A Businessperson's Guide to
Federal Warranty Law
State law (the Uniform Commercial Code). Sections 2-314
& 2-315. Section 2-313.
For the full legal texts listed below, consult the
supplement to this manual.
The FTC's Dispute Resolution Rule, 16 C.F.R. Part 703.
REQUIREMENT I: The Magnuson-Moss Warranty Act, Section
102.
REQUIREMENT II: The FTC's Disclosure Rule, 16 C.F.R. Part
701.
REQUIREMENT III: The FTC's Pre-Sale Availability Rule, 16
C.F.R. Part 702.
The FTC's Warranty Advertising Guides.
The Magnuson-Moss Warranty Act, Section 106.
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Table
of Contents
Introduction
Understanding
Warranties
Implied Warranties
Express Warranties
Understanding
the Magnuson-Moss Warranty Act
What the Magnuson-Moss Act Does Not Require
What the Magnuson-Moss Act Requires
What the Magnuson-Moss Act Does Not Allow
Disclaimer or Modification of Implied Warranties
"Tie-in-Sales"
Provisions
Deceptive Warranty Terms
How the Magnuson-Moss Act May Affect Warranty
Disputes
Consumer
Lawsuits
Alternatives to Consumer Lawsuits
Titling Written
Warranties as "Full" or "Limited"
What the Terms "Full" and
"Limited" Mean
Examples of Full Warranties, Limited Warranties, and
Multiple Warranties
Stating Terms
and Conditions of Your Written Warranty
Basic Information Required for All
Warranties
Specific Information Required When Your Warranty
Contains Certain Optional Terms and Conditions
Making
Warranties Available Prior to Sale
What Retailers Must Do
What Mail Order Companies Must Do
What Door-to-Door Sales Companies Must Do
What Manufacturers Must Do
Advertising
Warranties
How to Advertise Warranties Covered by
the Pre-Sale
Availability Rule
How to Advertise a Satisfaction Guarantee
How to Advertise a Lifetime Warranty or Guarantee
Offering Service
Contracts
Statement of Terms and Conditions
Disclaimer or Limitation of Implied Warranties
Additional Sources
of Information
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Introduction
This manual is intended as a businessperson's guide to the
basic features of the Magnuson-Moss Warranty Act, the federal law governing warranties on
consumer products. The text provides citations to specific sections of the lawthe
Warranty Act itself, the Rules the Federal Trade Commission (FTC) adopted under the Act,
and the FTC's Warranty Advertising Guides. For reference purposes, a supplement to this
manual containing the Act, the Rules, and the Guides is available from the FTC's Consumer
Response Center. See Additional Sources of Information.
This manual also addresses some basic
points of state law that you need to know to understand the requirements and prohibitions
of the Magnuson-Moss Act. However, because state law varies, you may need to contact a
private attorney or the offices of the attorneys general in the states where you do
business to get specific state law information. The manual is intended as a tool for you
to use in consultation with your attorney, not as a substitute for your attorney's advice.
The names of the companies in the examples
in this manual are fictitious; any resemblance between them and the names of actual
companies is completely coincidental.
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Your warranty is a contract that
commits you to stand behind your product.
Section 2-314 of the Uniform
Commercial Code, which is law in every state but Louisiana, covers the implied warranty of
merchantability.
Basically, your product is
"merchantable" if it does what it is supposed to do.
Section 2-315 of the Uniform
Commercial Code covers the implied warranty of fitness for a particular purpose.
Implied warranties deal with the
product at the time it is purchased.
Generally, customers
have four years to enforce an implied warranty
claim.
Merchants of used goods also give
implied warranties.
You can sell without implied
warranties"as is"in most states.
To sell "as is" you must
clearly and conspicuously disclaim implied warranties, generally in writing.
You cannot sell "as is"
in some states.
You cannot avoid implied warranties
if you offer a written warranty on a consumer product.
You cannot avoid responsibility for
personal injury caused by a defect in your product, even if you sell "as is."
Section 2-313 of the Uniform
Commercial Code covers express warranties. |
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Understanding
Warranties
Generally,
a warranty is your promise, as a manufacturer or seller, to stand behind your product. It
is a statement about the integrity of your product and about your commitment to correct
problems when your product fails.
The law recognizes two basic kinds of
warrantiesimplied warranties and express warranties.
Implied Warranties
Implied warranties are unspoken, unwritten promises, created
by state law, that go from you, as a seller or merchant, to your customers. Implied
warranties are based upon the common law principle of "fair value for money
spent," There are two types of implied warranties that occur in consumer product
transactions. They are the implied warranty of merchantability and the
implied
warranty of fitness for a particular purpose.
The implied warranty of merchantability
is a
merchant's basic promise that the goods sold will do what they are supposed to do and that
there is nothing significantly wrong with them. In other words, it is an implied promise
that the goods are fit to be sold. The law says that merchants make this promise
automatically every time they sell a product they are in business to sell. For example, if
you, as an appliance retailer, sell an oven, you are promising that the oven is in proper
condition for sale because it will do what ovens are supposed to dobake food at
controlled temperatures selected by the buyer. If the oven does not heat, or if it heats
without proper temperature control, then the oven is not fit for sale as an oven, and your
implied warranty of merchantability would be breached. In such a case, the law requires
you to provide a remedy so that the buyer gets a working oven.
