Draw the Law, People Issues XIII: Customers and Warranties, Part III

Hey everyone, made a mistake, I forgot there were some additional things that I wanted to cover this week on warranties.  So the discussion on disclaimers will follow next week. Anyway, let’s get to it.

Magnuson-Moss Act

The Magnuson-Moss Act is a federal law that covers written warranties in the situation of consumer goods (personal, household use items) that cost more than $10. It does NOT require you to produce a written warranty, it only requires certain things if you do decide to have one. It only applies to written and not oral warranties. Lastly, it does not apply to service warranties, unless you are providing the parts and workmanship in doing a repair, then it does.

The purpose of Magnuson-Moss is consumer protection, namely through regulating written warranties on consumer goods $10 and higher. The warranties should be easy to read and be available to consumers to read before purchase.

The Basics

The Federal Trade Commission is responsible for administering this law. There are three basic requirements that you as a warrantor or seller must do in your written warranties:

  1. You must state whether the warranty is “full” or “limited” (to be explained later);
  2. As a warrantor, you must state specified information (listed later) about the warranty coverage and it must be in plain language (no legalese!);
  3. You must ensure that the warranty is available to read BEFORE purchase by the consumer.

 Full vs. Limited Warranties

A full warranty is a promise that the good will be repaired or replaced for free during a warranty period.  It functions like a Lemon Law. To have a full warranty you must do the following:

  • You do not limit the duration of implied warranties.
  • You provide warranty service to anyone who owns the product during the warranty period; that is, you do not limit coverage to first purchasers.
  • You provide warranty service free of charge, including such costs as returning the product or removing and reinstalling the product when necessary.
  • You provide, at the consumer’s choice, either a replacement or a full refund if, after a reasonable number of tries, you are unable to repair the product.
  • You do not require consumers to perform any duty as a precondition for receiving service, except notifying you that service is needed, unless you can demonstrate that the duty is reasonable.

Anything short of that, you will have a limited warranty.  Some retailers like to offer a full warranty of their own above what the manufacturer offers as a competitive edge.

Full warranties cover an extensive set of solutions for consumers having trouble with your goods. In effect, it is like a Lemon Law, requiring that if you use a Full Warranty, there is repair or replacement done for free during a reasonable amount of time. A limited warranty is just as it sounds, it offers less to the consumer.

A limited warranty is the one you see more often, and it is probably one that is favored by starting businesses, as it is less costly. As you would expect, it is limited in what it covers, which is usually only parts and rarely the cost of labor beyond the first month.  Some expensive items manufacturers may offer limited warranties for a longer period of time due to the relative cost of the item.

The Specified Information

In plain language you must state the following in your written warranty:

  1. Name and address of the company making the warranty;
  2. The product or parts covered;
  3. Whether the warranty promises to replace, repair, or refund, and any expenses that the consumer has to pay associated with those actions;
  4. The length of the warranty;
  5. If the warranty does not cover certain legal damages beyond the cost of the product;
  6. What the consumer has to do if something goes wrong;
  7. If the company requires that the consumer waive certain rights in dispute or go through arbitration, then a statement on that must be included;
  8. Finally, a brief description of the consumers’ legal rights.

Specified Information: 1. name and address of company; 2. good or parts covered; 3. replace, repair, or refund; 4. duration of the warranty; 5. limitation of legal costs; 6. what to do in case of problems; and 7. basic legal rights and dispute resolution process for consumers.

There are a lot more issues with warranties, that would probably require a discussion with an attorney or a more in-depth analysis than one post would take. So that will be it for this week on warranties.

Come back next week where I will discuss disclaimers, and I am sure many of you already know the big one from buying things on Craigslist and Ebay. So see you then and also don’t forget to “Subscribe” to this blawg!

*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

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