|
The
Act
improves
consumers'
access
to
warranty
information.
The
Act
enables
consumers
to
comparison
shop
for
warranties.
The
Act
encourages
warranty
competition.
The
Act
promotes
timely
and
complete
performance
of
warranty
obligations.
The
Act
does
not
compel
you
to
give
a
written
warranty.
There
are
three
FTC
Rules
under
the
Act.
Section
102
of
the
Act
directs
how
to
title
your
warranty.
The
Disclosure
Rule
{16
C.F.R.
Part
701}
directs
what
you
must
include
in
your
warranty.
The
Pre-Sale
Availability
Rule
{16
C.F.
R.
Part
702}
directs
how
to
make
your
warranty
available
before
sale.
If
you
give
a
written
warranty
on a
consumer
product,
Section
108
of
the
Act
prevents
you
from
eliminating
or
restricting
implied
warranties.
With
some
exceptions,
Section
102
(c)
of
the
Act
prohibits
you
from
including
a
tie-in
sales
provision
in
your
warranty.
These
are
examples
of
prohibited
tie-in
sales
provisions.
This
is
an
example
of a
permissible
warranty
provision
to
use
instead
of a
tie-in.
Section
110(c)
(2)
of
the
Act
prohibits
deceptive
warranties.
Section
110(d)
of
the
Act
makes
breach
of
warranty
a
violation
of
federal
law,
and
enables
consumers
to
recover
attorneys'
fees.
Dispute
Settlement
Mechanisms
use
conciliation,
mediation,
or
arbitration
to
resolve
disputes.
For
more
information,
an
FTC
publication
Handling
Customer
Complaints,
is
available
from
the
Government
Printing
Office.
If
you
require
your
customers
to
use
a
dispute
settlement
mechanism
before
suing
under
the
Act,
your
mechanism
must
comply
with
the
FTC's
Dispute
Resolution
Rule
{16
C.F.R.
Part
703}.
A
mechanism
that
does
not
meet
the
standards
of
the
Dispute
Resolution
Rule
may
still
be a
valuable
tool
for
you. |
Understanding
the
Magnuson-Moss
Warranty
Act
The
Magnuson-Moss
Warranty
Act
is
the
federal
law
that
governs
consumer
product
warranties.
Passed
by
Congress
in
1975,
the
Act
requires
manufacturers
and
sellers
of
consumer
products
to
provide
consumers
with
detailed
information
about
warranty
coverage.
In
addition,
it
affects
both
the
rights
of
consumers
and
the
obligations
of
warrantors
under
written
warranties.
To
understand
the
Act,
it
is
useful
to
be
aware
of
Congress'
intentions
in
passing
it.
First,
Congress
wanted
to
ensure
that
consumers
could
get
complete
information
about
warranty
terms
and
conditions.
By
providing
consumers
with
a
way
of
learning
what
warranty
coverage
is
offered
on a
product
before
they
buy,
the
Act
gives
consumers
a
way
to
know
what
to
expect
if
something
goes
wrong,
and
thus
helps
to
increase
customer
satisfaction.
Second,
Congress
wanted
to
ensure
that
consumers
could
compare
warranty
coverage
before
buying.
By
comparing,
consumers
can
choose
a
product
with
the
best
combination
of
price,
features,
and
warranty
coverage
to
meet
their
individual
needs.
Third,
Congress
intended
to
promote
competition
on
the
basis
of
warranty
coverage.
By
assuring
that
consumers
can
get
warranty
information,
the
Act
encourages
sales
promotion
on
the
basis
of
warranty
coverage
and
competition
among
companies
to
meet
consumer
preferences
through
various
levels
of
warranty
coverage.
Finally,
Congress
wanted
to
strengthen
existing
incentives
for
companies
to
perform
their
warranty
obligations
in a
timely
and
thorough
manner
and
to
resolve
any
disputes
with
a
minimum
of
delay
and
expense
to
consumers.
Thus,
the
Act
makes
it
easier
for
consumers
to
pursue
a
remedy
for
breach
of
warranty
in
the
courts,
but
it
also
creates
a
framework
for
companies
to
set
up
procedures
for
resolving
disputes
inexpensively
and
informally,
without
litigation.