The implied warranty of fitness for a particular
purpose is a promise that the law says you, as a seller, make when your customer
relies on your advice that a product can be used for some specific purpose. For example,
suppose you are an appliance retailer and a customer asks for a clothes washer that can
handle 15 pounds of laundry at a time. If you recommend a particular model, and the
customer buys that model on the strength of your recommendation, the law says that you
have made a warranty of fitness for a particular purpose. If the model you recommended
proves unable to handle 15-pound loads, even though it may effectively wash 10-pound
loads, your warranty of fitness for a particular purpose is breached.
Implied warranties are promises about the condition of
products at the time they are sold, but they do not assure that a product will last for
any specific length of time. (The normal durability of a product is, of course, one aspect
of a product's merchantability or its fitness for a particular purpose.) Nor does the law
say that everything that can possibly go wrong with a product falls within the scope of
implied warranties. For example, implied warranties do not cover problems such as those
caused by abuse, misuse, ordinary wear, failure to follow directions, or improper
maintenance.
Generally, there is no specified duration for implied
warranties under state laws. However, the state statutes of limitations for breach of
either an express or an implied warranty are generally four years from date of purchase.
This means that buyers have four years in which to discover and seek a remedy for problems
that were present in the product at the time it was sold. It does not mean that the
product must last for four years. It means only that the product must be of normal
durability, considering its nature and price.
A special note is in order regarding implied warranties on
used merchandise. An implied warranty of merchantability on a used product is a
promise that it can be used as expected, given its type and price range. As with new
merchandise, implied warranties on used merchandise apply only when the seller is a
merchant who deals in such goods, not when a sale is made by a private individual.
If you do not offer a written warranty, the law in most
states allows you to disclaim implied warranties. However, selling without implied
warranties may well indicate to potential customers that the product is riskylow
quality, damaged, or discontinuedand therefore, should be available at a lower
price.
In order to disclaim implied warranties, you must inform
consumers in a conspicuous manner, and generally in writing, that you will not be
responsible if the product malfunctions or is defective. It must be clear to consumers
that the entire product risk falls on them. You must specifically indicate that you do not
warrant "merchantability," or you must use a phrase such as "with all
faults," or "as is." A few states have special laws on how you must phrase
an "as is" disclosure. (For specific information on how your state treats
"as is" disclosures, consult your attorney.)
Some states do not allow you to sell consumer products
"as is." At this time, these states are Alabama, Connecticut, Kansas, Maine,
Maryland, Massachusetts, Minnesota, Mississippi, New Hampshire, Vermont, Washington, West
Virginia, and the District of Columbia. In those states, sellers have implied warranty
obligations that cannot be avoided.
Federal law prohibits you from disclaiming implied
warranties on any consumer product if you offer a written warranty for that product (see
What the Magnuson-Moss Act
Requires) or sell a service contract on it (see Offering Service
Contracts).
You should be aware that even if you sell a product
"as is" and it proves to be defective or dangerous and causes personal injury to
someone, you still may be liable under the principles of product liability. Selling the
product "as is" does not eliminate this liability.
Express Warranties
Express warranties, unlike implied warranties, are not
"read into" your sales contracts by state law; rather, you explicitly offer
these warranties to your customers in the course of a sales transaction. They are promises
and statements that you voluntarily make about your product or about your commitment to
remedy the defects and malfunctions that some customers may experience.
Express
warranties can take a variety of forms, ranging from advertising claims to formal
certificates. An express warranty can be made either orally or in writing. While oral
warranties are important, only written warranties on consumer products are covered by the
Magnuson-Moss Warranty Act.
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The Act improves
consumers' access to warranty information.
The Act enables consumers to
comparison shop for warranties.
The Act encourages warranty
competition.
The Act promotes timely and
complete performance of warranty obligations.
The Act does not compel you to give
a written warranty.
There are three FTC Rules under the
Act.
Section 102 of the Act directs how
to title your warranty.
The Disclosure Rule {16 C.F.R. Part
701} directs what you must include in your warranty.
The Pre-Sale Availability Rule {16
C.F. R. Part 702} directs how to make your warranty available before sale.
If you give a written warranty on a
consumer product, Section 108 of the Act prevents you from eliminating or restricting
implied warranties.
With some exceptions, Section 102
(c) of the Act prohibits you from including a tie-in sales provision in your warranty.
These are examples of prohibited
tie-in sales provisions.
This is an example of a permissible
warranty provision to use instead of a tie-in.
Section 110(c) (2) of the Act
prohibits deceptive warranties.
Section 110(d) of the Act makes
breach of warranty a violation of federal law, and enables consumers to recover attorneys'
fees.
Dispute Settlement Mechanisms use
conciliation, mediation, or arbitration to resolve disputes. For more information, an FTC
publication Handling Customer Complaints, is available from the Government Printing
Office.
If you require your customers to use a dispute
settlement mechanism before suing under the Act, your mechanism must comply with the FTC's
Dispute Resolution Rule {16
C.F.R. Part 703}.
A mechanism that does not meet the
standards of the Dispute Resolution Rule may still be a valuable tool for
you. |
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Understanding
the Magnuson-Moss Warranty Act
The
Magnuson-Moss Warranty Act is the federal law that governs consumer product warranties.
Passed by Congress in 1975, 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.
To understand the Act, it is useful to be aware of
Congress' intentions in passing it. First, Congress wanted to ensure that consumers could
get complete information about warranty terms and conditions. By providing consumers with
a way of learning what warranty coverage is offered on a product before they buy, the Act
gives consumers a way to know what to expect if something goes wrong, and thus helps to
increase customer satisfaction.
Second, Congress wanted to ensure that consumers could
compare warranty coverage before buying. By comparing, consumers can choose a product with
the best combination of price, features, and warranty coverage to meet their individual
needs.
