Legal Definitions - warranty adjustment program

A warranty adjustment program, also known as a secret warranty program, is a service provided by car manufacturers when their vehicles have a defect. The program is designed to avoid a recall of the vehicle model, which can be costly and damaging to the manufacturer's reputation. Instead, the manufacturer creates a secret program to cover the cost of repairs for affected vehicles.

For example, if a car manufacturer discovers that a certain model has a defect that could cause the engine to fail, they may create a warranty adjustment program to cover the cost of repairs for affected vehicles. The manufacturer will typically send a letter to dealerships, allowing them to cover the repairs for customers who bring in their vehicles. However, the program is kept secret, and only dealerships and regional offices are informed of its existence.

The key aspect of a warranty adjustment program is that it is kept secret from the public. This can lead to criticism of the practice, as customers may not be aware that their vehicle is covered by the program. In some cases, customers may have to go through a lengthy complaints process to get their repairs covered.

It is important to note that there is no federal law limiting secret warranties. However, some states, such as California, Connecticut, Maryland, Virginia, and Wisconsin, have made secret warranties illegal. In these states, manufacturers must inform registered owners of affected vehicles, similar to a recall.