Getting a paint/defect settlement—The following settlement advice works not only for paint defects but for any other vehicle defect you believe is the automaker’s/dealer’s responsibility. If you’re not sure if the problem is a factory-related deficiency or a maintenance item, have it checked out by an independent garage.

1. If you know the problem is factory-related, take your vehicle to the dealer and ask for a written, signed estimate. When handed the estimate ask that the paint job be done for free under the manufacturer’s “goodwill” program (Ford’s euphemism for this secret warranty is “Owner Dialogue Program; GM’s term is “Special Policy,” and Chrysler just calls it “goodwill.” Don’t use the term secret warranty, yet.)

2. Your verbal request will probably be met with a refusal, or an offer to repaint the vehicle for half the cost, or, if you’re lucky, an agreement to repaint the vehicle free of charge. If you accept half-cost, make sure it’s based on the original estimate you have in hand, since some dealers jack up their estimates so that your 50 percent is really 100 percent of the true cost.

3. If the dealer or automaker has already refused your verbal claim, and the repair hasn’t been done yet, get an additional estimate from an independent garage that shows the problem is factory-related.

4. Now, send a registered claim letter or fax to the automaker (copy the dealer) claiming the average of both estimates. If the repair has been done at your expense, send a registered claim letter or fax with a copy of your bill. A sample claim letter or fax you can use is on this website.

5. If a satisfactory response isn’t received within five days, deposit a copy of the estimate or paid bill, any photos you may have (photos of paint defects are excellent proof) and your letter or fax before the small claims court and await a trial date. This means that the automaker and dealer will have to file a defense and appear at mediation or await a trial date.

No lawyer is required, costs should be minimal (under $100), and a mediation hearing or trial will likely be scheduled in a few months. Most cases or settled for two-thirds to three-quarters of the claim at the mediation stage. A trial and judgment will follow a few months later if the claim isn’t resolved through mediation (time varies among different regions).

Again, evidence that will help your case: pictures, maintenance work orders, previous work orders dealing with your problem, dealer service bulletins, and an independent expert (the garage or body shop that prepared your estimate or did the repair). Citing the two court judgments based on English common law found on this website will also be helpful.

Other Situations

If the vehicle has just been repainted but the dealer says “goodwill” coverage was denied by the automaker, pay for the repair with a certified cheque and write “under protest” on the cheque. Remember, though, that if the dealer does the repair you won’t have an independent expert who can affirm that the problem was factory-related or that it was a result of premature wear-out. Plus, the dealer can say you or the environment (bird droppings is a frequently-used defense) caused the breakdown.

If the dealer/automaker offers a partial repair or refund, take it. Then sue for the rest. Remember, if a partial repair has been done under warranty it counts as an admission of responsibility—no matter what “goodwill” euphemism is used. Also, the repaired component/body panel should be just as durable as if it were new. Hence, the clock starts ticking again, no matter what the dealer’s repair warranty limit says.

Send a reminder to the dealer or automaker that you expect the repair to last a reasonable period of time. File a copy away in your glove compartment and bring it out if the same problem reappears.

Conclusion

Very seldom do automakers contest paint claims before small claims court, opting instead to settle once the court claim is bounced from their customer relations people to Legal Affairs. If you do have to go to court, stand fast and contest the unfair nature of this “secret warranty” program (automaker lawyers cringe at the idea of trying to explain why consumers aren’t made aware of these programs)..

Common Secret Warranty Refusals

1. You’re too late

2. Mileage is too high

3. Work was done by an independent garage

4. Your vehicle wasn’t in the select group

5. Doesn’t apply to used vehicles

Successful Replies

1. You’re too late. Of course I am. You’re late, too—in notifying me I had additional warranty rights. I wouldn’t have been late if I had been notified this extended warranty existed. Nevertheless, I will accept a pro-rata offer from automaker and dealer that may be a bit less than what the original extended warranty program entitled me (I don’t recommend you settle for less than a three-fourths payout shared by the dealer and automaker).