Third, Congress intended to promote competition on the
basis of warranty coverage. By assuring that consumers can get warranty information, the
Act encourages sales promotion on the basis of warranty coverage and competition among
companies to meet consumer preferences through various levels of warranty coverage.
Finally, Congress wanted to strengthen existing incentives
for companies to perform their warranty obligations in a timely and thorough manner and to
resolve any disputes with a minimum of delay and expense to consumers. Thus, the Act makes
it easier for consumers to pursue a remedy for breach of warranty in the courts, but it
also creates a framework for companies to set up procedures for resolving disputes
inexpensively and informally, without litigation.
What the Magnuson-Moss Act
Does Not Require
In order to understand how the Act affects you as a
businessperson, it is important first to understand what the Act does not require.
First, 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.
Second, the Act does not apply to oral warranties. Only
written warranties are covered.
Third, the Act does not apply to warranties on services.
Only warranties on goods are covered. However, if your warranty covers both the parts
provided for a repair and the workmanship in making that repair, the Act does apply to
you.
Finally, 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. (This includes property attached to or
installed on real property.) Note that applicability of the Act to a particular product
does not, however, depend upon how an individual buyer will use it.
The following section of this manual summarizes what the
Magnuson-Moss Warranty Act requires warrantors to do, what it prohibits them from doing,
and how it affects warranty disputes.
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 FTC adopted three Rules under the Act, the Rule on Disclosure of
Written Consumer Product Warranty Terms and Conditions (the Disclosure Rule), the Rule
on Pre-Sale Availability of Written Warranty Terms (the Pre-Sale Availability Rule),
and the Rule on Informal Dispute Settlement Procedures (the Dispute Resolution
Rule). In addition, the FTC has issued an interpretive rule that clarifies certain terms
and explains some of the provisions of the Act. This section summarizes all the
requirements under the Act and the Rules.
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 titling requirement, established by the Act, applies
to all written warranties on consumer products costing more than $10. However, the
disclosure and pre-sale availability requirements, established by FTC Rules, apply to all
written warranties on consumer products costing more than $15. Each of these three general
requirements is explained in greater detail in the following chapters.
What the Magnuson-Moss Act
Does Not Allow
There are three prohibitions under the Magnuson-Moss Act.
They involve implied warranties, so-called "tie-in sales" provisions, and
deceptive or misleading warranty terms.
Disclaimer or Modification of Implied Warranties
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. This matter is
explained in Titling Written Warranties as "Full" or
"Limited".
If you sell a consumer product with a written warranty
from the product manufacturer, but you do not warrant the product in writing, you can
disclaim your implied warranties. (These are the implied warranties under which the
seller, not the manufacturer, would otherwise be responsible.) But, regardless of whether
you warrant the products you sell, as a seller, you must give your customers copies of any
written warranties from product manufacturers.
"Tie-In Sales" Provisions
Generally, tie-in sales provisions are not allowed. Such a provision would require a
purchaser of the warranted product to buy an item or service from a particular company to
use with the warranted product in order to be eligible to receive a remedy under the
warranty. The following are examples of prohibited tie-in sales provisions.
In order to keep your new Plenum Brand Vacuum Cleaner
warranty in effect, you must use genuine Plenum Brand Filter Bags. Failure to have
scheduled maintenance performed, at your expense, by the Great American Maintenance
Company, Inc., voids this warranty.
While you cannot use a tie-in sales provision, your
warranty need not cover use of replacement parts, repairs, or maintenance that is
inappropriate for your product. The following is an example of a permissible provision
that excludes coverage of such things.
While necessary maintenance or repairs on your AudioMundo
Stereo System can be performed by any company, we recommend that you use only authorized
AudioMundo dealers. Improper or incorrectly performed maintenance or repair voids this
warranty.
Although tie-in sales provisions generally are not
allowed, you can include such a provision in your warranty if you can demonstrate to the
satisfaction of the FTC that your product will not work properly without a specified item
or service. If you believe that this is the case, you should contact the warranty staff of
the FTC's Bureau of Consumer Protection for information on how to apply for a waiver of
the tie-in sales prohibition.
Deceptive Warranty Terms
Obviously, warranties must not contain deceptive or misleading terms. You cannot offer a
warranty that appears to provide coverage but, in fact, provides none. For example, a
warranty covering only "moving parts" on an electronic product that has no
moving parts would be deceptive and unlawful. Similarly, a warranty that promised service
that the warrantor had no intention of providing or could not provide would be deceptive
and unlawful.
How the Magnuson Moss Act May Affect Warranty Disputes
Two other features of the Magnuson-Moss Warranty Act are also important to warrantors.
First, the Act makes it easier for consumers to take an unresolved warranty problem to
court. Second, it encourages companies to use a less formal, and therefore less costly,
alternative to legal proceedings. Such alternatives, known as dispute resolution
mechanisms, often can be used to settle warranty complaints before they reach litigation.
Consumer Lawsuits
The Act makes it easier for purchasers to sue for breach of warranty by making breach of warranty a violation of federal law, and by
allowing consumers to recover court costs and reasonable attorneys' fees. This means that
if you lose a lawsuit for breach of either a written
or an implied warranty, you may have to pay the customer's costs for bringing the suit,
including lawyer's fees.
Because of the stringent federal jurisdictional
requirements under the Act, most Magnuson-Moss lawsuits are brought in state court.
However, major cases involving many consumers can be brought in federal court as class
action suits under the Act.
Although the consumer lawsuit provisions may have little
effect on your warranty or your business, they are important to remember if you are
involved in warranty disputes.
