1

 Specifically, I am responding to the August 25 letter on behalf of the Automotive

Aftermarket Industry Association (“AAIA”), the letters of September 8 and October 26 on behalf

of the Automotive Oil Change Association (“AOCA”), our meeting on October 26, and your

most recent letter on December 9 on behalf of AAIA, AOCA, and the Tire Industry

Association/Service Station Dealers of America, collectively. Copies of American Honda’s

position statements provided as part of these letters are attached hereto. 

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UNITED STATES OF AMERICA

FEDERAL TRADE COMMISSION

WASHINGTON, D.C. 20580

Bureau of Consumer Protection

 Division of Marketing Practices

December 21, 2010

Aaron M. Lowe

Vice President, Government Affairs

Automotive Aftermarket Industry Association

7101 Wisconsin Ave., Suite 1300 

Bethesda, MD 20814

Patricia Wirth

President

Automotive Oil Change Association

1701 N Greenville Ave., Suite 404

Richardson, TX 75081

Paul Fiore

Executive Vice President

Tire Industry Association

Service Station Dealers of America

1532 Pinter Ridge Place Suite G

Bowie, Maryland 20716

Dear Mr. Lowe, Ms. Wirth, and Mr. Fiore: 

I am responding to concerns your organizations have raised regarding position statements

issued by American Honda addressing warranties on parts that are not purchased from an

“authorized” Honda or Acura dealer and subsequent repair costs associated with failures due to

the use of such parts.1

 As we mentioned, we take very seriously the concerns you raised and

appreciate you bringing these issues to our attention. We are addressing your concerns as an

informal request for a staff advisory opinion. The opinions and conclusions expressed in the

following discussion are those of Commission staff only and are not attributable to, nor binding

on, the Commission itself or any individual Commissioner. 
2

 16 C.F.R. 700.10(c). 

3

 Id. (emphasis added).

4

 American Honda Position Statement Issued August 20, 2010 (emphasis added).

5

 Honda 2010 Warranty Booklet (Provided to FTC Staff), at 8 (stating that warranty does

not cover failures caused by installing accessories not authorized by Honda) (emphasis added).

6

 Id. at 36.

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The Honda Position Statements and Alleged Tying Violations

Your interpretation of American Honda’s position statements is that these statements

violate the Magnuson-Moss Warranty Act’s (“Magnuson-Moss” or “Act”) prohibition on tie-in

sales. As you know, Section 102(c) of the Act prohibits warrantors from conditioning warranty

coverage on the consumer’s using, in connection with the warranted product, an article or

service identified by brand, trade, or corporate name, unless the warrantor provides that article or

service without charge. In other words, warrantors may not claim that a warranty is void simply

because a consumer has used an unauthorized or aftermarket part. In the same vein, no

warrantor may condition continued warranty coverage on a consumer using only a named or

authorized service station or dealership for their automobile maintenance. Simply stated, “[a]

warrantor cannot, as a matter of law, avoid liability under a written warranty where a defect is

unrelated to the use by a consumer of ‘unauthorized’ articles or service.”2

However, warrantors are permitted to exclude liability for damage or defects caused by

the use of unauthorized parts. The FTC’s Interpretations under Magnuson-Moss explain: 

Although “[n]o warrantor may condition the continued validity of a warranty on the use of only

authorized repair service and/or authorized replacement parts for non-warranty service and

maintenance . . .[t]his does not preclude a warrantor from expressly excluding liability for

defects or damage caused by such “unauthorized” articles or service; nor does it preclude the

warrantor from denying liability where the warrantor can demonstrate that the defect or damage

was so caused.”3 

While we appreciate your view to the contrary, we interpret the American Honda position

statements to state that American Honda will not deny warranty coverage for the mere use of an

unauthorized part, but rather for damage or defects caused by those parts. Indeed, in the position

statements, American Honda states that it “will not be responsible for any subsequent repair

costs associated with vehicle or part failures caused by the use of parts other than [Honda/Acura]

Genuine parts purchased from an authorized US [Honda/Acura] dealer.”4 The terms of the

underlying warranty contain similar provisions.5

 In addition, we note that Honda’s warranty

terms specifically provide that “service at the dealer is not mandatory for continued warranty

coverage.”6 

Therefore, based solely on Commission staff’s review of the position statements and the

underlying warranty terms, American Honda does not appear to be in violation of the Act’s tying
7

 See 16 C.F.R. 700.10(c) (warrantor is not precluded from denying liability where “the

warrantor can demonstrate” the cause of damage or defect) (emphasis added).

8

 See http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt192.shtm.

9

 See 75 Fed. Reg. 12,715 (Mar. 17, 2010). 

Page 3 of 4

prohibition. We would welcome any information that American Honda operates inconsistent

with its position statements or warranty terms and represents to consumers that their warranty is

void simply because of the use of unauthorized parts or services. Moreover, should American

Honda, or any other warrantor, attempt to deny warranty coverage by claiming that an

unauthorized part caused the damage or defect for which the consumer seeks warranty service,

the burden will be on the warrantor to demonstrate that it was the unauthorized part that caused

that damage or defect.7

The Honda Position Statements and Perceived Misconceptions 

You also raised concerns that Honda’s position statements could be perceived as

misleading, and that there is a common misunderstanding by consumers regarding their warranty

rights. Specifically, you contend that consumers are often misinformed about whether they can

use aftermarket parts or independent service stations without impacting their warranty coverage. 

To address perceived confusion in this area and better inform consumers of their

warranty rights under the law, the FTC has issued new consumer education that specifically

addresses this issue. This new consumer alert, entitled “Auto Warranties, Routine Maintenance,

and Repairs: Is Using the Dealer a Must?,” explains in plain terms that it is “illegal for

manufacturers or dealers to claim that your warranty is void or to deny coverage under your

warranty simply because someone other than the dealer did the work.”8 The education piece also

addresses the use of aftermarket parts, and sends a similar message: that it is “illegal for

companies to void your warranty or deny coverage under the warranty simply because you used

an aftermarket part.” Additionally, the new education piece encourages consumers to file a

complaint with the FTC should they feel that a dealer denied their warranty claim unfairly. We

encourage your organizations to link to this consumer education and to promote it broadly. 

Finally, we want to inform you that, in 2011, the FTC will engage in a regulatory review

of the rules and guides issued under Magnuson-Moss.9 Of the rules to be reviewed is 16 C.F.R.

Part 700, the FTC’s Interpretations of certain provisions of Magnuson-Moss, including the tie-in

sales prohibition. Periodic review of the agency’s regulations is an important opportunity to

assess the effectiveness, costs, and benefits of the rules and guides that the agency issues, and to

provide the public and associations such as yours with an opportunity to comment on them. We

hope you will weigh in on the upcoming rule review proceedings, as may be appropriate. 

The opinions and conclusions expressed in the foregoing discussion are those of

Commission staff only and are not attributable to, nor binding on, the Commission itself

or any individual Commissioner. The Commission reserves the right to take such further action

as the public interest may require. Further, the staff will not be precluded from recommending
Page 4 of 4

to the Commission an appropriate action should other facts subsequently come to our attention.

We hope this discussion is helpful to you. Please continue to contact the Commission

whenever we may be of service. 

Very truly yours, 

Lois C. Greisman

Associate Director