California’s Not-So-Secret Warranties Law

Owning a car is a big deal in America. Cars have evolved beyond a method of transportation to symbols of our identity and independence. But nobody’s perfect, and neither are our cars.

The fact that cars are subject to manufacturing and design defects is a generally accepted fact of life. But knowing who is ultimately responsible for those defects isn’t as ubiquitous. Although retailers and manufacturers have written warranties for cars at the time of sale, there are some warranties that many people aren’t aware of – welcome to the world of “secret warranties…”

What Are Secret Warranties?

Secret warranties are established when a car manufacturer discovers a defect in one of their models after the expiration of its written warranty. As a result, the manufacturer implements an “adjustment program” to compensate car owners for repairs related to the defect, instead of individually addressing what could potentially be thousands of complaints.

California Secret Warranty Law

The term “secret warranties” can have negative connotations. But since the 1990s, California law has addressed these type of warranties as “adjustment programs.”

Adjustment programs are defined as:

Any program or policy that:

  • expands or extends the consumer’s warranty beyond its stated limit,

OR

  • under which a manufacturer offers to pay (or reimburse consumers) for all or any part of the cost of repairing, … any condition that may substantially affect vehicle durability, reliability, or performance …”

Under California law, dealers are required to provide notice to buyers and lessees on how to access service bulletins. In fact, California Civil Code, section 1795.91 provides a model notice that reads:

“FEDERAL LAW REQUIRES MANUFACTURERS TO FURNISH THE NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION (N.H.T.S.A.) WITH BULLETINS DESCRIBING ANY DEFECTS IN THEIR VEHICLES.

YOU MAY OBTAIN COPIES OF THESE BULLETINS, FOR A FEE, FROM EITHER OF THE FOLLOWING:

THE MANUFACTURER (ASK YOUR DEALER FOR THE TOLL-FREE NUMBER)

N.H.T.S.A. –TECHNICAL REFERENCE DIVISON

400 SEVENTH STREET, S.W.

ROOM 5110

WASHINGTON, D.C. 20590

202-366-2768”

Additionally, if a consumer brings a defective car to a dealer who knows that an adjustment program covers the repairs, California law requires the dealer to disclose the adjustment program’s principal terms and conditions.

As a result, California car dealers must be familiar with the notice requirements regarding adjustment programs. However, a dealer’s duty to disclose information on adjustment plans is limited to information the manufacturer provides in its service bulletins.

What Is the Difference Between Adjustment Programs and Recalls?

Recalls involve important repairs that are necessary for safely operating a car. Manufacturers try not to hide the ball when it comes to recalls and normally publish them on the company’s official website, or by directly notifying car owners about the defect.

On the other hand, Adjustment Programs don’t necessarily involve defects that risk the car owner’s safety. Such defects can involve the car’s aesthetic (e.g. paint that easily chips, allowing rust to form), luxury features (e.g. climate control, and stereo system), or ideal performance (e.g. engine and transmission parts).

When Is a Car Considered to Be a Lemon?

Like warranty adjustment laws, California lemon law was implemented to protect consumers from unfair practices in the car industry. Pursuant to California’s lemon law, car manufacturers or dealers are required to refund the purchase price of – or provide a replacement to – a defective car that could not be repaired after a reasonable number of attempts.

The law provides the consumer with remedies for the following costs associated with the unrepairable car:

  • Sales or use taxes;
  • License and registration fees;
  • Repair costs;
  • Rental car fees;
  • Towing fees; and
  • Other incidental damages.

California lemon law applies only to defects that impair the value, safety, or use of new cars i.e. cars used for less than 18 months or 18,000 miles. The lemon law also applies to used-cars that are still covered by the manufacturer’s new-car warranty.

Consult a Skilled Rancho Cucamonga Lemon Law Attorney

Car dealerships have many responsibilities under California law. As a result, your business could become the target of improper or fraudulent lemon law claims, and frivolous lawsuits from buyers. In addition to tenaciously defending your business against frivolous lawsuits, our Rancho Cucamonga lemon law attorneys will advise you on legal and regulatory compliance regarding consumer protection laws involving the automobile trade.

Contact Chug & Ignacio, LLP online, or call (909) 726-7112 to schedule a free consultation today.

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