Alternatives to Consumer Lawsuits
Although the Act makes consumer lawsuits for breach of warranty easier to bring, its goal
is not to promote more warranty litigation. On the contrary, the Act encourages companies
to use informal dispute resolution mechanisms to settle warranty disputes with their
customers. Basically, an informal dispute resolution mechanism is a system that works to
resolve warranty problems that are at a stalemate. Such a mechanism may be run by an
impartial third party, such as the Better Business Bureau, or by company employees whose
only job is to administer the informal dispute resolution system. The impartial third
party uses conciliation, mediation, or arbitration to settle warranty disputes.
The Act allows warranties to include a provision that
requires customers to try to resolve warranty disputes by means of the informal dispute
resolution mechanism before going to court. (This provision applies only to cases based
upon the Magnuson-Moss Act.) If you include such a requirement in your warranty, your
dispute resolution mechanism must meet the requirements stated in the FTC's Rule
on Informal Dispute Settlement Procedures (the Dispute Resolution Rule). Briefly, the
Rule requires that a mechanism must:
- Be adequately funded and staffed to resolve all disputes
quickly;
- Be available free of charge to consumers;
- Be able to settle disputes independently, without influence
from the parties involved;
- Follow written procedures;
- Inform both parties when it receives notice of a dispute;
- Gather, investigate, and organize all information necessary
to decide each dispute fairly and quickly;
- Provide each party an opportunity to present its side, to
submit supporting materials, and to rebut points made by the other party; (the mechanism
may allow oral presentations, but only if both parties agree);
- Inform both parties of the decision and the reasons
supporting it within 40 days of receiving notice of a dispute;
- Issue decisions that are not binding; either party must be
free to take the dispute to court if dissatisfied with the decision (however, companies
may, and often do, agree to be bound by the decision);
- Keep complete records on all disputes; and
- Be audited annually for compliance with the Rule.
It is clear from these standards that informal dispute
resolution mechanisms under the Dispute Resolution Rule are not "informal" in
the sense of being unstructured. Rather, they are informal because they do not involve the
technical rules of evidence, procedure, and precedents that a court of law must use.
Currently, the FTC's staff is evaluating the Dispute
Resolution Rule to determine if informal dispute resolution mechanisms can be made simpler
and easier to use. To obtain more information about this review, contact the FTC's
warranty staff.
As stated previously, you do not have to comply with the
Dispute Resolution Rule if you do not require consumers to use a mechanism before bringing
suit under the Magnuson-Moss Act. You may want to consider establishing a mechanism that
will make settling warranty disputes easier, even though it may not meet the standards of
the Dispute Resolution Rule.
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REQUIREMENT I: SECTION 102 OF THE MAGNUSON- MOSS ACT.
Written warranties must be titled
"full" or "limited" As explained on p. 5, this requirement applies to
warranties on products costing more than $10.
"Full Warranty" means the
coverage meets the federal minimum standards for comprehensive warranties, while
"Limited Warranty" means the coverage does not.
You must be able to demonstrate
that any duties you impose are reasonable. Requiring customers to return a registration
card is an unreasonable duty that is not allowed in a full warranty 116 C.FR.
§700.ó(b)}.
This is an example of a full
warranty. It specifies that the customer has a right to a replacement or a refund
if repairs are not possible. Notice that this full warranty does not cover every type of
defect in the product.
This is an example of a limited
warranty. It is limited because there are requirements that the customer pay labor and
postage charges, and that the customer return a registration card.
This is a multiple warranty that is
part full and part limited. The initial two-year full warranty spells out that the
customer has a right to a refund or a replacement. The remainder of the warranty is
limited because it covers only parts and not labor.
This part full and part limited
multiple warranty is a pro rata warranty-- one which provides a refund or credit that
decreases during the life of the product according to a formula. Notice that the formula
is carefully spelled out. The warranty specifies that during the initial period of full
coverage the customer has a right to a replacement or a refund. The remainder of the
warranty is limited because the customer can get only a partial credit.
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Titling Written Warranties as
"Full" or "Limited"
The Magnuson-Moss
Warranty Act requires that every written warranty on a consumer product that costs more
than $10 have a title that says the warranty is either "full" or
"limited" (The Act calls these titles "designations.") The title is
intended to provide consumers, at a glance, with a key to some of the important terms and
conditions of a warranty.
The title "full warranty" is a shorthand message
to consumers that the coverage meets the Act's standards for comprehensive warranty
coverage. Similarly, the title "limited warranty" alerts consumers that the
coverage does not meet at least one of the Act's standards, and that the coverage is less
than "full" under the Act.
What the Terms "Full" and "Limited"
Mean Determining whether your warranty is a
"full" or a "limited" warranty is not difficult. If each of the
following five statements is true about your warranty's terms and conditions, it is a
"full" warranty:
- 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.
If any of these statements is not true, then your 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.
Examples of Full Warranties, Limited Warranties, and Multiple
Warranties
Counterpoint Carpet Corp.
Full Five Year Warranty
What is Covered
This warranty covers any defects in materials or workmanship, including
installation, with the exceptions stated below.
How Long Coverage Lasts
This warranty runs for five years from the date your carpet is installed.
What is not covered
This warranty does not cover fading or discoloration caused by exposure to sunlight
or chemicals such as ammonia, laundry detergent, or household bleach. (For information on
how to prevent fading or discoloration, consult our manual "Care Tips From
Counterpoint Carpet," available free from your Counterpoint dealer.)
What Counterpoint Will Do
Counterpoint will repair any carpet that proves to be defective in materials or
workmanship. In the event repair is not possible, Counterpoint will either replace your
carpet with new carpet of similar composition and price, or refund the full purchase price
of your carpet, whichever you prefer.
