What are Secret Warranties?
Few car owners know secret car warranties exist.
Carmakers are reluctant to make these free repair programs public because they feel it would weaken confidence in their product and increase their legal liability. Most motorists who get compensated for repairs to blown engines and burnt transmissions or paint that has turned chalky white or peeled away, are the ones who read Lemon-Aid each year, produce automaker service bulletins, and yell the loudest. This year's Lemon-Aid guides shine a light on all of these hidden warranties with reprints of confidential dealer service bulletins and automaker memoranda that allow car owners to stand toe-to-toe with carmakers and service managers. Get the latest Lemon-Aid guides to learn about scores of other free repair programs.
Service Bulletin Archived in Lemon-Aid
Only important service bulletins showing factory goofs are archived in Lemon-Aid. With the bulletin in hand, owners get refunds. Honda, for example, uses the term "goodwill" as a euphemism to describe its secret warranties; GM calls them both “goodwill” and “special policies;” Ford calls them Owner Notification Programmes, and Chrysler tags them Owner Satisfaction Notifications. No matter the euphemism, they are an extension of the original warranty, applied to vehicles that may have been bought new or used.
The Art of Complaining
It's not just what you say, but how you say it...
Getting your money back from an automaker or dealer is easy—if you use the hundreds of confidential service bulletins and unreported court decisions found only in the annual Lemon-Aid New and Used Car and Truck guides.
Here are the top ten auto problems
Chrysler airbags— Airbags usually carry a lifetime warranty. Chrysler confirmed as much in its replacement program for 1999 minivan airbags. This admission can serve as a handy benchmark as to how long one can expect these components to last.
Chrysler catalytic converters— In a settlement with the U. S. Environmental Protection Agency, Chrysler said it would notify approximately 700,000 owners of 1996-1999 model year Jeeps, Dodge Ram, and Dodge Dakota vehicles that the catalytic converter warranty on their vehicles would be extended to 10 years or 120,000 miles.
Chrysler also pledged to send notices to owners informing them of the potential catalytic converter failure and reminding them that their original catalytic converters are still covered by the original 8-year/80,000-mile warranty.
Chrysler will also establish procedures to reimburse owners of vehicles covered by the
settlement's extended warranty or recall provisions who paid out of their own pockets for the repair or replacement of a defective original equipment catalytic converter (http://www.walshcarlines.com/pdf/nsl20056.pdf).
Chrysler, Ford, GM, and Asian automaker automatic transmissions—Faulty automatic transmissions that self-destruct, shift erratically, gear down to “limp mode,” are slow to shift, or are noisy. If you have the assistance of your dealer’s service manager, or a Lemon-Aid service bulletin (pdf) ,expect an offer of 50–75 percent (about $2,500); file a claim in small claims court and you’ll usually get a full “goodwill” refund up to 7 years/160,000 km. Acura, Honda, Hyundai, Lexus, and Toyota coverage varies between seven and eight years.
Chrysler, Ford, and GM, engine head/intake manifold gaskets—Too many service bulletins in the book to count, plus some important court cases that nailed Ford’s hide to the wall. Symptoms: overheating, windows fog up, and poor gas mileage
Chrysler, Ford, GM, and Asian automaker paint delamination—Paint turns white and peels. Carmakers usually give a full refund up to the seventh year of ownership.
Ford ABS brakes—2003 and 2004 full sized vans have a 10-year “goodwill” warranty (pdf) .
Ford fuel modules—1999 through 2002 Cougar fuel modules will be replaced free of charge (pdf).
Ford front springs—Defective front coil springs on 1992-2004 Aerostar, Focus, Sable, Taurus, and Windstar models may suddenly break, puncturing the front tire and leading to loss of steering control. Under a “Safety Improvement Campaign,” negotiated with NHTSA, Ford will replace broken coil springs at no charge up to 10 years/unlimited mileage. The company says it won’t replace the springs until they have broken—if you’re alive to submit a claim—but has relented when threatened with a lawsuit (pdf) .
