Bob here some information from the Law Library: very long but informative!
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.
1.As a warrantor, you must designate, or title, your written warranty as
either "full" or "limited"
2.As a warrantor, you must state certain specified information about the
coverage of your warranty in a single, clear, and easy-to read document.
3.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.
-------------------------------------------
Steven St.Laurent
Test Engineer
Test Branch, GSD, MCTSSA
MARCORSYSCOM, USMC
760-725-2506 (DSN 365-2506)
Work:mailto:stlaurents@mctssa.usmc.mil
Home:mailto:saint1958@home.com
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