How To Get Service
Contact any Counterpoint dealer, listed in the Yellow Pages under
"Carpet,"or contact Counterpoint at 800-987-6543. A service representative will
come to your home and take any necessary action to correct problems covered by this
warranty.
How State Law Applies
This warranty gives you specific legal rights, and you may also have other
rights which vary from state to state. |
When you decide on your warranty's terms and conditions,
consider eliminating unnecessary restrictions. Rather than adopting warranty terms just
because they are common in your industry, let your experience guide you. For example, a
limit on the duration of implied warranties may be the only provision that would prevent
your written warranty from being "full" If your experience indicates that you do
not really need this restriction, you may wish to consult your attorney and eliminate it.
Also, remember that the distinctions between a
"full'' and a "limited" warranty are specified by law, and that the legal
meanings of the words "full" and "limited" in written consumer product
warranties are far more narrow and specific than they are in ordinary usage. Avoid
confusing the legal and ordinary meanings.
Magnifisound Corporation
Limited Warranty
What Does This Warranty Cover? This warranty
covers any defects or malfunctions in your new Magnifisound hearing aid.
How Long Does The Coverage Last? This
warranty lasts as long as you own your Magnifisound aid. Coverage terminates if you sell
or otherwise transfer the aid.
What Will Magnifisound Do? Magnifisound will
replace any defective or malfunctioning part at no charge. You must pay any labor charges.
What Does This Warranty Not Cover? Batteries,
or any problem that is caused by abuse, misuse, or an act of God (such as a flood) are not
covered. Also, consequential and incidental damages are not recoverable under this
warranty. Some states do not allow the exclusion or limitation of incidental or
consequential damages, so the above limitation or exclusion may not apply to you.
How Do You Get Service? In order to be
eligible for service under this warranty you MUST return the warranty
registration card attached below within 30 days of purchasing the aid.
If something goes wrong with your aid, send it
postage paid with a brief written description of the problem to:
Magnifisound Corp.
Box 10000
Auditory, Ohio
We will inspect your aid and contact you within 72
hours to give the results of our inspection and an estimate of the labor charges required
to fix the aid. If you authorize repairs, we will return the repaired aid to you COD
within 72 hours. You must pay any labor charges upon receipt of the repaired aid.
If you inform us that you wish us to provide
necessary parts to you but you wish to have repairs performed elsewhere, we will return
the aid and replacement parts to you within 72 hours.
There is no charge for inspection.
How Does State Law Apply? This warranty
gives you specific legal rights, and you may also have other rights which vary from state
to state. |
Full Two Year Warranty on
The Black Star 2001
Clothes Washer
What is covered: Any
defect in your 2001 Clothes Washer.
For How Long: Two years after the date
you bought your 2001 Clothes Washer.
What Black Star Will Do: Repair, or if
repair is not possible, either replace your 2001 Clothes Washer, or refund the purchase
price, whichever you prefer.
Limited Warranty on Parts for the
Third through Fifth Years
What is covered:
Any defect in your 2001 Clothes Washer.
For How Long: From the start of the
third year after you bought your 2001 Clothes Washer until the end of the fifth year.
What Black Star Will Do: Provide free new or
rebuilt replacement parts, but not labor to install the parts. Any servicer you choose can
do service during this period.
How to Get Service: Contact any Black Star
Dealer or any Authorized Black Star Service Center. See the Yellow Pages under
"Appliance Repair" for the name of a Black Star Servicer near you, or call
800-111-1111.
Your Rights Under State Law: This warranty
gives you specific legal rights, and you may also have other rights which vary from state
to state. |
Treadwell Tire
Full Warranty During First 20%
of Usable Tread Life
If a defect in materials or
workmanship appears in your Treadwell Tire before 20% of the tread is worn away, Treadwell
Corporation will provide, at your choice, either free replacement of the same model number
Treadwell Tire or a complete refund of the original purchase price.
Limited Warranty During Remaining
80% of Usable Tread Life
If a defect in, materials or
workmanship appears in your Treadwell Tire after 20% of the tread is worn away and before
the remainder of the tread is worn away, Treadwell Corporation will provide you with a
credit good for the purchase of any Treadwell Tire of the same model number. The credit
will drop by 10% of the original purchase price for each additional 10% of the tread that
is worn away when the defect appears.
How to Get Service
Just bring the defective tire to any Treadwell Dealer. The address of the dealer near you
is listed on the other side of this document
How State Law Relates to this
Warranty
This warranty gives you specific legal rights, and you may also have other rights
which vary from state to state. |
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REQUIREMENT
II: THE DISCLOSURE RULE {16 C.F.R. PART 701}.
Written warranties
must include specified information. As explained in
What the Magnuson-Moss Act
Requires, this requirement applies to warranties on products costing more than $15.
The five basic
questions about warranty coverage can be used as headings for organizing your warranty.
Say what your warranty
covers.
State how long your
warranty lasts.
Tell what you will or
will not do.
Give a step-by-step
guide to getting service.
Use the FTC
"boilerplate" disclosures about state law rights in your warranty.
This disclosure about state law must be included in every written warranty on a
consumer product.
If you wish to impose
other conditions or limitations that are not covered by the five basic questions about
coverage, you must state these conditions or limitations in your warranty.
Your limited warranty
must include this standard disclosure if it limits the duration of implied warranties.
Your warranty must
include this standard disclosure if it excludes or limits consequential or incidental
damages.
You must disclose any
restrictions on who is eligible for coverage under a limited warranty.
