Consumer Alert: A consumer called us when his car dealer wouldn’t honor his warranty. So we investigated.
ROCHESTER, N.Y. This Consumer Alert is all about warranties: who sells them, who honors them and how to read them.
A viewer who bought a new Chevy Equinox in 2020 also bought a warranty. But since he bought the car, the dealership has changed hands. And the new owners said they had nothing to do with the sale of the warranty and wouldn’t honor it. But the guy had a contract. So I started digging.
Darleen Sanders and her husband George White love everything about their 2020 Equinox from the smooth ride to the sunroof and its spacious interior.
‘We bought the car in October of 2020 brand-spankin’ new, zero miles. And the salesman asked her if she wanted rust protection,” White recalled.
The spray-on rust protection would cost $1,199 and is good for 10 years. White says he was told they could go back to the dealership annually and it would apply a new coat of rust protectant.
So because the salt-based solution used on Rochester roads is very hard on cars, the couple decided to pay for the added protection. They recently decided to take the vehicle in for a re-spray before the winter months.
“We called and made an appointment for it, and they said, ‘Well, we don’t honor that,’” George recalled.
He had bought the car at East Syracuse Chevrolet. But a year later, the dealership was sold. It’s now owned by West Herr.
So here’s the question: Shouldn’t the new owner be legally bound to contracts made by the old owner? I posed that very question to attorney and contract expert Leslie Silva, a partner at Tully Rinkey.
“The dealership is not the warrantor, so they are not the company or the party that is saying we warranty your car for this issue,” Silva explained.
White had no idea they had bought a third-party contract. A company called NWAN holds the warranty, not the dealership. And when I read the contract’s fine print. In a section that explains what the warranty covers it is clear that the warranty does not cover annual applications of the rust protectant. Instead, it says if the treated area is damaged by rust, “the damaged area will be repaired completely free of charge.”
“When a dealer sells these warranties, they very likely receive a commission for selling that product,” said Silva. “But the dealership is not the one that’s obligated to do anything here.”
Third-party warranties are common. When you buy a car, electronics or even some toys, you will likely be asked to buy a warranty. But that warranty is often from a third party, not the seller of the product. And this can get tricky. It’s really important to read the fine print before you sign on the bottom line because these can come with loopholes big enough to drive a truck through.
In this case, the new owner of the dealership, West Herr, has no relationship with this third-party warranty company and West Herr has no obligation to honor the contract. But as a good faith gesture, the general manager told me the dealership is offering customers two free re-sprays at no charge.
White and Sanders are happy with that. So this investigation has a happy ending and a lesson for all of us: the importance of reading the fine print.