for $6,600 is now worth about $100,000!
How many miles will my car go?
One thing that inspired me to own BMWs was my experience working on them. I remember the first BMW I serviced as a young, ambitious technician. The engineering applied to this car was astounding to me. I studied every inch of that 3 Series and was so impressed with how much thought and development went into the car. Service items were easy to reach and well designed. No oil pouring all over the place when loosening the oil filter! Things like the door hinges were made to never need repair. This was something I had many frustrations with on GM products. I worked at a few different general repair shops when I was first starting and serviced many different makes, from Fords to Hondas and everything in-between – simply put, I never worked on anything built as well as a BMW. I did see some similarities with Porsche, Benz and Audi and realized the German made cars were better but I felt BMW was the best.
After I purchased my first BMW I studied it and serviced it with the care I gave my first car (1973 Datsun truck). I felt like a high schooler again, so my wife and I drove that car to Phoenix and on the way the vehicle made it to 135 mph! The car wanted to go faster but my mind (and wife) knew better. I purchased that BMW with 112,000 miles on the clock. I then drove it another 45K before selling it. The new owners quickly put nearly 40K more miles on the car before deciding to sell it and they called me to see if I was interested in buying it back. I was more interested in seeing just how long the car would go before it required a major repair. So I purchased it…again.
With faded paint plus a few dings and scratches I was driving my first BMW again. After a new set of tires and a few minor repairs it was back and ready to drive. Could this car do 135 mph again? This BMW had nearly 200K miles on it and it was still as tight, and as much fun to drive as it was the first time I bought it. The 1988 75 0il met an abrupt and unfortunate end shortly after turning 207,000 miles when it was hit from behind and totaled out. Just for the record it did do 135+ with over 200,000 miles on the odometer and just wanted to go faster.
We have many customers with over 200,000 miles on their BMWs and we even have a few with over 300,000 miles!
Should I buy a car that gets better gas mileage?
The simple answer at this time is no. Gas mileage in non-electric longer range vehicles is still well below the cost benefit. Here is some analysis we have compiled based on a 2008 BMW 528i driven 15,000 miles per year over the next 10 years. (20 mpg combined avg. at $4.00/gal).
Saving 5 mpg (25 mpg combined avg.) nets only $6,000 over 10 years, or only $600 per year. this would only put $50 into your pocket per month.
Saving 10 mpg (30 mpg combined avg.) nets $10,000 or $1,000 per year. It would take over 4 years of fuel savings just to recover the money paid on the sales taxes for the new car.
As you can see the advantages in the form of savings just aren’t there yet. It would take a vehicle that averages over 40 mpg to really save you money and we all know what those “micro cars” look like and how safe they are to drive.
How often should I change my oil?
Although fully synthetic oils are much better and newer engines make less pollution than older ones, it is still wise to service your oil regularly. We suggest every 7,500 miles or 6 months. It is proven that regular trips to the mechanic will help to avoid a costly breakdown due to preventative maintenance. It also is known that having regular maintenance records greatly improves the resale value of your vehicle.
Here is an engine that did not get regular oil services:
Here is a well maintained engine:
What about the maintenance extension?
Since the late 90s, BMW has been offering free scheduled maintenance after the purchase of their vehicles. More recently, BMW has been selling an extension to this free indicated service.
Some problems arise with this due to the conflicting interests between BMW Corporate and the Authorized U.S. Dealers. Often the dealer sells the maintenance extension at a price well over the manufacturer’s suggested price. Just like during the initial maintenance period, the manufacturer is trying to minimize its costs and your costs and will only do maintenance that is indicated or scheduled. The dealer, not wanting to miss an opportunity to generate revenue and meet their quotas, will be looking to sell you services or repairs not covered by the extension.