You must disclose
information about any informal dispute resolution mechanism that you require customers to
use.
This warranty includes
all the necessary disclosures about an informal dispute resolution mechanism that you
require your customers to use before taking a dispute to court |
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Stating
Terms and Conditions of Your
Written Warranty
The
FTC's Rule on Disclosure of Written Consumer Product Warranty Terms and Conditions (the
Disclosure Rule) requires a written warranty on a consumer product that costs more than
$15 to be clear, easy to read, and contain certain specified items of information about
its coverage.
To help you comply with the law and to make
your warranty clear and easy to read, you may wish to refer to Writing Readable
Warranties, an FTC manual that is available from the Government Printing Office.
The information you must disclose in your
warranty is explained in the remainder of this chapter. This information includes basic
information about aspects of warranty coverage common to all written warranties, and
specific information that is required only when your warranty contains certain optional
terms and conditions.
Basic Information Required for All Warranties
Under the FTC's Disclosure Rule, 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:
1. 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, as in the "Counterpoint Carpet"
example in Examples
of Full Warranties, Limited Warranties, and Multiple Warranties, you should clearly
describe the scope of coverage.
2. 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. In the "Counterpoint Carpet"
example in Examples
of Full Warranties, Limited Warranties, and Multiple Warranties, warranty coverage
begins 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. In the limited warranty
"Magnifisound
Corporation" example, coverage lasts until the first purchaser transfers the
product to someone else.
3. 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. This requires a description of the types of expenses, if
any, that you will not cover. These might include, for example, labor charges,
consequential damages (the costs of repairing or replacing other property that is damaged
when the warranted product fails, such as food spoilage when a refrigerator breaks down),
or incidental damages (the costs a consumer incurs in order to obtain warranty service,
such as towing charges, telephone charges, time lost from work, transportation costs, and
the cost of renting a product temporarily to replace the warranted product).
4. 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. This means that the warranty
needs to include the name and address of your company, and any person or office customers
should contact. If they can call you locally or toll-free, you can give the telephone
number instead of the address. If you want customers to contact your local or regional
service centers first, explain how this should be done. See the examples in
Examples
of Full Warranties, Limited Warranties, and Multiple Warranties and the "Bauhaus Mobile
Home" example.
5. 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.
Specific Information Required When Your
Warranty Contains Certain Optional Terms and Conditions
Generally, if you wish to impose on your customers any
obligations other than notifying you that they need service, you must state these
obligations in your warranty. Also, if you wish to establish any other conditions,
limitations, or terms that you intend to enforce, you must state them in your
warranty; you cannot have "hidden" requirements. An example of such a condition
or limitation would be a provision voiding the warranty if the serial number on the
product is defaced.
There are also a number of other disclosures
you must make in your warranty if it contains certain optional terms and conditions. These
requirements are explained in the following paragraphs.
If your warranty contains a provision that
restricts the duration of implied warranties, the Disclosure Rule requires you to
include a statement that state law may override such restrictions. This is required
because some states prohibit any restrictions on implied warranties. The requirement
applies only to limited warranties, because only in limited warranties can you
restrict the duration of implied warranties. This is discussed in
Titling
Written Warranties as "Full" or "Limited". To tell consumers that
state law may not permit such a restriction, the Disclosure Rule requires you to use the
following language:
Some states do not allow limitations on
how long an implied warranty lasts, so the above limitation may not apply to you.
If your warranty contains a provision
intended to restrict or eliminate your potential liability for consequential or incidental
damages, explained in Stating Terms and Conditions of Your
Written Warranty, you must include a statement that state law may not allow such a
provision. To inform consumers that state law may not permit such a restriction, the
Disclosure Rule requires that you use the following sentence:
Some states do not allow the exclusion or
limitation of incidental or consequential damages, so the above limitation or exclusion
may not apply to you.
If your warranty contains a provision that
restricts who has rights under the warranty, you must include a statement explaining
specifically who is covered. For example, if your limited warranty is valid only for the
first purchaser, your warranty must state that. Note that this applies only to limited warranties.
A full warranty must cover anyone who owns the product during the period of coverage, as
discussed in Titling Written Warranties as "Full" or
"Limited".
If your warranty contains a provision that
requires your customers to use a dispute resolution mechanism before suing under the
federal Magnuson-Moss Warranty Act for breach of warranty, you must include:
a statement informing consumers that they
can sue under state law without first using the mechanism, but that before suing under the
Magnuson-Moss Act, they must first try to resolve the dispute through the mechanism; and
information and materials about the dispute
mechanism, including the name and address or a toll-free telephone number, or a form for
filing a claim.
Of course, if you include a dispute
resolution requirement in your warranty, the informal dispute resolution mechanism must
comply with the FTC's Dispute Resolution Rule. This is discussed in
How the
Magnuson-Moss Act May Affect Warranty Disputes.
The example below shows how to make the
required disclosures about an informal dispute resolution mechanism that you require
customers to use before taking a dispute to court.
Bauhaus Mobile Homes, Inc.
Limited Warranty
What This Warranty Covers
This warranty covers substantial defects in materials and workmanship in your new
Bauhaus Mobile Home, including the heating, air conditioning, plumbing and electrical
systems, and all original appliances installed in your Bauhaus Mobile Home.
What This Warranty Does Not
Cover
This warranty does not cover any problems which result from improper transportation
or set-up of the home, abuse, accidents, or acts of God, such as hurricanes or floods.
How Long The Warranty Lasts
The coverage of this warranty lasts for two years after the date of installation of
your new Bauhaus Mobile Home.
