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Used Car Warranties: A Brief History of Warranties


When you are studying used car warranties and extended warranties, have you ever wondered where warranties came from anyway? OK, so you just care about cost and reliable providers, but it gives you pause when you consider there was a time when warranties didn’t exist at all.

“Back in the 1950s, people started complaining that their cars weren’t working very well, and that companies weren’t standing behind the cars,” Wojcicki said. “Eventually, the complaints made their way to Washington and Congress took heed. In the late 1960s, Congress started looking into the question, and a Presidential Task Force was born. The Federal Trade Commission was asked to do an investigation.”

“In 1968, the FTC issued its report,” he said. “They found that automobiles were not manufactured to an acceptable quality standard; that manufacturers and dealers were not standing behind the warranty — were not making repairs as promised; that because of the quality problems, the automobiles required more types of service, more frequent preventative service than was acceptable; and that an increase in private litigation, while it would apply pressure on the industry to provide better cars and improved services, does not represent an efficient or generally satisfactory way to achieve proper performance under the warranty.”

In other words, the FTC conceded that litigation wasn’t the best way to improve product quality.

Warranty Legislation Proposed

“Nonetheless, legislation was proposed,” Wojcicki said, in the form of the Automobile Quality Control Act, which he said would have made warranties a statutory requirement, had it become law. “You would have had a set of federal requirements that you would have to comply with if you were an automobile manufacturer.”

There are a few states that have demanded minimum warranties, and in Europe manufacturers have no choice, a minimum 2 year warranty must be available on all consumer goods.

Magnuson Moss Act

Before legislation did pass in the states (Magnuson Moss Act), complaints were rampant; warranties that took away a consumer’s rights, deceptive language, manufacturers that wouldn’t comply. The new law provided for the following:

“The new law required that entities that choose to issue product warranties must characterize them as either full or limited warranties. The warranty must also describe 1) what is covered, 2) what is not covered, 3) what is the period of coverage, 4) how to obtain coverage, and 5) how the warranty is affected by various state laws. But it does not require that warranties be granted in the first place.”

Read more of this informative article, “Warranty and the Law”, at Warranty

To inquire about a warranty, Auto Advantage have been specialists in Extended Warranties/Vehicle Service Contracts for New and Used Cars, Trucks, Motorcycles,RVs since 1979.

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Posted on Wednesday, March 28th, 2007 at 5:23 am In Used Car Warranties  

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