This maintenance extension should not be confused with a warranty; unlike the initial warranty, it simply extends the “free scheduled maintenance” period. It covers only front and rear brake pads, front and rear brake rotors, brake wear sensors, external drive belts, oil service, air filter, micro filter, wiper blade inserts, and brake fluid flush. Depending on the vehicle, it will cost from $1500 to $2500. What will be performed during that period varies, however. In most cases the vehicle will get two oil changes, an inspection service, a brake fluid flush and a brake job. Add this up at the dealer and it sounds like a wash; however, add it up at Coast Motor Werk and you could save up to $1000. It does not cover wear items such as bushings, gaskets, seals, motor mounts, window regulators, water pumps, spark plugs, fuel filters, radiators, hoses, and everything else in the car.
An example could go like this: Your 2004 325i indicates it is time for an oil change, so you schedule your appointment expecting to wait for it. You get to the dealer right on time and settle into a chair, and after an hour or so the service advisor tells you about a leaking valve cover gasket and cracked control arm bushings at $1500 or more (no, these are not covered!) Sure, he will provide a loaner – if you bought your car from them, otherwise it’s another $50. You pick up your car at least a day later and this takes another half hour or more. Want to see the old parts? Sorry, those have been thrown out already. Want to see your car being worked on? Sorry! It’s been taken in the back where you can’t see it, but hey, you can have all the coffee you want while you wait!
Now let’s look at the same situation at Coast Motor Werk. You call or schedule an appointment online and come in the same day if needed. You arrive and in 45 minutes your oil service is completed. The leaking valve cover gasket and control arm bushings are noted, and estimates are prepared. You will have the opportunity to see the failures noted by the technician working on your vehicle. If convenient, the repairs are done the same day, and the whole job costs less than $800 including the oil service! Your parts will be available for you to inspect or keep if you wish.
Keep in mind we are purchasing the same parts from the same dealer, and they even make profit on the parts we purchase! Even if you rent a car at Enterprise for $30, you’re still paying less than half if you factor in the cost of the extension. And let’s compare the time factor. At the dealer you would have probably spent 2-3 hours before driving away. At CMW you would be driving away 45 minutes later with an estimate, or leaving a half an hour later with work in progress on your vehicle (and you in a rental or getting a ride to your home or office). Most likely you’ll picking up your car at 5 pm the same day. Regardless, the time spent will probably be at half as well, if not less.
How much does diagnosis cost?
Diagnosis is one of the charges that is the hardest to estimate. Diagnosis requires the most skilled technician, the most expensive equipment and generally involves no parts sold as part of the diagnosis. Auto repair businesses must charge more per hour to diagnose problems due to the lack of the parts sales. We are no exception; however, we are realistic in what we charge. Often if the diagnosis is not difficult or the repair is expensive we will discount the diagnosis. We can sleep at night knowing we provided the very best service at the best value.
How much does an oil change cost?
We do “oil services.” Places like Jiffy Lube do “oil changes.”
BMWs and MINIs have extended oil change intervals. This does not mean they need less maintenance. Without a thorough inspection by an actual technician performed frequently, you run the risk of a costly breakdown. The oil change techs at places like Jiffy Lube would not care or tell you if there was a problem with your brakes or suspension because they don’t do those types of repairs.
At CMW, besides replacing the engine oil and oil filter with original BMW synthetic oil and BMW filter, the vehicle receives a complete inspection by a qualified technician. All the fluids are checked and/or topped off, and the tire pressures are checked and adjusted. The service interval reminder and tire pressure warning are reset, and any recommended repairs are estimated. Every vehicle oil service is slightly different; in most cases the prices range between $100 to $150 (MINIs $90-$100). “M” cars are higher due to the price of oil.
Can CMW perform my CPO repairs?
Unfortunately, only dealerships can perform repairs to Certified Previously Owned warranty (CPO), recalls and original warranty repairs at this time.
Do you wash cars after repairs?
Some of our locations can wash vehicles, and some can’t. Our HB location is in an industrial park and has no ability to reclaim the water used to wash vehicles, so this water goes into storm drains then into the sea. Due to this and city regulations, we cannot wash customers’ vehicles on site.
Can I bring my own parts?