How To Get Service
If something goes wrong, contact the Bauhaus dealer from whom you purchased your
home. Arrange a mutually convenient time for the dealer's service representative to come
to your home and, if possible correct the problem. In most cases your dealer will be able
to correct the problem, but if he is not able to do so, you should contact Bauhaus
directly in writing at the following address:
Bauhaus Mobile Homes, Inc.
Customer Relations Dept.
10101 Factory Blvd.
Manufacturing City, CA.
Bauhaus will send a representative to
your home to inspect the problem and to correct it if possible. All service under this
warranty will be performed at your home site.
What To Do If You Are Not Satisfied
With Service
We believe you will be fully satisfied by the service you receive from your Bauhaus
dealer and from Bauhaus. However, because our aim is your complete and lasting
satisfaction, Bauhaus adds another feature to your warranty's protection. In the unlikely
event that you feel our response to a warranty service request is not satisfactory,
Bauhaus offers you an opportunity to air your complaint to an impartial dispute-handling
organization. The paragraph below explains how this works.
If you believe your dealer and Bauhaus
have not performed as stated in this warranty, you may submit a request for further
consideration to the National Reconciliation Board of Home Owners and Producers
("NRBHOP"). You should make any such request by mailing the attached
"Request for Dispute Resolution" form to NRBHOP, or by sending a letter
specifically demanding such dispute resolution and identifying yourself, Bauhaus, the
defect, and the remedy you seek to this address:
NRBHOP
Box 8613
Redress, OK
Upon receiving your "Request for
Dispute Resolution, NRBHOP will notify Bauhaus and ask for a response to your complaint.
If Bauhaus disagrees with your complaint, NRBHOP will arrange for informal dispute
settlement between you and Bauhaus. See the section of your Owners Manual entitled
"The NRBHOP Program" for more detailed information about how the informal
dispute settlement process works.
You may not file suit against Bauhaus
under the Magnuson-Moss Warranty Act until your claim has been submitted to NRBHOP for
informal dispute settlement and a decision has been reached, or you have waited 40 days
for a decision following your submission of a Request for Dispute Resolution, whichever
comes first. However, you may be entitled to file suit under state laws without waiting.
How State Law Applies
This warranty gives you specific legal rights, and you may also have other
rights which vary from state to state. |
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REQUIREMENT
III: THE PRE-SALE AVAILABILITY RULE {16 C.F.R. PART 702}.
Written warranties must be
available for customers to read before buying. As explained on page 5, this requirement
applies to warranties on products costing more than $15.
You can display
warranties any way you choose, or post signs and have the warranties ready to give
customers when they ask to see them.
Mail Order and
Door-to-Door companies have different modes of compliance from in-store retailers.
Manufacturers must
provide warranty materials to their retailers. |
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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. These
provisions are explained in this section.
What Retailers Must Do
If you sell directly to consumers who come to your place of
business to buy, you must make written warranties available at the point of sale. You must
do this with all written warranties on the products you sell warranties from
manufacturers, as well as any written warranties you extend.
The Pre-Sale Availability Rule requires that
sellers make warranties readily available to prospective buyers either by displaying them
in close proximity to the warranted products, or by furnishing them upon request prior to
sale and posting prominent signs to let customers know that warranties can be
examined upon request. The Rule does not specify any particular method for fulfilling its
requirements. For example, an appliance retailer might post a refrigerator warranty on the
front of the appliance, or in the freezer compartment. Or, a retailer of small products,
such as watches or electric razors, might keep the warranties readily available behind the
counter, or keep them indexed in a binder near the warranted products, and post signs
stating their availability. Any of these methods is acceptable.
What Mail Order Companies Must Do
If you accept orders for warranted consumer products through the mail or by telephone,
your catalog or other advertising must include either the warranty or a statement telling
consumers how to get a copy. This information should be near the product description or
clearly noted on a separate page. If you choose the latter, you must provide a page
reference to the warranty statement near the product description.
What Door-to Door Sales
Companies Must Do
If you sell warranted products to consumers in their homes,
or in some place other than your place of business, you must offer the customer copies of
the written warranties before the sale is completed.
What Manufacturers Must Do
If you are a manufacturer and offer written warranties, you
must provide retailers of your product with the warranty materials they will need to meet
their requirements as described above. 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.
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Deceptive warranty advertising is unlawful.
The FTC's Guides for
the Advertising of Warranties and Guarantees {16 C.FR. Part 239} can advise you on how to
advertise your warranty.
Advertisements for
products covered by the Pre-Sale Availability Rule need only state that the warranty can
be seen where the product is sold. {16 C.F.R. 239.2}.
"Satisfaction"
and "Money back" guarantees constitute an offer of a full refund for any
reason.{16 C.F.R. §239.3}.
Clarify what you are
talking about when you advertise a "lifetime" warranty. {16 C.F.R. §239.4}. |
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Advertising
Warranties
The
Magnuson-Moss Warranty Act does not cover the advertising of warranties. However, warranty
advertising falls within the scope of the FTC Act, which generally prohibits "unfair
or deceptive acts or practices in or affecting commerce." Therefore, it is a
violation of the FTC Act to advertise a warranty deceptively.
To help companies understand what the law
requires, the FTC has issued guidelines called the Guides for Advertising Warranties and
Guarantees. To obtain a copy, see Additional Sources of Information.
However, the Guides do not cover every aspect of warranty advertising, and cannot
substitute for consultation with your lawyer on warranty advertising matters.
The Guides cover three principal topics: how
to advertise a warranty that is covered by the Pre-Sale Availability Rule; how to
advertise a satisfaction guarantee; and how to advertise a lifetime guarantee or warranty.
