Saturday, May 23, 2015

FTC Will Keep Consumer Product Warranty Rules in Current Form with Some Modifications

The Federal Trade Commission has completed its review of the Interpretations, Rules, and Guides under the Magnuson-Moss Warranty Act and will keep them in their present form, with certain changes to the Interpretations as set forth in a Federal Register Notice (FRN) to be published shortly.

In 2011, as part of its systematic review of all current FTC rules and guides, the FTC sought public comments on its Interpretations, Rules, and Guides regarding product warranties under the Warranty Act, which became law in 1975. The Interpretations provide the Commission’s views on terms and provisions in the Act; the Guides help advertisers avoid unfair or deceptive practices; and the Rules specify disclosure requirements, require that warranty information be available before purchase, and set standards for any informal dispute settlement provisions in a warranty.


In response to the comments received, the Commission has revised Part 700.10 of the Interpretations to clarify that implied tying – warranty language that implies to a consumer that warranty coverage is conditioned on the use of select parts or service – is deceptive. It has also revised Part 700.10 to state that, to the extent that the Warranty Act’s service contract provisions apply to the insurance business, they are effective if they do not interfere with state laws regulating the business of insurance. The Commission has also updated the citation format in the Interpretations and Rules.
The Commission’s FRN also explains, among other things, the obligations of online and offline warrantors and the Act’s application to certain consumer leases, and continues to ensure that consumers are entitled to informal dispute mechanisms provided by the Act.

The Commission vote approving the FRN announcing retention of the Warranty Act Interpretations, Guides and Rules, with modifications to the Interpretations, was 4-1, with Commissioner Maureen K. Ohlhausen voting no; Commissioner Ohlhausen issued a dissenting statement. The FRN is available on the FTC’s website and will be published in the Federal Register shortly.

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