In order to maintain our warranty, we must provide the associated parts for the repairs. When we provide the parts associated with most repairs or services, we stand behind them with an industry leading 3 Year or 36,000 Mile Warranty.
Do you install tires?
Yes, we provide and install tires as well as perform alignments. Although we are not a tire shop, we can get any tire and mount and balance on site. We also can balance tire/wheels on the vehicle to over 100 mph. This is something that even most tire shops can’t do. Alignments are done on site and using the latest BMW/MINI specific equipment.
Why are alignments on BMWs more expensive?
BMW has long been known for being the Ultimate Driving Machine. BMWs reward their drivers with that “connected to the road” feeling that most manufacturers strive to match.
Nothing is more important to the vehicle’s handling as alignment and tires. One way Your BMW or MINI can leave you wanting more is when the alignment is incorrect. Besides the expense of premature tire wear and poor gas mileage, your BMW may not perform like the ultimate driving machine and could even cause the vehicle to be less safe.
Not all alignments are the same. Besides the obvious adjusting and setting of the alignment, many things go into an alignment, especially on BMW vehicles. We at CMW start by discussing the driving characteristics with the owner of the vehicle. Next comes test driving the vehicle, then on to a hoist for a thorough inspection of the vehicles tires, suspension and steering. Any problems with these can lead to an improper alignment and wasted time and money. After the inspection is completed, the tire pressures are checked and adjusted and the vehicle is re-road tested. Any problems during this road test are noted and will be verified fixed after the alignment is completed.
What does the SERVICE ENGINE SOON light mean?
The engines in today’s BMW and MINI vehicles are largely electronically controlled. Sensors and actuators sense the operation of specific components (e.g., the oxygen sensor) and actuate others (e.g., the fuel injectors) to maintain optimal engine control. An on-board computer, known sometimes as a “powertrain control module” or an “engine control unit” controls all of these systems.
With proper software, the on-board computer is capable of monitoring all of the sensors and actuators to determine whether they are working as intended. It can detect a malfunction or deterioration of the various sensors and actuators, usually well before the driver becomes aware of the problem through a loss in vehicle performance or driveability.
The sensors and actuators, along with the diagnostic software in the on-board computer, make up what is called “the OBD system.” When a problem occurs the “SERVICE ENGINE SOON” light illuminates. This is an indicator thats it’s time to bring the vehicle in for a diagnostic. The repairs can be as simple as a loose or defective gas cap or something else. CMW will perform a thorough diagnosis and then provide a detailed estimate for the repairs before any repairs are made.
Why are repairs so expensive?
Vehicles are the sum of their parts, and BMWs and MINIs are no exception. BMW parts are much more expensive to purchase, as well as the specially designed tools and equipment needed to replace them. Often, however, the repairs done at CMW are as much as half of the dealership prices,and even less on MINIs.
Is my original warranty affected if I go to an independent shop?
The simple answer is no. Your vehicle’s warranty remains intact regardless of who services your car or where, unless it’s proven by the manufacturer the repairs or parts used caused a failure.
In many cases we at Coast Motor Werk have helped customers save money by pointing out potential problems that were still covered under the original warranty.
The Environmental Protection Agency has regulations in place establishing requirements for on-board diagnostic (OBD) systems on light-duty vehicles and light-duty trucks beginning with the 1994 model year. The OBD system ensures proper emission control operation for the vehicle’s lifetime by monitoring emission-related components and systems for deterioration and malfunction.
What is OBD And How Does It Work?
By the early 1980s, numerous vehicles were using electronics and on-board computers to control many of the engine’s control systems, such as fuel and ignition. Vehicle manufacturers had to develop ways to diagnose problems generated by the new electronic hardware found under the hood. Thus, the first OBD systems were developed by auto manufacturers in the early 1980s as electronic systems replaced mechanical systems.
