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BBB: Warranties that dealers pay for must also be charged for

May 8, 2015
By Patricia Kelly, Better Business Bureau
The Better Business Bureau’s Chicago office has become aware of numerous dealers offering their own warranties included in the prices of new and used vehicles they sell.
There are strict limitations on these programs to ensure that such offers do not become "free prizes, gifts or other incentives" which are prohibited by Section 475.590 of the Illinois Administrative Rules on Motor Vehicle Advertising.
Of course, as a first step, dealer warranties cannot be advertised as "free" as set out in Section 475.590 (c).  These programs are generally not offered as "free" but as included in the purchase prices of vehicles.
Dealer warranties must also be offered by dealers as programs entirely born by dealers to remain consistent with Section 475.590. No insurance or service contracts can be bought by dealers to cover consumer use of the warranties. Such programs cannot include third party administrators paid by dealers to operate the programs.  If they do, the warranty programs will violate the rule.
The BBB would like to remind dealers that, while dealer warranties are allowable and good for consumer sales, dealers cannot pay any third party companies in connection with their warranty programs if the programs are included in the prices of vehicles. 
The BBB sends letters to dealers asking about the terms of their warranty programs to make sure that all dealers are offering their programs consistent with Section 475.590. Dealers can expect to receive such letters asking what company supports the warranties.
The BBB wants to ensure that all dealers comply with these limitations so that dealers are competing fairly with respect to such programs.