FEDERAL WARRANTY ACT FREQUENTLY ASKED QUESTIONS

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INTRODUCTION

This page provides answers to frequently asked questions about the Magnuson-Moss Warranty—Federal Trade Commission Improvement Act, also known as the Federal Warranty Act – a Federal law regulating the language of consumer warranties and providing certain remedies to breach of warranty victims.

FEDERAL WARRANTY ACT FREQUENTLY ASKED QUESTION #1

WHAT IS THE PURPOSE OF THE ACT?

The Federal Warranty Act is the federal government law regulating consumer product warranties. Passed by Congress in 1975, the Act requires manufacturers and sellers of consumer products to provide consumers with detailed information about warranties before and after selling a product covered by a warranty. If consumers are the victim of a Federal Warranty Act violation, the Act gives them certain remedies.

FEDERAL WARRANTY ACT FREQUENTLY ASKED QUESTION #2

WHICH CONSUMERS, WARRANTORS AND PRODUCTS ARE COVERED BY THE ACT?

The Act doesn’t apply to all warranties. Instead, the Act applies to written warranties on tangible personal property normally used for personal, family or household purposes that are manufactured after July 4, 1975. This includes property intended to be attached to or installed in any real property without regard to whether actually attached or installed. A product is a “consumer product” if the use of that type of product is not uncommon. The amount of product sales or the use to which the product is put by any individual buyer is not important. For example, products such as cars and typewriters which are used for both personal and commercial purposes are consumer products under the Act. Ambiguities about if a particular product is covered under the Act’s definition of consumer product are resolved in favor of coverage. Agricultural products such as farm machinery, structures and implements used in the business or occupation of farming are not covered by the Act where their personal, family or household use is uncommon. However agricultural products normally used for personal or household gardening (for example, to produce goods for personal consumption, and not for resale) are consumer products under the Act. The definition of “Consumer product” limits the applicability of the Act to personal property, “including any such property intended to be attached to or installed in any real property without regard to whether it is so attached or installed.” This provision brings under the Act separate items of equipment attached to real property, such as air conditioners, furnaces, and water heaters. The coverage of separate items of equipment attached to real property includes, but is not limited to, appliances and other thermal, mechanical, and electrical equipment. (It does not extend to the wiring, plumbing, ducts, and other items which are integral component parts of the structure.) State law would classify many such products as fixtures to, and therefore a part of, realty. The statutory definition is designed to bring such products under the Act regardless of whether they may be considered fixtures under state law. The coverage of building materials which are not separate items of equipment is based on the nature of the purchase transaction. An analysis of the transaction will determine whether the goods are real or personal property. The numerous products which go into the construction of a consumer dwelling are all consumer products when sold “over the counter,” as by hardware and building supply retailers. This is also true where a consumer contracts for the purchase of such materials in connection with the improvement, repair, or modification of a home (for example, paneling, dropped ceilings, siding, roofing, storm windows, remodeling). However, where such products are at the time of sale integrated into the structure of a dwelling they are not consumer products as they cannot be practically distinguished from realty. Thus, for example, the beams, wallboard, wiring, plumbing, windows, roofing, and other structural components of a dwelling are not consumer products when they are sold as part of real estate covered by a written warranty. For consumer contracts with a builder to construct a home, a substantial addition to a home, or other realty (such as a garage or an in-ground swimming pool) the building materials to be used are not consumer products. Although the materials are separately identifiable at the time the contract is made, it is the intention of the parties to contract for the construction of realty which will integrate the component materials. Of course, as noted above, any separate items of equipment to be attached to such realty are consumer products under the Act. Certain provisions of the Act apply only to products actually costing the consumer more than a specified amount. For example, 15 U.S.C. 2303, applies to consumer products actually costing the consumer more than $10, excluding tax. The $10 minimum will be interpreted to include multiple-packaged items which may individually sell for less than $10, but which have been packaged in a manner that does not permit breaking the package to purchase an item or items at a price less than $10. Thus, a written warranty on a dozen items packaged and priced for sale at $12 must be designated, even though identical items may be offered in smaller quantities at under $10. This interpretation applies in the same manner to the minimum dollar limits in section 102, 15 U.S.C. 2302, and rules promulgated under that section. Warranties on replacement parts and components used to repair consumer products are covered by the Act.