The engines in today’s vehicles are largely electronically controlled. Sensors and actuators sense the operation of specific components (e.g., the oxygen sensor) and actuate others (e.g., the fuel injectors) to maintain optimal engine control. An on-board computer, known sometimes as a “powertrain control module” or an “engine control unit,” controls all of these systems. With proper software, the on-board computer is capable of monitoring all of the sensors and actuators to determine whether they are working as intended. It can detect a malfunction or deterioration of the various sensors and actuators, usually well before the driver becomes aware of the problem through a loss in vehicle performance or driveability. The sensors and actuators, along with the diagnostic software in the on-board computer, make up what is called “the OBD system.”
What Is The Connection Between OBD And Vehicle Emissions?
There are circumstances under which the vehicle computer will detect a system problem before the driver notices a driveability problem. Furthermore, OBD can detect problems that may not be noticeable upon visual inspection, because many component failures that impact emissions can be electrical or even chemical in nature. By detecting these emission-related failures and alerting the driver to the need for potential repair, EPA hopes that vehicles will be properly repaired before emissions become a problem.
How Does OBD Inform Drivers Of Problems?
When the OBD system determines that a problem exists, a corresponding “Diagnostic Trouble Code” is stored in the computer’s memory. The computer also illuminates a dashboard light indicating “Service Engine Soon” or “Check Engine” or displays an engine symbol. This light, usually yellow in color, serves to inform the driver that a problem has been detected and vehicle service is needed. When the car is delivered to the repair shop, a service technician can quickly retrieve the stored diagnostic trouble codes from the computer memory of the vehicle using newly developed diagnostic tools. Since the diagnostic trouble codes will specifically identify the problem, the service technician can more quickly and accurately make the proper repair.
It is important to note that an illuminated dashboard light, as described here, is intended to inform the driver of the need for service, NOT of the need to stop the vehicle. However, service should be sought as soon as possible. Drivers also may wish to consult a repair shop or their vehicle owner’s manual for further guidance.
Why Does The Dashboard Light Blink Or Flash?
Under certain conditions, the dashboard light will blink or flash. This indicates a rather severe level of engine misfire. When this occurs, the driver should reduce speed and seek service as soon as possible. Severe engine misfire over only a short period of time can seriously damage emission control system components – especially the catalytic converter, which is typically the most expensive to replace. Drivers should also consult their vehicle owner’s manual for manufacturer-specific information.
How Can The Dashboard Light Be Turned Off?
How Does OBD Help The Environment?
The intent of OBD systems is to assure proper emission system operation of each and every vehicle and light truck for its lifetime by monitoring emission-related components and systems for malfunction and/or deterioration. An important aspect of OBD is its ability to notify the driver of a problem before the vehicle’s emissions have increased significantly. If the vehicle is taken to a repair shop in a timely fashion, it can be properly repaired before any significant emission increase occurs. OBD systems will also provide automobile manufacturers with valuable feedback from their customers’ vehicles that can be used to improve vehicle and emission control system designs.
How Does OBD Help Consumers?
OBD systems are designed to alert drivers when something in the emission control system begins to deteriorate or fails. Early diagnosis followed by timely repair can often prevent more costly repairs on both emission control systems and other vehicle systems that may affect vehicle performance such as fuel economy. For example, a poorly performing spark plug can cause the engine to misfire, a condition sometimes unnoticed by the driver. This engine misfire can, in turn, quickly degrade the performance of the catalytic converter.
With OBD detection of the engine misfire, the driver would be faced with a relatively inexpensive spark plug repair. However, without OBD detection, the driver could be faced with an expensive catalytic converter repair in addition to the spark plug repair. Also, manufacturers have increased incentive to build a higher quality vehicle with better performance, reduced emissions, and more efficient powertrains to prevent problems that can lead to OBD detection. OBD systems will also provide far more information than ever before to help auto technicians diagnose and properly repair vehicles during their first visit to the repair shop, saving time and money for consumers.
Are OBD-Related Repairs Covered By Warranty?