What
the
Magnuson-Moss
Act
Does
Not
Require
In
order
to
understand
how
the
Act
affects
you
as a
businessperson,
it
is
important
first
to
understand
what
the
Act
does
not
require.
First,
the
Act
does
not
require
any
business
to
provide
a
written
warranty.
The
Act
allows
businesses
to
determine
whether
to
warrant
their
products
in
writing.
However,
once
a
business
decides
to
offer
a
written
warranty
on a
consumer
product,
it
must
comply
with
the
Act.
Second,
the
Act
does
not
apply
to
oral
warranties.
Only
written
warranties
are
covered.
Third,
the
Act
does
not
apply
to
warranties
on
services.
Only
warranties
on
goods
are
covered.
However,
if
your
warranty
covers
both
the
parts
provided
for
a
repair
and
the
workmanship
in
making
that
repair,
the
Act
does
apply
to
you.
Finally,
the
Act
does
not
apply
to
warranties
on
products
sold
for
resale
or
for
commercial
purposes.
The
Act
covers
only
warranties
on
consumer
products.
This
means
that
only
warranties
on
tangible
property
normally
used
for
personal,
family,
or
household
purposes
are
covered.
(This
includes
property
attached
to
or
installed
on
real
property.)
Note
that
applicability
of
the
Act
to a
particular
product
does
not,
however,
depend
upon
how
an
individual
buyer
will
use
it.
The
following
section
of
this
manual
summarizes
what
the
Magnuson-Moss
Warranty
Act
requires
warrantors
to
do,
what
it
prohibits
them
from
doing,
and
how
it
affects
warranty
disputes.
What
the
Magnuson-Moss
Act
Requires
In
passing
the
Magnuson-Moss
Warranty
Act,
Congress
specified
a
number
of
requirements
that
warrantors
must
meet.
Congress
also
directed
the
FTC
to
adopt
rules
to
cover
other
requirements.
The
FTC
adopted
three
Rules
under
the
Act,
the
Rule
on
Disclosure
of
Written
Consumer
Product
Warranty
Terms
and
Conditions
(the
Disclosure
Rule),
the
Rule
on
Pre-Sale
Availability
of
Written
Warranty
Terms
(the
Pre-Sale
Availability
Rule),
and
the
Rule
on
Informal
Dispute
Settlement
Procedures
(the
Dispute
Resolution
Rule).
In
addition,
the
FTC
has
issued
an
interpretive
rule
that
clarifies
certain
terms
and
explains
some
of
the
provisions
of
the
Act.
This
section
summarizes
all
the
requirements
under
the
Act
and
the
Rules.
The
Act
and
the
Rules
establish
three
basic
requirements
that
may
apply
to
you,
either
as a
warrantor
or a
seller.
- As a warrantor, you must designate, or title, your written warranty as either "full" or "limited."
- As a warrantor, you must state certain specified information about the coverage of your warranty in a single, clear, and easy-to-read document.
- As a warrantor or a seller, you must ensure that warranties are available where your warranted consumer products are sold so that consumers can read them before buying.
The
titling
requirement,
established
by
the
Act,
applies
to
all
written
warranties
on
consumer
products
costing
more
than
$10.
However,
the
disclosure
and
pre-sale
availability
requirements,
established
by
FTC
Rules,
apply
to
all
written
warranties
on
consumer
products
costing
more
than
$15.
Each
of
these
three
general
requirements
is
explained
in
greater
detail
in
the
following
chapters.
What
the
Magnuson-Moss
Act
Does
Not
Allow
There
are
three
prohibitions
under
the
Magnuson-Moss
Act.
They
involve
implied
warranties,
so-called
"tie-in
sales"
provisions,
and
deceptive
or
misleading
warranty
terms.
Disclaimer
or
Modification
of
Implied
Warranties
The
Act
prohibits
anyone
who
offers
a
written
warranty
from
disclaiming
or
modifying
implied
warranties.
This
means
that
no
matter
how
broad
or
narrow
your
written
warranty
is,
your
customers
always
will
receive
the
basic
protection
of
the
implied
warranty
of
merchantability.
