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Industry Organizations Applaud FTC's Compliance Warning to Hyundai

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May 7, 2018—On April 9, 2018, the Federal Trade Commission (FTC) issued a “compliance warning” to Hyundai Motor Company regarding violations of the Magnuson Moss Warranty Act (MMWA)’s prohibition against tie-in sales of branded products and services as a condition of warranty coverage. FTC specified the following website statement as problematic: “The use of Hyundai genuine parts is required to keep your Hyundai manufacturer’s warranties and any extended warranties intact.” Should Hyundai fail to eliminate such statements, FTC may take “legal action.”

While AOCA, Auto Care and the Tire Association of America wish that the FTC action had been stronger, they say they are pleased that the agency has publicly warned the companies that it is illegal under the Magnuson Moss Warranty Act to require the use of a manufacturer part or service in order to maintain a warranty.

The associations had filed complaints with FTC and the National Highway Traffic Safety Administration in 2012 and 2016 over Hyundai and Kia Motors’ Technical Service Bulletins #114 and #12-EM-006 which directed their dealerships to assume aftermarket oil filters were the cause of any engine knocking noise and to refuse warranty coverage associated with oil system maintenance and repairs. Many of the vehicles impacted by those bulletins became the subjects of class action lawsuits (Wallis v. Kia and Mendoza v. Hyundai) and subsequent recalls and settlements which determined the engine knocking noises were the result of engine defects, not aftermarket oil filters or non-dealership service.

The associations hope that the FTC action will serve as a wake-up call to the vehicle manufacturers and their authorized service providers about the Act’s anti-tying provisions; and will also help educate consumers that they can have their vehicles maintained by their trusted independent technician using high quality non-original equipment parts without fear of voiding their new car warranty.

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