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BMW settles FTC charges over MINI warranty

BMW of North America LLC, accused of violating a federal law by voiding warranties if MINI owners had maintenance or repairs done outside its dealerships, settled the charges with the Federal Trade Commission, the agency announced on Thursday.

BMW was accused of violating the Magnuson-Moss Warranty Act, a federal law that prohibits companies from putting such conditions on warranties. Companies are not allowed, under the law, to require consumers to only go to certain shops or use specific parts unless the company offers them for free.

The law, on the books since 1975, contains a variety of consumer protections governing written warranties including the requirement to conspicuously detail the terms in plain language.

"It's against the law for a dealer to refuse to honor a warranty just because someone else did maintenance or repairs on the car," Jessica Rich, director of the FTC's Bureau of Consumer Protection said in a statement.

The settlement requires BMW to notify MINI owners of the settlement and what the company was accused of. BMW, "without admitting or denying liability," noted that for the first three years MINI provides all maintenance for free. The issue mainly arose in the fourth year when owners were choosing to do their service elsewhere and then sought warranty service.

BMW is also prohibited from telling consumers when selling MINIs that the only way of ensuring the vehicle will be safe is if it is serviced at a MINI dealer. An exception to that requirement was permitted if the company could back up such a claim with scientific evidence.

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