Federal law requires that the emission control systems on 1995 and later model year vehicles be warranted for 2 years or 24,000 miles. Many auto makers provide extended warranty coverage beyond what is currently required by federal law. Federal law also mandates that the on-board computer and the catalytic converter on 1995 and later model year vehicles be warranted for 8 years or 80,000 miles.
Will Aftermarket Parts Work With OBD?
Most aftermarket parts should work with OBD systems, but there is no guarantee. It is the responsibility of aftermarket parts manufacturers to ensure that their parts work properly with the vehicle for which they are designed. This is even more true for OBD. The OBD regulations have required manufacturers to devise technologies and monitoring strategies that didn’t previously exist. However, EPA is confident that aftermarket part manufacturers who do a thorough job of replicating original equipment manufacturer parts and those who carefully develop specialty parts will be able to produce parts that work with the OBD system.
Can an automotive dealership void your warranty?
Understanding the Magnuson-Moss Warranty Act of 1975
Nearly everyone has heard about someone who has taken a vehicle that has been modified with aftermarket parts to a dealer for warranty service, only to have the dealer refuse to cover the defective items. The dealer usually states that because of the aftermarket parts the warranty is void, without even attempting to determine whether the aftermarket part caused the problem.
This is illegal.
Vehicle manufacturers are not allowed to void the vehicle warranty just because aftermarket parts are on the vehicle. To better understand this problem it is best to know the differences between the two types of new car warranties and the two types of emission warranties.
When a vehicle is purchased new, the owner is protected against the faults that may occur by an expressed warranty – an offer by the manufacturer to assume the responsibility for problems with predetermined parts during a stated period of time. Beyond the expressed warranty, the vehicle manufacturer is often held responsible for further implied warranties. These state that a manufactured product should meet certain standards. However, in both cases, the mere presence of aftermarket parts does not void the warranty.
There are also two emission warranties (defect and performance) required under the Clean Air Act. The defect warranty requires the manufacturer to produce a vehicle which, at the time of sale, is free of defects that would cause it to not meet the required emission levels for its useful life as defined in the law. The performance warranty implies a vehicle must maintain certain levels of emission performance over its useful life. If the vehicle fails to meet the performance warranty requirements, the manufacturer must make repairs at no cost to the owner. Even if an aftermarket part is directly responsible for a warranty claim, the vehicle manufacturer cannot void the performance warranty. This protection is the result of a parts self-certification program developed by the Environmental Protection Agency (EPA) and the Specialty Equipment Market Association (SEMA).
In cases where such a failed aftermarket part is responsible for a warranty claim, the vehicle manufacturer must arrange a settlement with the consumer, but by law the new-vehicle warranty is not voided.
Overall, the laws governing warranties are very clear. The only time a new vehicle warranty can be voided is if an aftermarket part has been installed and it can be proven that it is responsible for an emission warranty claim. However, a vehicle manufacturer or dealership cannot void a warranty simply because an an aftermarket equipment has been installed on a vehicle.
If a dealership denies a warranty claim and you think the claim falls under the rules explained above concerning the clean air act (such as an emission part failure), obtain a written explanation of the dealer’s refusal. Then follow the steps outlined in the owner’s manual. However, if this fails, then phone in your complaint to the EPA at (202) 233-9040 or (202) 326-9100.
If a dealer denies a warranty claim involving an implied or expressed new car warranty and you would like help, you can contact the Federal Trade Commission (FTC). The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, you can call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the online complaint form. The FTC enters Internet, telemarketing, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies worldwide.
What is the Magnuson-Moss Warranty Act?
On January 4, 1975, President Ford signed into law the Magnuson-Moss Warranty Act, Title 1, ..101-112, 15 U.S.C. ..2301 et seq. This act, effective July 4, 1975, is designed to “improve the adequacy of information available to consumers, prevent deception, and improve competition in the marketing of consumer products. . . .”
The Magnuson-Moss Warranty Act applies only to consumer products, which are defined as “any tangible personal property which is distributed in commerce and which is normally used for personal, family, or household purposes (including any such property intended to be attached to or installed in any real property without regard to whether it is so attached or installed).”
