FTC Enforcement Targets BMW Warranties

The Federal Trade Commission (“FTC”) announced last week that it reached a settlement with BMW of North America, LLC, (“BMW”) regarding the maintenance and repair warranty that BMW’s MINI Division provided consumers.

Under the Magnuson-Moss Warranty Act (“Act”), a company that provides a warranty cannot condition that warranty on the purchase of parts or services from a particular company. According to the FTC’s complaint, the MINI Division warranty violated the Act because (1) it was conditioned on whether consumers used genuine MINI parts and dealers to perform maintenance and repair work and (2) there was a charge for the parts and services.

The proposed consent order prohibits BMW from requiring that car owners have maintenance performed by MINI Division dealers or with MINI parts as a condition of the warranty, unless BMW provides the part or service without charge. The agreement also prohibits BMW from indicating that car owners must have maintenance performed by MINI Division dealers or with MINI parts so that their vehicles operate safely or maintain their value.

This is the first auto warranty related enforcement action by the FTC in several years and a reminder to all companies offering a warranty to revisit their terms to ensure they do not impose similar conditions.