GM diesel engines—Owners of 1994-2000 6.5L diesel-equipped trucks will get free fuel pump replacements (pdf) up to 11 years/193,000 km.
GM inaccurate fuel gauges —More secret bulletins (1, 2 pdf) where GM admits its error. This repair may also be covered by the emissions warranty.
GM minivan roof rust—According to GM’s own service bulletin, 1997-2003 minivans will get a new roof and 10 hours of free labour (pdf) to fix rust holes.
GM oil leaks—Owners of 1986-2006 vehicles with oil leaks are covered by a special policy (pdf) authorizing free repairs up to 7 years/160,000 km.
GM turn signal/hazard warning flashers—Owners of 1999-2002 Alero, Cutlass, Grand Am, and Malibu models will get free flashers up to 10 years.
Nissan Altima and Maxima rear sub-frame rusting—Shhh…don’t tell anyone, but Nissan will repair the problem for free (pdf) up to 13 years (yep, thirteen) on all 2002-2005 Altimas and 2004-2005 Maximas.
Getting a paint/defect settlement
The following settlement advice works not only for paint defects but for any other vehicle defect you believe is the automaker's/dealer's responsibility. If you're not sure if the problem is a factory-related deficiency or a maintenance item, have it checked out by an independent garage.
1. If you know the problem is factory-related, take your vehicle to the dealer and ask for a written, signed estimate. When handed the estimate ask that the paint job be done for free under the manufacturer's "goodwill" program (Ford's euphemism for this secret warranty is "Owner Dialogue Program; GM's term is "Special Policy," and Chrysler just calls it "goodwill." Don't use the term secret warranty, yet.)
2. Your verbal request will probably be met with a refusal, or an offer to repaint the vehicle for half the cost, or, if you're lucky, an agreement to repaint the vehicle free of charge. If you accept half-cost, make sure it's based on the original estimate you have in hand, since some dealers jack up their estimates so that your 50 percent is really 100 percent of the true cost.
3. If the dealer or automaker has already refused your verbal claim, and the repair hasn't been done yet, get an additional estimate from an independent garage that shows the problem is factory-related.
4. Now, send a registered claim letter or fax to the automaker (copy the dealer) claiming the average of both estimates. If the repair has been done at your expense, send a registered claim letter, email, or fax with a copy of your bill. You can use the two sample claim letters found in Part Two and Three of Lemon-Aid.
5. If a satisfactory response isn't received within five days, deposit a copy of the estimate or paid bill, any photos you may have (photos of paint defects are excellent proof) and your letter or fax before the small claims court and await a trial date. This means that the automaker and dealer will have to file a defense and appear at mediation or await a trial date.
No lawyer is required, costs should be minimal (under $100), and a mediation hearing or trial will likely be scheduled in a few months. Most cases or settled for two-thirds to three-quarters of the claim at the mediation stage. A trial and judgment will follow a few months later if the claim isn't resolved through mediation (time varies among different regions).
Again, evidence that will help your case: pictures, maintenance work orders, previous work orders dealing with your problem, dealer service bulletins, and an independent expert (the garage or body shop that prepared your estimate or did the repair). Citing the two court judgments based on English common law found on this website will also be helpful.
- If the vehicle has just been repainted but the dealer says "goodwill" coverage was denied by the automaker, pay for the repair with a certified cheque and write "under protest" on the cheque. Remember, though, that if the dealer does the repair you won't have an independent expert who can affirm that the problem was factory-related or that it was a result of premature wear-out. Plus, the dealer can say you or the environment (bird droppings is a frequently-used defense) caused the breakdown.
- If the dealer/automaker offers a partial repair or refund, take it. Then sue for the rest. Remember, if a partial repair has been done under warranty it counts as an admission of responsibility—no matter what "goodwill" euphemism is used. Also, the repaired component/body panel should be just as durable as if it were new. Hence, the clock starts ticking again, no matter what the dealer's repair warranty limit says.
