Extended Warranties and Service Contracts Under the Magnuson-Moss Warranty Act
Most "extended warranties" are service contracts, not warranties, under federal law. The Magnuson-Moss Warranty Act (MMWA) still covers them: service contractors must honor their contracts, and a seller who sells you a service contract at the sale or within 90 days generally cannot disclaim the implied warranties on your vehicle.
Denied a repair under your warranty or service contract? See whether the facts support a claim.
Take the case eligibility quiz →What is the difference between a warranty and a service contract?
People use "warranty" for both, but federal law draws a line. The MMWA defines a written warranty as a written promise, made in connection with the sale of a consumer product, that the material or workmanship is defect free or will meet a specified level of performance over a specified period (15 U.S.C. 2301(6)). It defines a service contract as a written contract to perform, over a fixed period or for a specified duration, services relating to the maintenance or repair of a consumer product (15 U.S.C. 2301(8)).
The Federal Trade Commission puts the practical difference simply: a manufacturer's warranty comes included in the price of a new vehicle, while an auto service contract or "extended warranty" is bought separately and is not a warranty as federal law defines it.
| Factory warranty | Service contract ("extended warranty") | |
|---|---|---|
| How you get it | Included with the vehicle | Bought separately, often at the dealer |
| Who stands behind it | The manufacturer | The manufacturer, the dealer or an independent company, often through an administrator |
| MMWA definition | Written warranty, 15 U.S.C. 2301(6) | Service contract, 15 U.S.C. 2301(8) |
| What governs coverage | The warranty terms and federal and state law | The contract terms and federal and state law |
To see how factory coverage is usually structured, read our guide to the powertrain warranty. To check your own coverage window, try the warranty period checker.
Does MMWA protect you if you bought a service contract?
Yes, in several ways. The MMWA lets a consumer sue a supplier, warrantor or service contractor that fails to comply with its obligations under the Act or under a written warranty, implied warranty or service contract (15 U.S.C. 2310(d)(1)). As with warranty claims, the company generally must first get a reasonable opportunity to cure (15 U.S.C. 2310(e)). If the consumer finally prevails, the court may award attorney fees and costs (15 U.S.C. 2310(d)(2)).
The biggest protection is less well known, and it involves implied warranties.
What is the 90-day implied warranty rule?
Implied warranties are promises the law reads into a sale, such as the promise that a car is fit for ordinary driving. Sellers often try to disclaim them, for example by selling a used car "as is."
The MMWA limits that. Under 15 U.S.C. 2308(a), no supplier may disclaim or modify an implied warranty if it gives a written warranty on the product, or if, at the time of sale or within 90 days after, it enters into a service contract with the consumer that applies to the product. The law does allow an implied warranty to be limited in duration to the length of a written warranty of reasonable duration, if the limit is conscionable, clear and prominently displayed (15 U.S.C. 2308(b)). A disclaimer that violates the section is ineffective under the Act and under state law (15 U.S.C. 2308(c)).
In plain terms: if a dealer sold you a car "as is" and, in the same deal or within 90 days, sold you a service contract it is a party to, the "as is" disclaimer may not hold up. Whether the dealer counts as the party entering into the service contract depends on how the contract is set up, so bring the paperwork. This comes up often with used cars; see our guide on used car warranty claims under MMWA.
Manufacturer-backed or third-party: who do you claim against?
Read the first page of your contract. It should name the obligor (the company that owes you the repairs) and often an administrator that handles claims.
- Manufacturer-backed plans are sold through franchised dealers and are usually handled by the automaker's own network. Repairs are often done at the dealer, and the records sit alongside your factory warranty history.
- Third-party plans are backed by independent companies. Claims can involve pre-authorization, inspections and disputes over whether a part is covered or whether a condition was pre-existing.
Either way, keep the full contract, every claim number, every denial in writing and every repair order. Our guide on documenting repair attempts applies here too.
Does a service contract extend lemon-law coverage?
Usually not by itself. State lemon laws are generally tied to the manufacturer's warranty or to a set period after delivery, and they vary by state, so check yours with our state law lookup. A service contract can still matter in three ways: the MMWA claims described above, the implied warranty protection under 2308, and a repair record showing the same defect coming back. If your factory coverage has ended, read what if my warranty is expired. A defect first reported while the factory warranty was active may still be covered after it ends, depending on the facts.
Lemonaid Firm helps owners nationwide under MMWA. Results depend on the facts of each case.
Frequently asked questions
Is an extended warranty a real warranty?
Under federal law, usually not. The FTC explains that an auto service contract or extended warranty is not a warranty as federal law defines it, because you buy it separately. The MMWA calls it a service contract, 15 U.S.C. 2301(8).
Can I sue a service contract company under MMWA?
The MMWA lets a consumer sue a service contractor that fails to comply with its obligations under a service contract, generally after giving it a reasonable opportunity to cure. If you finally prevail, the court may award attorney fees and costs.
I bought a used car as is but also bought a service contract. Do I have implied warranties?
Possibly. Under 15 U.S.C. 2308(a), a supplier that enters into a service contract with you at the time of sale or within 90 days cannot disclaim implied warranties. Whether that applies depends on who the parties to the contract are.
Does my extended warranty extend my lemon-law rights?
Generally not by itself, since state lemon laws are usually tied to the manufacturer's warranty or a set period. It can still support MMWA claims and document a recurring defect. Check your state's rules.
What should I keep if my service contract claim is denied?
Keep the full contract, the denial in writing, claim numbers, repair orders, inspection reports and receipts for any repairs you paid for.
Sources
- 15 U.S.C. 2301, definitions (Cornell LII)
- 15 U.S.C. 2308, implied warranties (Cornell LII)
- 15 U.S.C. 2310, remedies in consumer disputes (Cornell LII)
- FTC: Auto warranties and auto service contracts
Warranty or service contract claim denied?
A few questions on your vehicle, your coverage and your repair orders. Free. We tell you whether the facts support an MMWA or lemon-law claim. Results depend on the facts of each case.
Take the case eligibility quiz →