2. Mileage is too high. Mileage has nothing to do with problem ( i.e. paint). Mileage would not have been so high if I knew earlier this program existed. You cannot penalize me for your failure to notify me. Nevertheless, I will accept a pro-rata offer from automaker and dealer that may be a bit less than what the original extended warranty program entitled me (again, I don’t recommend you settle for less than a three-fourths payout shared by the dealer and automaker).

3. Work was done by an independent garage. It was an emergency situation. I don’t have a dealer nearby. The dealer wasn’t cooperative; and he didn’t tell me this warranty extension existed.

A major complaint is the way automakers look at repair claims arising from work done by independent agencies. I’m going to spend some time here on the subject because I’ve gotten hundreds of reports from owners that they are being routinely denied transmission and engine head gasket refunds because they went to an independent garage.

All automakers maintain that independent agencies make it harder to prove the repairs were really necessary (I’d argue the contrary) and that to pay such claims undercuts the dealers’ customer loyalty (that’s the real reason, I believe, make the dealer look good). My response is the following: We are dealing with well-known product defects, and the independent garage is available to show the repair was necessary to correct a factory-related defect and attest that nothing

was done by the owner to either create or exacerbate the problem. I also believe that the independent garage factor should be considered as only one element in assessing the claim.

Owners have successfully argued the following points to get their money refunded:

It was an emergency, and no dealer was nearby or the dealer was closed.

The car was off warranty, and the owner had no idea warranty “goodwill” was available. And dealer repairs would have cost a great deal more.

The dealer had been uncooperative in the past.

But I have another point to add about independent repairs, and this time I’ll get just a little bit legalistic. In addition to claiming a warranty, or a “goodwill” refund from the automaker, use the federal Magnuson-Moss Warranty Act in the States and state statutes to your advantage claiming that a secret or goodwill warranty substantially modifies the vehicle’s original warranty and confers additional benefits to you that were never disclosed. This failure to disclose puts the automaker in contravention of the federal Act as well as some state acts. For Canadian consumers, please note that two class actions were filed recently over GM and Chrysler paint delamination on 1986-97 vehicles claiming the secret warranties are a violation of provincial statutes (The Trade Practices Act). Incidentally, the Trade Practices Act is found in one form or another in all of Canada’s provinces and territories.

Additionally, owners should point out that:

A product must be reasonably durable (use my “Estimated Part Durability” chart in Part Two of Lemon-Aid) and this failure occurred long before it should have.

Finally, you should not be penalized for going to an independent garage if the “goodwill” warranty wasn’t disclosed to you by the dealer or automaker. To rule otherwise would be against the public interest and would encourage dealers and automakers to keep these programs secret for as long as possible.

4. Your vehicle wasn’t in the select group. We’re talking defects, not vehicles. A defect that was once subject to a special “goodwill” program establishes a benchmark for owners of similar vehicles not covered by that special program. For example, you have already read that Chrysler has a 7-year “goodwill” warranty for AC evaporators on its 1993–97 Jeep Grand Cherokees and LH cars (Concorde, Intrepid, LHS, New Yorker, and Vision), and your Caravan, Cherokee, or truck has the same problem. It stands to reason that you can argue under consumer protection statutes that Chrysler’s own program maintains that an evaporator should last a minimum of seven years. You also wouldn’t be remiss in adding that your vehicle cost a lot more or was exceptionally well-maintained (see Bentley v. Dave Wheaton Pontiac Buick GMC Ltd and General Motors in Lemon-Aid, Part Two, “Getting a Settlement”).

5. Doesn’t apply to used vehicles. Hogwash! Every manufacturer’s “special program” or “goodwill” warranty extension clearly states that their is no exclusion of subsequent owners. This is only logical since the original warranty follows the vehicle, not the owner. Most consumer protection statues reinforce this principle that the original warranty and subsequent warranty rights aren’t lost when ownership is transferred. Owners should notify the automaker of a change of ownership, however, to speed up future claims.