By: Lesley Fair (Federal Trade Commission)
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…