This
is
explained
in
Understanding
Warranties.
There
is
one
permissible
modification
of
implied
warranties,
however.
If
you
offer
a
"limited"
written
warranty,
the
law
allows
you
to
include
a
provision
that
restricts
the
duration
of
implied
warranties
to
the
duration
of
your
limited
warranty.
For
example,
if
you
offer
a
two-year
limited
warranty,
you
can
limit
implied
warranties
to
two
years.
However,
if
you
offer
a
"full"
written
warranty,
you
cannot
limit
the
duration
of
implied
warranties.
This
matter
is
explained
in
Titling
Written
Warranties
as
"Full"
or
"Limited".
If
you
sell
a
consumer
product
with
a
written
warranty
from
the
product
manufacturer,
but
you
do
not
warrant
the
product
in
writing,
you
can
disclaim
your
implied
warranties.
(These
are
the
implied
warranties
under
which
the
seller,
not
the
manufacturer,
would
otherwise
be
responsible.)
But,
regardless
of
whether
you
warrant
the
products
you
sell,
as a
seller,
you
must
give
your
customers
copies
of
any
written
warranties
from
product
manufacturers.
"Tie-In
Sales"
Provisions
Generally,
tie-in
sales
provisions
are
not
allowed.
Such
a
provision
would
require
a
purchaser
of
the
warranted
product
to
buy
an
item
or
service
from
a
particular
company
to
use
with
the
warranted
product
in
order
to
be
eligible
to
receive
a
remedy
under
the
warranty.
The
following
are
examples
of
prohibited
tie-in
sales
provisions.
In order to keep your new Plenum Brand Vacuum Cleaner warranty in effect, you must use genuine Plenum Brand Filter Bags. Failure to have scheduled maintenance performed, at your expense, by the Great American Maintenance Company, Inc., voids this warranty.
While
you
cannot
use
a
tie-in
sales
provision,
your
warranty
need
not
cover
use
of
replacement
parts,
repairs,
or
maintenance
that
is
inappropriate
for
your
product.
The
following
is
an
example
of a
permissible
provision
that
excludes
coverage
of
such
things.
While necessary maintenance or repairs on your AudioMundo Stereo System can be performed by any company, we recommend that you use only authorized AudioMundo dealers. Improper or incorrectly performed maintenance or repair voids this warranty.
Although
tie-in
sales
provisions
generally
are
not
allowed,
you
can
include
such
a
provision
in
your
warranty
if
you
can
demonstrate
to
the
satisfaction
of
the
FTC
that
your
product
will
not
work
properly
without
a
specified
item
or
service.
If
you
believe
that
this
is
the
case,
you
should
contact
the
warranty
staff
of
the
FTC's
Bureau
of
Consumer
Protection
for
information
on
how
to
apply
for
a
waiver
of
the
tie-in
sales
prohibition.
Deceptive
Warranty
Terms
Obviously,
warranties
must
not
contain
deceptive
or
misleading
terms.
You
cannot
offer
a
warranty
that
appears
to
provide
coverage
but,
in
fact,
provides
none.
For
example,
a
warranty
covering
only
"moving
parts"
on
an
electronic
product
that
has
no
moving
parts
would
be
deceptive
and
unlawful.
Similarly,
a
warranty
that
promised
service
that
the
warrantor
had
no
intention
of
providing
or
could
not
provide
would
be
deceptive
and
unlawful.
How
the
Magnuson
Moss
Act
May
Affect
Warranty
Disputes
Two
other
features
of
the
Magnuson-Moss
Warranty
Act
are
also
important
to
warrantors.
First,
the
Act
makes
it
easier
for
consumers
to
take
an
unresolved
warranty
problem
to
court.
Second,
it
encourages
companies
to
use
a
less
formal,
and
therefore
less
costly,
alternative
to
legal
proceedings.
Such
alternatives,
known
as
dispute
resolution
mechanisms,
often
can
be
used
to
settle
warranty
complaints
before
they
reach
litigation.
Consumer
Lawsuits
The
Act
makes
it
easier
for
purchasers
to
sue
for
breach
of
warranty
by
making
breach
of
warranty
a
violation
of
federal
law,
and
by
allowing
consumers
to
recover
court
costs
and
reasonable
attorneys'
fees.