Send a reminder to the dealer or automaker that you expect the repair to last a reasonable period of time. File a copy away in your glove compartment and bring it out if the same problem reappears.
Very seldom do automakers fight claims at the small claims court level, opting instead, to settle once the court claim is bounced from their customer relations people to Legal Affairs. If you do have to go to court, stand fast and contest the unfair nature of this "secret warranty" program (automaker lawyers cringe at the idea of trying to explain why consumers aren't made aware of these programs)..
Common Secret Warranty Refusals and Responses
1. You're too late.
Of course I am. You're late, too—in not telling me before that I had additional warranty rights, according to Lemon-Aid’s copy of your own service bulletin, which shows it’s your mistake. I wouldn't have been late if I had been told this extended warranty existed. Nevertheless, I will accept a pro-rata offer from you and the dealer that may be a bit less than what the original extended warranty program entitled me (I don't recommend you settle for less than a three-fourths payout shared by the dealer and automaker).
2. Mileage is too high.
Mileage has nothing to do with problem (i.e. paint). You cannot penalize me for your failure to notify me. Nevertheless, I will accept a pro-rata offer (again, I don't recommend you settle for less than a three-fourths payout shared by the dealer and automaker).
3. Work was done by an independent garage.
It was an emergency situation. I don't have a dealer nearby. The dealer wasn't cooperative; and he didn't tell me this warranty extension existed.
A major complaint is the way automakers look at repair claims arising from work done by independent agencies. I'm going to spend some time here on the subject because I've gotten hundreds of reports from owners that they are being routinely denied transmission and engine head gasket refunds because they went to an independent garage.
All automakers maintain that independent agencies make it harder to prove the repairs were really necessary (I'd argue the contrary) and that to pay such claims undercuts the dealers' customer loyalty (that's the real reason, I believe, make the dealer look good). My response is the following: We are dealing with well-known product defects, and the independent garage is available to show the repair was necessary to correct a factory-related defect and attest that nothing was done by the owner to either create or exacerbate the problem. I also believe that the independent garage factor should be considered as only one element in assessing the claim.
Owners have successfully argued the following points to get their money refunded:
- It was an emergency, and no dealer was nearby or the dealer was closed.
- The car was off warranty, and the owner had no idea warranty "goodwill" was available. And dealer repairs would have cost a great deal more.
- The dealer had been uncooperative in the past.
But I have another point to add about independent repairs, and this time I'll get just a little bit legalistic. In addition to claiming a warranty, or a "goodwill" refund from the automaker, use the federal Magnuson-Moss Warranty Act in the States and state statutes to your advantage claiming that a secret or goodwill warranty substantially modifies the vehicle's original warranty and confers additional benefits to you that were never disclosed. This failure to disclose puts the automaker in contravention of the federal Act as well as some state acts. Canadian consumers should point out that:
- A product must be reasonably durable (use my "Estimated Part Durability" chart in Part Two of the Lemon-Aid guides) and this failure occurred long before it should have.
- One should not be penalized for going to an independent garage if the "goodwill" warranty wasn't disclosed. To rule otherwise would be against the public interest and would encourage dealers and automakers to keep these programs secret for as long as possible.
4. Your vehicle wasn't in the select group.
We're talking defects, not vehicles. A defect that was once subject to a special "goodwill" program establishes a benchmark for owners of similar vehicles not covered by that special program.
5. Doesn't apply to used vehicles.
Hogwash! Every manufacturer's "special program" or "goodwill" warranty extension includes subsequent owners. This is only logical since the original warranty follows the vehicle, not the owner. Most consumer protection statues reinforce this principle that the original warranty and subsequent warranty rights aren't lost when ownership is transferred. Owners should notify the automaker of a change of ownership, however, to speed up future claims.