Under Section 103 of the Act, if a warrantor sells a consumer product costing more than $15 under written warranty, the writing must state the warranty in readily understandable language as determined by standards set forth by the Federal Trade Commission. There is, however, no requirement that a warranty be given nor that any product be warranted for any length of time. Thus the Act only requires that when there is a written warranty, the warrantor clearly disclose the nature of his warranty obligation prior to the sale of the product. The consumer may then compare warranty protection, thus shopping for the “best buy.”
To further protect the consumer from deception, the Act requires that any written warranty must be labeled as either a “full” or a “limited” warranty. Only warranties that meet the standards of the Act may be labeled as “full.” One of the most important provisions of the Act prohibits a warrantor from disclaiming or modifying any implied warranty whenever any written warranty is given or service contract entered into. Implied warranties may, however, be limited in duration if the limitation is reasonable, conscionable, and set forth in clear and unmistakable language prominently displayed on the face of the warranty.
A consumer damaged by breach of warranty, or noncompliance with the act, may sue in either state or federal district court. Access to federal court, however, is severely limited by the Act’s provision that no claim may be brought in federal court if: (a) The amount in controversy of any individual claim is less than $25,000; (b) the amount in controversy is less than the sum or value of $50,000 computed on the basis of all claims in the suit; or (c) a class action is brought, and the number of named plaintiffs is less than 100. In light of these requirements it is likely that most suits will be brought in state court. If the consumer prevails, he is awarded costs and attorneys’ fees. Nothing in the Act invalidates any right or remedy available under state law, and most suits should proceed on claims based on both the Code and the Act.
Understanding the Magnuson-Moss Warranty Act
The Magnuson-Moss Warranty Act is the federal law that governs consumer product warranties. Passed by Congress in 1975, the Act requires manufacturers and sellers of consumer products to provide consumers with detailed information about warranty coverage. In addition, it affects both the rights of consumers and the obligations of warrantors under written warranties.
To understand the Act, it is useful to be aware of Congress’ intentions in passing it. First, Congress wanted to ensure that consumers could get complete information about warranty terms and conditions. By providing consumers with a way of learning what warranty coverage is offered on a product before they buy, the Act gives consumers a way to know what to expect if something goes wrong, and thus helps to increase customer satisfaction.
Second, Congress wanted to ensure that consumers could compare warranty coverage before buying. By comparing, consumers can choose a product with the best combination of price, features, and warranty coverage to meet their individual needs.
Third, Congress intended to promote competition on the basis of warranty coverage. By assuring that consumers can get warranty information, the Act encourages sales promotion on the basis of warranty coverage and competition among companies to meet consumer preferences through various levels of warranty coverage.
Finally, Congress wanted to strengthen existing incentives for companies to perform their warranty obligations in a timely and thorough manner and to resolve any disputes with a minimum of delay and expense to consumers. Thus, the Act makes it easier for consumers to pursue a remedy for breach of warranty in the courts, but it also creates a framework for companies to set up procedures for resolving disputes inexpensively and informally, without litigation.
What the Magnuson-Moss Act Does Not Require
In order to understand how the Act affects you as a businessperson, it is important first to understand what the Act does not require.
First, the Act does not require any business to provide a written warranty. The Act allows businesses to determine whether to warrant their products in writing. However, once a business decides to offer a written warranty on a consumer product, it must comply with the Act.
Second, the Act does not apply to oral warranties. Only written warranties are covered.
Third, the Act does not apply to warranties on services. Only warranties on goods are covered. However, if your warranty covers both the parts provided for a repair and the workmanship in making that repair, the Act does apply to you.
Finally, the Act does not apply to warranties on products sold for resale or for commercial purposes. The Act covers only warranties on consumer products. This means that only warranties on tangible property normally used for personal, family, or household purposes are covered. (This includes property attached to or installed on real property.) Note that applicability of the Act to a particular product does not, however, depend upon how an individual buyer will use it.