This
means
that
if
you
lose
a
lawsuit
for
breach
of
either
a
written
or
an
implied
warranty,
you
may
have
to
pay
the
customer's
costs
for
bringing
the
suit,
including
lawyer's
fees.
Because
of
the
stringent
federal
jurisdictional
requirements
under
the
Act,
most
Magnuson-Moss
lawsuits
are
brought
in
state
court.
However,
major
cases
involving
many
consumers
can
be
brought
in
federal
court
as
class
action
suits
under
the
Act.
Although
the
consumer
lawsuit
provisions
may
have
little
effect
on
your
warranty
or
your
business,
they
are
important
to
remember
if
you
are
involved
in
warranty
disputes.
Alternatives
to
Consumer
Lawsuits
Although
the
Act
makes
consumer
lawsuits
for
breach
of
warranty
easier
to
bring,
its
goal
is
not
to
promote
more
warranty
litigation.
On
the
contrary,
the
Act
encourages
companies
to
use
informal
dispute
resolution
mechanisms
to
settle
warranty
disputes
with
their
customers.
Basically,
an
informal
dispute
resolution
mechanism
is a
system
that
works
to
resolve
warranty
problems
that
are
at a
stalemate.
Such
a
mechanism
may
be
run
by
an
impartial
third
party,
such
as
the
Better
Business
Bureau,
or
by
company
employees
whose
only
job
is
to
administer
the
informal
dispute
resolution
system.
The
impartial
third
party
uses
conciliation,
mediation,
or
arbitration
to
settle
warranty
disputes.
The
Act
allows
warranties
to
include
a
provision
that
requires
customers
to
try
to
resolve
warranty
disputes
by
means
of
the
informal
dispute
resolution
mechanism
before
going
to
court.
(This
provision
applies
only
to
cases
based
upon
the
Magnuson-Moss
Act.)
If
you
include
such
a
requirement
in
your
warranty,
your
dispute
resolution
mechanism
must
meet
the
requirements
stated
in
the
FTC's
Rule
on
Informal
Dispute
Settlement
Procedures
(the
Dispute
Resolution
Rule).
Briefly,
the
Rule
requires
that
a
mechanism
must:
- Be adequately funded and staffed to resolve all disputes quickly;
- Be available free of charge to consumers;
- Be able to settle disputes independently, without influence from the parties involved;
- Follow written procedures;
- Inform both parties when it receives notice of a dispute;
- Gather, investigate, and organize all information necessary to decide each dispute fairly and quickly;
- Provide each party an opportunity to present its side, to submit supporting materials, and to rebut points made by the other party; (the mechanism may allow oral presentations, but only if both parties agree);
- Inform both parties of the decision and the reasons supporting it within 40 days of receiving notice of a dispute;
- Issue decisions that are not binding; either party must be free to take the dispute to court if dissatisfied with the decision (however, companies may, and often do, agree to be bound by the decision);
- Keep complete records on all disputes; and
- Be audited annually for compliance with the Rule.
It
is
clear
from
these
standards
that
informal
dispute
resolution
mechanisms
under
the
Dispute
Resolution
Rule
are
not
"informal"
in
the
sense
of
being
unstructured.
Rather,
they
are
informal
because
they
do
not
involve
the
technical
rules
of
evidence,
procedure,
and
precedents
that
a
court
of
law
must
use.
Currently,
the
FTC's
staff
is
evaluating
the
Dispute
Resolution
Rule
to
determine
if
informal
dispute
resolution
mechanisms
can
be
made
simpler
and
easier
to
use.
To
obtain
more
information
about
this
review,
contact
the
FTC's
warranty
staff.
As
stated
previously,
you
do
not
have
to
comply
with
the
Dispute
Resolution
Rule
if
you
do
not
require
consumers
to
use
a
mechanism
before
bringing
suit
under
the
Magnuson-Moss
Act.
You
may
want
to
consider
establishing
a
mechanism
that
will
make
settling
warranty
disputes
easier,
even
though
it
may
not
meet
the
standards
of
the
Dispute
Resolution
Rule.
more
information
here........ |