How to Advertise Warranties Covered by the
Pre-Sale Availability Rule
In general, the Guides advise that if a print or broadcast ad
for a consumer product mentions a warranty, and the advertised product is covered by the
Pre Sale Availability Rule (that is, the product is sold in stores for more than $15) the
ad should inform consumers that a copy of the warranty is available to read prior to sale
at the place where the product is sold. Print or broadcast advertisements that mention a
warranty on any consumer product that can be purchased through the mail or by telephone
should inform consumers how to get a copy of the warranty.
For advertisements of consumer products
costing $15 or less, the Guides do not call for the pre-sale availability disclosure.
Instead, the Guides advise that the FTC's legal decisions and policy statements are the
sole sources of guidance on how to avoid unfairness or deception in advertising
warranties. Consult your attorney for assistance in researching and applying the FTC's
case decisions and policy statements.
How to Advertise a Satisfaction Guarantee The Guides advise that, regardless of the price of the product,
advertising terms such as "satisfaction guaranteed" or "money back
guarantee" should be used only if the advertiser is willing to provide full refunds
to customers when, for any reason, they return the merchandise.
The Guides further advise that an ad
mentioning a satisfaction guarantee or similar offer should inform consumers of any
material conditions or limitations on the offer. For example, a restriction on the offer
to a specific time period, such as 30 days, is a material condition that should be
disclosed.
How to Advertise a Lifetime
Warranty or Guarantee
"Lifetime" warranties or guarantees can be a source
of confusion for consumers. This is because it is often difficult to tell just whose life
measures the period of coverage. "Lifetime" can be used in at least three ways.
For example, a warrantor of an auto muffler may intend his "lifetime" warranty's
duration to be for the life of the car on which the muffler is installed. In this case,
the muffler warranty would be transferable to subsequent owners of the car and would
remain in effect throughout the car's useful life.
Or the warrantor of the muffler might intend
a "lifetime" warranty to last as long as the original purchaser of the muffler
owns the car on which the muffler is installed. Although commonly used, this is an
inaccurate application of the term "lifetime."
Finally, "lifetime" can be used to
describe a warranty that lasts as long as the original purchaser of the product lives.
This is probably the least common usage of the term.
The Guides advise that to avoid confusing
consumers about the duration of a "lifetime" warranty or guarantee, ads should
tell consumers which "life" measures the warranty's duration In that way,
consumers will know which meaning of the term "lifetime" you intend.
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Section 106 of the Act
deals with service contracts.
Service contracts,
unlike warranties, are purchased separately from a product.
Section 108 (a) of the
Act prohibits you from disclaiming. warranties on a product if you sell a service contract
on it. |
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Offering
Service Contracts
A
service contract is an optional agreement for product service that customers sometimes
buy. It provides additional protection beyond what the warranty offers on the product.
Service contracts are similar to warranties in that both concern service for a product.
However, there are differences between warranties and service contracts.
Warranties come with a product and are
included in the purchase price. In the language of the Act, warranties are "part of
the basis of the bargain" Service contracts, on the other hand, are agreements that
are separate from the contract or sale of the product. They are separate either because
they are made some time after the sale of the product, or because they cost the customer a
fee beyond the purchase price of the product.
The Act includes very broad provisions
governing service contracts that are explained in the following sections.
Statement
of Terms and Conditions
If you offer a service contract, the Act requires you to list
conspicuously all terms and conditions in simple and readily understood language. However,
unlike warranties, service contracts are not required to be titled "full"
or "limited,' or to contain the special standard disclosures. In fact, using warranty
disclosures in service contracts could confuse customers about whether the agreement is a
warranty or a service contract.
The company that makes the service contract
is responsible for ensuring that the terms and conditions are disclosed as required by
law. This is not the responsibility of the seller of the service contract, unless the
seller and the maker are the same company.
Disclaimer or Limitation of
Implied Warranties
Sellers of consumer products who make service contracts on their products are prohibited
under the Act from disclaiming or limiting implied warranties. (Remember also that sellers
who extend written warranties on consumer products cannot disclaim implied warranties,
regardless of whether they make service contracts on their products.) However, sellers of
consumer products that merely sell service contracts as agents of service contract
companies and do not themselves extend written warranties can disclaim implied
warranties on the products they sell.
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Additional
Sources of Information
For a supplement to this booklet containing
texts of the Magnuson-Moss Warranty Act, the related FTC Rules, and the FTC Warranty
Advertising Guides, write:
Federal Trade Commission
Consumer Response Center
Washington, D.C. 20580
For additional copies of this publication or
for other FTC warranty related business manuals, contact the U.S. Government Printing
Sales Office at (202) 783-3238.
Your Opportunity to Comment
The Small Business and Agriculture Regulatory Enforcement Ombudsman and 10
Regional Fairness Boards collect comments from small business about federal enforcement
actions. Each year, the Ombudsman evaluates enforcement activities and rates each
agencys responsiveness to small business. To comment on FTC actions, call
1-888-734-3247.
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The FTC works for the consumer to
prevent fraudulent, deceptive and unfair business practices in the
marketplace and to provide information to help consumers spot, stop and
avoid them. To file a
complaint or to get free information
on consumer issues, visit
www.ftc.gov or
call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The
FTC enters Internet, telemarketing, identity theft and other fraud-related
complaints into
Consumer Sentinel, a
secure, online database available to hundreds of civil and criminal law
enforcement agencies in the U.S. and abroad.
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FEDERAL TRADE COMMISSION |
FOR THE CONSUMER |
1-877-FTC-HELP |
www.ftc.gov |
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