The following section of this manual summarizes what the Magnuson-Moss Warranty Act requires warrantors to do, what it prohibits them from doing, and how it affects warranty disputes.
What the Magnuson-Moss Act Requires
In passing the Magnuson-Moss Warranty Act, Congress specified a number of requirements that warrantors must meet. Congress also directed the FTC to adopt rules to cover other requirements. The FTC adopted three Rules under the Act: the Rule on Disclosure of Written Consumer Product Warranty Terms and Conditions (the Disclosure Rule), the Rule on Pre-Sale Availability of Written Warranty Terms (the Pre-Sale Availability Rule), and the Rule on Informal Dispute Settlement Procedures (the Dispute Resolution Rule). In addition, the FTC has issued an interpretive rule that clarifies certain terms and explains some of the provisions of the Act. This section summarizes all the requirements under the Act and the Rules.
The Act and the Rules establish three basic requirements that may apply to you, either as a warrantor or a seller:
- As a warrantor, you must designate, or title, your written warranty as either “full” or “limited.”
- As a warrantor, you must state certain specified information about the coverage of your warranty in a single, clear, and easy-to-read document.
- As a warrantor or a seller, you must ensure that warranties are available where your warranted consumer products are sold so that consumers can read them before buying.
The titling requirement, established by the Act, applies to all written warranties on consumer products costing more than $10. However, the disclosure and pre-sale availability requirements, established by FTC Rules, apply to all written warranties on consumer products costing more than $15. Each of these three general requirements is explained in greater detail in the following chapters.
What the Magnuson-Moss Act Does Not Allow
There are three prohibitions under the Magnuson-Moss Act. They involve implied warranties, so-called “tie-in sales” provisions, and deceptive or misleading warranty terms.
Disclaimer or Modification of Implied Warranties
The Act prohibits anyone who offers a written warranty from disclaiming or modifying implied warranties. This means that no matter how broad or narrow your written warranty is, your customers always will receive the basic protection of the implied warranty of merchantability.
There is one permissible modification of implied warranties, however. If you offer a “limited” written warranty, the law allows you to include a provision that restricts the duration of implied warranties to the duration of your limited warranty. For example, if you offer a two-year limited warranty, you can limit implied warranties to two years. However, if you offer a “full” written warranty, you cannot limit the duration of implied warranties.
If you sell a consumer product with a written warranty from the product manufacturer, but you do not warrant the product in writing, you can disclaim your implied warranties. (These are the implied warranties under which the seller, not the manufacturer, would otherwise be responsible.) But, regardless of whether you warrant the products you sell, as a seller, you must give your customers copies of any written warranties from product manufacturers.
“Tie-In Sales” Provisions
Generally, tie-in sales provisions are not allowed. Such a provision would require a purchaser of the warranted product to buy an item or service from a particular company to use with the warranted product in order to be eligible to receive a remedy under the warranty.
The following is an example of a prohibited tie-in sales provision:
In order to keep your new Plenum Brand Vacuum Cleaner warranty in effect, you must use genuine Plenum Brand Filter Bags. Failure to have scheduled maintenance performed, at your expense, by the Great American Maintenance Company, Inc., voids this warranty.
While you cannot use a tie-in sales provision, your warranty need not cover use of replacement parts, repairs, or maintenance that is inappropriate for your product.
The following is an example of a permissible provision that excludes coverage of such things:
While necessary maintenance or repairs on your AudioMundo Stereo System can be performed by any company, we recommend that you use only authorized AudioMundo dealers. Improper or incorrectly performed maintenance or repair voids this warranty.
Although tie-in sales provisions generally are not allowed, you can include such a provision in your warranty if you can demonstrate to the satisfaction of the FTC that your product will not work properly without a specified item or service. If you believe that this is the case, you should contact the warranty staff of the FTC’s Bureau of Consumer Protection for information on how to apply for a waiver of the tie-in sales prohibition.
