May 2022
By Michael G. Charapp
Charapp & Weiss LLP
Dealer personnel continue to believe that when a dealership sells a used vehicle with a dealer warranty, the FTC buyer’s guide may serve as the warranty document that the customer must receive.
In fact, a customer who buys a used car with the dealer warranty must also receive a separate warranty document.
The federal Magnuson Moss Warranty Act requires that a warranty must be a written description of a consumer’s rights in a clearly worded, single document. There is a simple answer why the buyer’s guide cannot be the warranty document — the buyer’s guide itself says that it isn’t. The form buyer’s guide states: “Ask the dealer for a copy of the warranty document and an explanation of warranty coverage, exclusions, and repair obligations.”
There is of course a more complicated answer — the buyer’s guide cannot function as the warranty document because, while it does or may contain some of the descriptions of coverage required by the MMWA, it does not have all the mandated terms. The Magnuson Moss Warranty Act mandates certain disclosures in a warranty if the dealer wishes to avail itself of them — for example, a limitation on damages or coverage limitations such as non-assignability — that are simply not in the buyer’s guide.
So, protect your dealership against claims that you breached your obligations when you sold a used vehicle with an express dealer’s warranty that did not comply with the MMWA, opening the dealership to much more expensive liability than it ever intended to accept. Use a separate written warranty with the terms required by federal law to fully protect your dealership.