Passed by Congress in 1975, the Act requires manufacturers and sellers of consumer products to provide consumers with detailed information about warranty coverage. In addition, it affects both the rights of consumers and the obligations of warrantors under written warranties.

To understand the Act, it is useful to be aware of Congress' intentions in passing it. First, Congress wanted to ensure that consumers could get complete information about warranty terms and conditions. By providing consumers with a way of learning what warranty coverage is offered on a product before they buy, the Act gives consumers a way to know what to expect if something goes wrong, and thus helps to increase customer satisfaction.

Second, Congress wanted to ensure that consumers could compare warranty coverage before buying.

By comparing, consumers can choose a product with the best combination of price, features, and warranty coverage to meet their individual needs. Third, Congress intended to promote competition on the basis of warranty coverage. By assuring that consumers can get warranty information, the Act encourages sales promotion on the basis of warranty coverage and competition among companies to meet consumer preferences through various levels of warranty coverage.

Finally, Congress wanted to strengthen existing incentives for companies to perform their warranty obligations in a timely and thorough manner and to resolve any disputes with a minimum of delay and expense to consumers. Thus, the Act makes it easier for consumers to pursue a remedy for breach of warranty in the courts, but it also creates a framework for companies to set up procedures for resolving disputes inexpensively and informally, without litigation.

If you are shopping for a new or used car, you may be encouraged to buy an auto service contract. Auto service contracts have become increasingly popular as a way to provide consumers a means to deal with unforeseen vehicle repair problems.

Before signing on the dotted line, the Better Business Bureau urges consumers to be sure they understand the terms of the contract and know who is responsible for providing the coverage. According to the Federal Trade Commission, an auto service contract is a promise to perform (or pay for) certain repairs or service.

Sometimes called an “extended warranty,” a service contract is not a warranty as defined by federal law.

A service contract may be arranged at any time and always costs extra; a warranty comes with a new car and is included in the original price. This separate and additional cost distinguishes a service contract from a warranty. Before deciding whether to buy an auto services contract, the BBB suggests you ask the following questions.

Who backs the service contract? It may be the manufacturer, dealer, or an independent company. Many service contracts sold by dealers are handled by independent companies called administrators. Administrators act as claims adjusters, authorizing the payment of claims to any dealers under the contract.

What’s the cost of the auto service contract? Usually, the price of the service contract is based on the car make, model, condition (new or used), depth of coverage and length of contract. The cost of the service contract can range from several hundred dollars to more than $2,000. In addition, you may need to pay a deductible each time your car is serviced or repaired.

What is covered and not covered? Few auto service contracts cover all repairs. Watch out for absolute exclusions that deny coverage for any reasons. For instance, if the contract specifies that only “mechanical breakdowns” will be covered, problems caused by “normal wear and tear” may be excluded.

File A Lemon Law/Auto Warranty Complaint

 If your auto manufacturer participates in BBB AUTO LINE, we can assist you with mediation and, if necessary, an informal arbitration hearing.

If your manufacturer doesn’t participate, we’ll route your complaint to the right forum to help you get a resolution.