Deceptive Warranty Terms
Obviously, warranties must not contain deceptive or misleading terms. You cannot offer a warranty that appears to provide coverage but, in fact, provides none. For example, a warranty covering only “moving parts” on an electronic product that has no moving parts would be deceptive and unlawful. Similarly, a warranty that promised service that the warrantor had no intention of providing or could not provide would be deceptive and unlawful.
How the Magnuson-Moss Act May Affect Warranty Disputes
Two other features of the Magnuson-Moss Warranty Act are also important to warrantors. First, the Act makes it easier for consumers to take an unresolved warranty problem to court. Second, it encourages companies to use a less formal, and therefore less costly, alternative to legal proceedings. Such alternatives, known as dispute resolution mechanisms, often can be used to settle warranty complaints before they reach litigation.
The Act makes it easier for purchasers to sue for breach of warranty by making breach of warranty a violation of federal law, and by allowing consumers to recover court costs and reasonable attorneys’ fees. This means that if you lose a lawsuit for breach of either a written or an implied warranty, you may have to pay the customer’s costs for bringing the suit, including lawyer’s fees.
Because of the stringent federal jurisdictional requirements under the Act, most Magnuson-Moss lawsuits are brought in state court. However, major cases involving many consumers can be brought in federal court as class action suits under the Act.
Although the consumer lawsuit provisions may have little effect on your warranty or your business, they are important to remember if you are involved in warranty disputes.
Alternatives to Consumer Lawsuits
Although the Act makes consumer lawsuits for breach of warranty easier to bring, its goal is not to promote more warranty litigation. On the contrary, the Act encourages companies to use informal dispute resolution mechanisms to settle warranty disputes with their customers.
Basically, an informal dispute resolution mechanism is a system that works to resolve warranty problems that are at a stalemate. Such a mechanism may be run by an impartial third party, such as the Better Business Bureau, or by company employees whose only job is to administer the informal dispute resolution system. The impartial third party uses conciliation, mediation, or arbitration to settle warranty disputes.
The Act allows warranties to include a provision that requires customers to try to resolve warranty disputes by means of the informal dispute resolution mechanism before going to court. (This provision applies only to cases based upon the Magnuson-Moss Act.) If you include such a requirement in your warranty, your dispute resolution mechanism must meet the requirements stated in the FTC’s Rule on Informal Dispute Settlement Procedures (the Dispute Resolution Rule). Briefly, the Rule requires that a mechanism must:
- Be adequately funded and staffed to resolve all disputes quickly;
- Be available free of charge to consumers;
- Be able to settle disputes independently, without influence from the parties involved;
- Follow written procedures;
- Inform both parties when it receives notice of a dispute;
- Gather, investigate, and organize all information necessary to decide each dispute fairly and quickly;
- Provide each party an opportunity to present its side, to submit supporting materials, and to rebut points made by the other party (the mechanism may allow oral presentations, but only if both parties agree);
- Inform both parties of the decision and the reasons supporting it within 40 days of receiving notice of a dispute;
- Issue decisions that are not binding; either party must be free to take the dispute to court if dissatisfied with the decision (however, companies may, and often do, agree to be bound by the decision);
- Keep complete records on all disputes; and
- Be audited annually for compliance with the Rule.
It is clear from these standards that informal dispute resolution mechanisms under the Dispute Resolution Rule are not “informal” in the sense of being unstructured. Rather, they are informal because they do not involve the technical rules of evidence, procedure, and precedents that a court of law must use.
Currently, the FTC’s staff is evaluating the Dispute Resolution Rule to determine if informal dispute resolution mechanisms can be made simpler and easier to use. To obtain more information about this review, contact the FTC’s warranty staff.
As stated previously, you do not have to comply with the Dispute Resolution Rule if you do not require consumers to use a mechanism before bringing suit under the Magnuson-Moss Act. You may want to consider establishing a mechanism that will make settling warranty disputes easier, even though it may not meet the standards of the Dispute Resolution Rule.
Sources of the above information include:
Superchips Inc. Newsletter / Car Craft September 1994 issue.
Federal Trade Commission
State Bar of Texas