Secret Warranties No Longer a Secret in Maryland

BALTIMORE, MD (June 27, 2007) - Attorney General Douglas F. Gansler today joined state legislators and consumer advocates to help spread the word about a new state law that could potentially save consumers millions of dollars in automobile repair costs. Under a new law that takes effect October 1, automobile manufacturers will be required to notify consumers when they issue technical service bulletins, also known as “secret warranties.”

Secret warranties are issued by automobile manufacturers to automobile dealers when there are persistent problems with a car that are not covered by the warranty or are discovered after the warranty has expired. Secret warranties are rarely advertised by the manufacturer. Because consumers are not notified of the “secret warranty,” they may end up paying for the repair if they bring their car to an independent mechanic or encounter a problem when the bulletin is not in effect.

“Maryland now joins only four other states that have eliminated the practice of secret warranties,” said Attorney General Gansler. “Working together with our state legislators and consumer advocates, we have made secret warranties a thing of the past in Maryland.”

Beginning October 1, automobile manufacturers will be required to mail a notice to the vehicle’s owner within 90 days of creating a warranty adjustment program. Manufacturers will also be required to notify consumers at the time they purchase the vehicle that warranty adjustment programs are sometimes offered and that information about such programs is provided to the National Traffic Highway Safety Administration (NHTSA). The new law could save Maryland consumers more than a million dollars in repair costs annually. Only four other states require manufacturers to notify car buyers when they adopt secret warranty programs: California, Connecticut, Virginia and Wisconsin.

“If there is a design or manufacturing defect in a car, the consumer should not have to pay for the repair in addition to suffering the inconvenience associated with it,” said Maryland State Senator Jamie Raskin, sponsor of the legislation. “This law makes certain that all consumers--not just the most aggressive and litigious--will be able to get the manufacturer to pay for its mistakes.”

“It’s no secret that secret warranties costs consumers well over a billion dollars annually nationwide,” said Maryland State Delegate Bill Bronrott, sponsor of the legislation in the House. “Passage of this bill will now save Maryland consumers millions of dollars every year in unnecessary repair costs.”