The Magnuson-Moss Warranty Act is the federal law that governs consumer product warranties.  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.

What the Magnuson-Moss Act Does NOT Require

• 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.
• The Act does not apply to oral warranties.  Only written warranties are covered.
• The Act does not apply to warranties on services.  Only warranties on goods are covered.
• 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.

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 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 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.

What the Terms “Full” and “Limited” Mean

If each of the following five statements is true about a warranty’s terms and conditions, it is a “FULL” warranty:

• The warranty does not limit the duration of implied warranties.
• The warranty provides warranty service to anyone who owns the product during the warranty period; that is, coverage is not limited to first purchasers.
• The warranty provides warranty service free of charge, including such costs as returning the product or removing and reinstalling the product when necessary.
• The warranty provides, 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.
• The warranty does not require consumers to perform any duty as a precondition for receiving service, except notifying the warrantor that service is needed, unless the duty is reasonable.

If any of these statements is not true, then the warranty is “limited”.

You are not required to make your entire warranty “full” or “limited”.  If the statements above are true about the coverage on only some parts of your product, or if the statements are true about the coverage during only one part of the warranty period, then your warranty is a multiple warranty that is part full and part limited.

Basic Information Required for All Warranties

Under the FTC Rules, there are five basic aspects of coverage that your warranty must describe.  It is useful to think of these as five questions which your warranty must answer:

• What does the warranty cover/not cover? Answering this question is quite simple when the warranty covers every type of malfunction or defect that may appear in all parts of the product. However, if not all parts or not all types of defects are covered, you should clearly describe the scope of coverage.
• What is the period of coverage? If coverage begins at some point in time other than the purchase date, your warranty must state the time or event that begins the coverage.  For example, warranty coverage could begin when the product is installed, which may be different from when the product is purchased.  Also, you must make it clear when coverage ends if some particular event would terminate it.  For example, coverage could be voided upon improper installation.
• What will you do to correct problems? This requires an explanation of the remedy you offer under the warranty.  This could be repair or replacement of the product, a refund of the purchase price, or a credit toward subsequent purchases.  If necessary for clarity, you must also explain what you will not do or what expenses you will not pay.
• How can the customer get warranty service? Your warranty must tell customers who they can go to for warranty service and how to reach those persons or companies.  Typically, this means that the warranty needs to include the name and address of your company, and any person or office customers should contact.
• How will state law affect your customer’s rights under the warranty? Your warranty must answer this question because implied warranty rights and certain other warranty rights vary from state to state.  Rather than require a detailed explanation about this on a state-by-state basis, the FTC adopted the following “boilerplate” disclosure to address this issue.  It must be included in every consumer product warranty: “This warranty gives you specific legal rights, and you may also have other rights which vary from state to state.”

Making Warranties Available Prior to Sale

The FTC’s Rule on Pre-Sale Availability of Written Warranty Terms requires that written warranties on consumer products costing more than $15 be available to consumers before they buy.  The Rule has provisions that specify what retailers, including mail order, catalog, and door-to-door sellers, must do to accomplish this. The Rule also specifies what manufacturers must do so that sellers can meet their obligations under the Rule.

Retailers must make written warranties available at the point of sale.  As a manufacturer, you must provide retailers of your product with the warranty materials they will need to meet their availability requirements.  There are any number of ways to do this, including: providing copies of the warranty to be placed in a binder; providing warranty stickers, tags, signs, or posters; or printing the warranty on your product’s packaging.  As long as you have provided retailers with the warranty materials they need to comply with the rule, you are not legally responsible if they fail to make your warranties available.

–Matt

The above is a general overview of some aspects of Federal Warranty Law and was in part taken substantially from the Federal Trade Commission’s Business Person’s Guide to Federal Warranty Law