Is it legal for a warranty to hinge on undisclosed criteria and require payment to test those criteria?

Question

In the USA is it legal for a manufacturer to:

1. warrant a product in a way such that only they can test a pass/fail without disclosing the test criteria used
2. charge the consumer to run the test
3. require paid (software) upgrades on the product in order to run the test?

For example, some electric car manufacturers offer a warranty on the vehicle's battery capacity retention being above a certain threshold (typically 60-70%) through the 8 year federally mandated warranty period because batteries naturally lose capacity over time and use.
https://www.greencars.com/guides/definitive-guide-to-electric-car-batteries-range#:~:text=Most%20automakers%20have%20an%208,a%20minimum%20of%20eight%20years.

However, exact battery capacity is difficult to measure so the manufacturers will dictate that an authorized dealer must perform a test for it. In some cases there is little description of the test beyond the dealer plugging the car into a computer, doing something and the computer generating a "pass" or "fail" response with no further explanation of what determines a pass or fail.

Additionally, some people report that their dealer required that the car's software be updated (for a fee) prior to performing said test.

So, is it legal for a warranty to hinge upon undisclosed criteria? Is it legal to charge money to perform such a test? And is it legal to require an additional purchase (software upgrade) to perform such a test?

Edit to add two points that may be relevant:

• Does it matter if a dealer themselves does not understand what the test does and that the test computer is running the manufacturer's software which is the only way to determine a pass/fail?

• There are various ways to approximate battery capacity, including charging to full, and driving until the car stops to measure mileage however that is not only impractical because you may run out of charge in an undesirable location on a roadway but it also can vary substantially due to driving efficiency (are you driving uphill the entire time?). Because of this, no guarantee is in "miles of range" and any possible methods of capacity are an approximation. The manufacturer claims that only a dealer can make a warranty determination but the dealer seems to claim that it is ultimately the manufacturer's determination.

Answer 1

Main Question: Most likely not under Magnuson-Moss or U.C.C..

Question 1: If a charge payable before hand was not set forth in any written warranty, it is most likely not legal to deny remedy to the consumer. However, even if it was, it is possible that it would not meet the federal minimum standards for warranties as, per paragraph (d) a warranty has to provide for remedy without a charge. If there is absolutely no way for you to obtain the information to prove that a remedy is due — for e.g. no third party has legal or technical capacity to diagnose the vehicle — that is likely also a term to be found unconscionable and void, and may be found fraudulent, malicious and/or oppressive which may entitle one to collect punitive damages. (It is worth obtaining written confirmation of whether this decision is made in accord with their policies or on a line that they announce to be recorded)

Question 2: Most likely same as Question 1. Question 3: Most likely same as Question 2.

According to 15 U.S.C., subsection (a) of Section 2302 entitled "Full and conspicuous disclosure of terms and conditions; additional requirements for contents:

"In order to improve the adequacy of information available to consumers, prevent deception, and improve competition in the marketing of consumer products, any warrantor warranting a consumer product to a consumer by means of a written warranty shall, to the extent required by rules of the Commission, fully and conspicuously disclose in simple and readily understood language the terms and conditions of such warranty.

(4) A statement of what the warrantor will do in the event of a defect, malfunction, or failure to conform with such written warranty—at whose expense—and for what period of time."

(5) A statement of what the consumer must do and expenses he must bear.

(6) Exceptions and exclusions from the terms of the warranty.

(7) The step-by-step procedure which the consumer should take in order to obtain performance of any obligation under the warranty, including the identification of any person or class of persons authorized to perform the obligations set forth in the warranty.

(12) The characteristics or properties of the products, or parts thereof, that are not covered by the warranty.

(13) The elements of the warranty in words or phrases which would not mislead a reasonable, average consumer as to the nature or scope of the warranty.

It may, in addition to any or all of the above, be a violation of paragraph (8), (9), (10) and/or (11) based on specific fact patterns.

To the 2nd point added: If the manufacturer stated that the vehicle would run at least a certain number of miles on a full charge for a certain number of miles driven or number of years, and did not stipulate it otherwise, they would have to remedy this. It is highly likely that they tried to evade making such written statement (if not written, it's not a warranty under Magnuson-Moss). If they did, and they did not define the scope of what they would have to do in the case of a defect or malfunction, they would have to remedy it by repairs within a reasonable time; if they fail, they would have to refund or replace.

This does not mean that it is likely worth pursuing the matter in court other than maybe in small claims (See: ohwilleke's reply to this question for a general explanation). Moreover, most auto manufacturers put arbitration provisions in their sale contracts and/or their warranties and generally it may be required of one to opt out of it within 30 days of entering into the agreement. If that took place, first the dispute would likely need to be disputed through a qualified dispute resolution mechanism of the manufacturer, dealer, distributor and/or sellers choice depending on who gave the warranty.

The specific State's lemon laws may provide for civil penalties for willful violations which may or may not be a very high bar to meet depending on the State's case law, and which is more likely to make it worth for "lemon" lawyers to take the case, but generally they are not a great deal more like hyenas of this segment of the law. It may still be worth considering for one depending on the specific facts, including State jurisdiction and the impeding nature of the nonconformity.

(Please specify a State for the State's lemon laws applicable in this hypo)

Answer 2

The question hasn't really accurately characterized the nature of the warranty. What is being warranted is that the battery won't fall below 60% of capacity after eight years (or whatever capacity it actually states). These concepts can be given reasonable scientific definitions, informed by industry custom if necessary, so the criteria aren't truly undisclosed.

A dealer test is one way to determine that, but if you can get your own test done to determine that the dealer's test results are inaccurate, a court would take that test result very seriously and would likely rule in your favor.

It may or may not make economic sense to do that, but if the dealer's testing method systemically denied warranty coverage in cases where the battery actually fell below the warranted threshold, it could be a good case for class action relief or actions from state attorneys-general under consumer protection laws, which probably would make economic sense.

Answer 3

Does the product work?

In a nut shell, a warranty says that the product will do its job for a period of time as per the specification. In case of an EV battery it means that, once fully charged, the battery will provide enough power to travel a certain distance.

Now, it either does or it doesn't: no tests that only an authorized dealer can perform are required to establish that. Such tests may be needed to investigate the failure in detail, but that's not for the consumer to care about.

The warranty fine print may say any sort of stuff, but it cannot override the law: if the product is faulty when it should work and that's not the consumer's fault (no warranty terms were breached), it gets fixed for free. The burden of proof that warranty was breached is on the warranty provider.

So, if the warranty provider gets stubborn and refuses to fix a faulty battery (which still should work) unless you pay to perform some tests, you just take them to the court.