The big selling point for modern Hyundais are their impressive warranties, especially the 10-year, 100,000 mile powertrain one. But last month, the Federal Trade Commission warned the company that its warranty may be illegal because it appears to void out if owners don’t use Hyundai’s own parts.
The FTC said in a press release that it recently sent warnings to six major companies because of “concerns about the companies’ statements that consumers must use specified parts or service providers to keep their warranties intact.”
The FTC cites the Magnuson-Moss Warranty Act, saying that a company cannot stipulate that certain parts must be used to preserve the warranty, unless the company providing the warranty gives consumers the parts for free, or unless it’s received permission from the FTC. The idea is to protect the consumer and allow third-party repairs, fighting against the whole closed ecosystem environment we’re getting stuck in with ever-more tech companies.
The release does not specify which six companies the FTC sent the letters to, but Motherboard filed a Freedom of Information Act and determined that Hyundai was one of the recipients along with Sony, Microsoft, Nintendo, HTC, and ASUS.
The FTC’s letter is made out to Hyundai chief legal officer W. Gerald Flanner specifically cites the following language that Hyundai allegedly uses in its warranty descriptions:
The use of Hyundai Genuine Parts is required to keep your Hyundai manufacturer’s warranties and any extended warranties intact.
A cursory glance through Hyundai’s warranty stipulations, which you can read here, shows this in the “What Is Not Covered Section”:
Damage or failure resulting from...Use of parts other than Hyundai Genuine Parts, or parts of non-equivalent quality and design.
It’s that clause before the “or” in the quote above that’s problematic (Update: Actually, this quote doesn’t seem to be the FTC’s concern. See update below.), as Jalopnik’s favorite legal expert Steve Lehto explained to me when reached for comment.
He walked me through the Magnuson-Moss act, saying it “makes sense if you think about how [requiring use of a company’s own parts] could be abused: A car company could demand you get your oil changed using certified oil and filters made by them.”
He says that the act does allow the warrantor to deny any warranty claims resulting from “substandard parts,” but that proving the cause of the failure would be tough. “If you brought your car in for service and the manufacturer denied a warranty claim saying it was caused by your unreasonable use of a substandard part,” he told me over Facebook messenger, “then you’d have to litigate it to get an answer. And few people want to go to court to resolve repair issues on their cars.”
He goes on, saying “The Federal Trade Commission here appears to be on the right path, in my opinion. As the warranty booklet now reads, consumers might understandably be confused into believing they have to use all Hyundai parts on their Hyundai cars for fear of having their warranty voided.“
The FTC, in its press release, says it has asked all six companies to review their warranty materials to make sure they don’t “imply that warranty coverage is conditioned on the use of specific parts of services.” The FTC also asked all the companies to revise their warranty practices, saying that companies have 30 days to fix their websites or else be subject to potential “law enforcement action.”
Update 3:15 P.M. Thursday:
Hyundai has clarified which changes the FTC asked the company to make, with a representative telling me via email:
Hyundai Motor America was made aware of concerns regarding warranty coverage language on Hyundaiusa.com on April 10, 2018, by the U.S. Federal Trade Commission (FTC). Hyundai Motor America is currently revising the language on Hyundaiusa.com to address the FTC’s concerns.
The language on the website was part of a consumer awareness campaign to inform Hyundai vehicle owners of their rights after a collision to ensure that their vehicle is restored to its pre-collision condition. This language does not appear in Hyundai’s written warranty terms or anywhere else on Hyundaiusa.com. Hyundai apologizes for any confusion this may have caused.
So it appears that the aforementioned quote from the Warranty Information booklet wasn’t really the issue. The real concern, Hyundai told me, was the first block quote mentioned in this article—a quote that appeared in a “frequently asked questions” section of a 2016 consumer awareness campaign about counterfeit auto parts. The company showed me how it plans to alter the wording: