In the past year, the FTC has promoted consumers’ so-called “right to repair.” In particular, the FTC has focused on the “Anti-Tying Rule” of the Magnuson-Moss Warranty Act (the “MMWA”), which limits manufacturers’ ability to steer consumers to manufacturer-affiliated repair shops. Plaintiffs’ firms have taken notice, filing a spate of class actions based on purported violations of the Anti-Tying Rule. These same firms have also filed a spate of consumer class actions against retailers alleging violations of the MMWA’s “Pre-Sale Availability Rule.” Manufacturers and retailers should confirm they are complying with the MMWA and state law.
MMWA Section 2302(c) states in part: “No warrantor of a consumer product may condition his written or implied warranty of such product 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.” FTC regulations implementing this provision specifically prohibit product warranties that are voided if the consumer seeks a repair from a non-authorized servicer, or otherwise repairs the product using parts not manufactured by the warrantor. 16 C.F.R. § 700.10. Indeed, the FTC has shown that it is ready and willing to enforce these provisions. In recent months, the FTC has ordered two major manufacturers to change their product warranties in order to comply with these provisions. Since the Commission filed its complaints, both manufacturers have entered into a consent decree to change their warranty practices.
On top of FTC enforcement actions, numerous putative consumer class actions have recently been filed against major product manufacturers. Plaintiffs in these cases allege that they are prevented from utilizing a third party repair service for their products. They assert that doing so would void their product’s warranty, thereby constituting a violation of the MMWA’s Anti-Tying provision. In some cases, plaintiffs lodge supplemental state law claims for violations of consumer protections statutes in addition to their federal claims under the MMWA.
Retailers, like product warrantors, have also seen a deluge of consumer class actions alleging violations of the MMWA. But unlike in the case of warrantors, these actions are premised upon retailers’ alleged failure to meet their obligations under the Pre-Sale Availability Rule. The Rule requires: “the seller of a consumer product with a written warranty [to] make a text of the warranty readily available for examination by the prospective buyer by: (1) Displaying it in close proximity to the warranted product … or (2) Furnishing it upon request prior to sale … and placing signs reasonably calculated to elicit the prospective buyer’s attention in prominent locations in the store or department advising such prospective buyers of the availability of warranties upon request.” 16 C.F.R. § 702.3. Plaintiffs in these suits allege that retailers are failing to make product warranties available to consumers, thereby violating the MMWA.
In order to reduce the risk of frivolous litigation, consumer product warrantors should carefully review their warranties to ensure that they comply with the MMWA. In addition, retailers should carefully review their business practices to ensure that original product warranties for consumer goods are available to consumers in accordance with the requirements of the MMWA.
If you have any questions concerning whether your company’s product warranties are in compliance with the MMWA or FTC Rules, please contact the members of the Consumer Financial Compliance and Litigation practice group at Hunton Andrews Kurth.