Kaput. Kerflooey. On the fritz. Regardless of what you call it, when products break down, consumers have a choice. They can go back to the dealer. They can visit a local fix-it shop. Or they can try some DIY. But when companies place illegal restrictions on how and where people can get their stuff repaired, consumers see red – and they aren’t alone in that concern. The FTC has announced proposed settlements with grill maker Weber-Stephen Products LLC, motorcycle manufacturer Harley-Davidson Motor Company Group, LLC, and MWE Investments, LLC, which manufactures Westinghouse outdoor power equipment, alleging they violated the Magnuson-Moss Warranty Act and the FTC Act by including warranty provisions that unlawfully conveyed that their warranties would be voided if a customer used third-party parts or, in the case of Harley-Davidson and Westinghouse, independent repairers.
First, a brief warranty refresher. Section 2302(c) of the Magnuson-Moss Warranty Act – the statute’s “anti-tying” prohibition – makes it illegal for a company to condition a warranty “on the consumer’s using, in connection with such product, any article or service (other than article or service provided without charge under the terms of the warranty) which is identified by brand, trade, or corporate name.” In other words, companies can’t tell customers they will void a customer’s warranty or deny warranty coverage if the customer uses a part made by someone else or has someone other than the dealer repair the product. There are two narrow instances where that prohibition doesn’t apply: 1) if the company has received a waiver in advance from the FTC after proving that the product will work properly only if a specific branded part is used; or 2) if the warranty states that the company will provide the identified parts and services for free. And just to be clear, a manufacturer can’t avoid liability by providing free parts or services to repair or replace defective parts if its warranty conveys that customers must use a specific brand of parts or specific service providers in other situations. Put another way, if a company will replace certain parts for free – but will still void a consumer’s warranty for using another maker’s parts for other purposes – the company has violated the law.
The complaint against Weber charges that for some of its gas and electric grills, the company included a provision in its user manual and warranty that stated, “The use and/or installation of parts on your WEBER products that are not genuine WEBER parts will void this warranty . . . .” As the complaint alleges, Weber didn’t get a waiver from the FTC and didn’t provide those parts and labor for free except in the case of defects. So the two narrow exceptions don’t apply. Therefore, according to the lawsuit, Weber’s stated policy that using non-Weber parts will void consumers’ warranties violates the Warranty Act. In addition, the complaint alleges that by conditioning the validity of the warranty on the use of Weber parts that weren’t provided free to the consumer, Weber engaged in an unfair or deceptive practice, in violation of the FTC Act.
The complaint against Harley-Davidson alleges that its warranty included a number of provisions that restricted consumers’ right to repair and violated other Warranty Act protections. For example, the company’s 2021 warranty states that “the use of parts and service procedures other than Harley-Davidson approved parts and service procedures may void the limited warranty” and that the “use of aftermarket performance parts may void all or parts of your limited warranty. See an authorized Harley-Davidson dealer for details.”
What’s more, 16 C.F.R. § 701.3(a)(2) – Disclosure of Written Consumer Product Warranty Terms and Conditions – requires that written warranties must “disclose in a single document in simple and readily understood language” certain key terms, including a “clear description and identification of products, or parts, or characteristics, or components or properties covered by and where necessary for clarification, excluded from the warranty.” However, in multiple places in its warranty, Harley-Davidson told consumers to consult a dealer “for details” about the warranty – a provision the FTC says violates the Rule’s “single document” requirement.
According to the FTC’s complaint against MWE Investments, LLC, the company’s warranty for its Westinghouse outdoor power equipment listed “exclusions” that voided coverage for “generators that utilize non-MWE Investments, LLC replacement parts” and “products that are altered or modified in a manner not authorized in writing by MWE Investments, LLC.” In addition to a count challenging the company’s violations of the tying prohibitions of Warranty Act, the complaint alleges that the company’s practices violated Section 5.
To settle the cases, the proposed orders against Weber, Harley-Davidson, and MWE Investments make it clear that the companies can’t tell consumers their warranties will be void if they use third-party parts or services, or that they have to use branded parts or authorized service providers. The companies also must revise their warranties by adding language that conveys this to consumers: “Taking your product to be serviced by a repair shop that is not affiliated with or an authorized dealer of [Company] will not void this warranty. Also, using third-party parts will not void this warranty.” In addition, Harley-Davidson and Westinghouse must notify current customers, dealers, and service providers about the changes to the warranty terms. When the proposed settlements appear in the Federal Register, you may file a public comment by the listed deadline.
The benefits of consumer choice in repairs should be apparent: lower costs, faster service, and more competition. What can other companies take from the announcement of the three actions?
The FTC means business when it comes to vindicating consumers’ right to repair. The Nixing the Fix Report to Congress and a unanimous Policy Statement on Repair Restrictions Imposed by Manufacturers and Sellers send the unmistakable message that challenging practices that illegally restrict consumers’ right to repair is a key FTC enforcement priority.
Conduct a warranty compliance check. When was the last time you reviewed your warranties? Now is the time to take a closer look to make sure you’re honoring the requirements of the Warranty Act. The FTC’s concern is that violations of the tying prohibition inflict an injurious double whammy. Companies that illegally restrict consumers’ right to choose how and where to get items repaired may force people to use potentially pricier options. And by conditioning consumers’ warranties on the use of authorized service providers and branded parts, companies infringe on the right of independent repairers and manufacturers to compete on a level playing field.
Keep your warranties readable. The Warranty Disclosure Rule requires that your written warranty must be contained in a “single document.” So don’t send consumers hither and yon to try to determine its contours. In addition, the Rule specifies that you must word your warranty in “simple and readily understood language.” It also lists information your warranty must include – for example, ”a clear description” of the products or parts that are covered or excluded, a statement of what you’ll do in the event of a defect or malfunction, and “a step-by-step explanation of the procedure which the consumer should follow in order to obtain performance of any warranty obligation.” An FTC publication, Businessperson's Guide to Federal Warranty Law, offers advice to help your compliance efforts.
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