FEDERAL WARRANTY ACT FREQUENTLY ASKED QUESTION #3

DOES THE ACT APPLY TO SERVICES?

The Act doesn’t apply to warranties on services. Therefore, warranties which apply solely to a repairer's workmanship in performing repairs are not subject to the Act. Where a written agreement warrants both the parts provided to effect a repair and the workmanship in making that repair, the warranty must comply with the Act and the rules thereunder.

FEDERAL WARRANTY ACT FREQUENTLY ASKED QUESTION #4

WHAT KIND OF WARRANTIES ARE REGULATED BY THE ACT?

The Act imposes specific duties and liabilities on suppliers who offer written warranties on consumer products. Certain representations, such as energy efficiency ratings for electrical appliances, care labeling of wearing apparel, and other product information disclosures may be express warranties under the Uniform Commercial Code. However, these disclosures alone are not written warranties under the Act. A written affirmation of fact or a written promise of a specified level of performance must relate to a specified period of time in order to be considered a “written warranty.” A product information disclosure without a specified time period to which the disclosure relates is therefore not a written warranty. In addition, the Act excludes any written warranty the making or content of which is required by federal law so as to encourage disclosure of product information which is not deceptive and which may benefit consumers and so that it doesn’t impede information disclosure in product advertising or labeling. A “written warranty” is also created by a written affirmation of fact or a written promise that the product is defect free, or by a written undertaking of remedial action. Certain terms, or conditions, of sale of a consumer product may not be “written warranties” and should not be offered or described in a manner that may deceive consumers as to their enforceability under the Act. For example, a seller of consumer products may give consumers an unconditional right to revoke acceptance of goods within a certain number of days after delivery without regard to defects or failure to meet a specified level of performance. Or a seller may permit consumers to return products for any reason for credit toward purchase of another item. Such terms of sale taken alone are not written warranties under the Act. Therefore, suppliers should avoid any characterization of such terms of sale as warranties. The use of such terms as “free trial period” and “trade-in credit policy” in this regard would be appropriate. Furthermore, such terms of sale should be stated separately from any written warranty. The Act generally applies to written warranties covering consumer products. Many consumer products are covered by warranties which are neither intended for, nor enforceable by, consumers. A common example is a warranty given by a component supplier to a manufacturer of consumer products. (The manufacturer may, in turn, warrant these components to consumers.) The component supplier's warranty is generally given solely to the product manufacturer, and is neither intended to be conveyed to the consumer nor brought to the consumer's attention in connection with the sale. Such warranties are not subject to the Act, since a written warranty must become “part of the basis of the bargain between a supplier and a buyer for purposes other than resale.” However, the Act applies to a component supplier's warranty in writing which is given to the consumer. An example is a supplier's written warranty to the consumer covering a refrigerator that is sold installed in a boat or recreational vehicle. The supplier of the refrigerator relies on the boat or vehicle assembler to convey the written agreement to the consumer. In this case, the supplier's written warranty is to a consumer, and is covered by the Act.

FEDERAL WARRANTY ACT FREQUENTLY ASKED QUESTION #5

WHO IS THE PARTY CONSIDERED AS THE ONE MAKING A WARRANTY?

Under the Act only the supplier “actually making” a written warranty is liable for purposes of private enforcement of the Act. A supplier who does no more than distribute or sell a consumer product covered by a written warranty offered by another person or business and which identifies that person or business as the warrantor is not liable for failure of the written warranty to comply with the Act or rules thereunder. However, other actions and written and oral representations of such a supplier in connection with the offer or sale of a warranted product may obligate that supplier under the Act. If under State law the supplier is deemed to have “adopted” the written affirmation of fact, promise, or undertaking, the supplier is also obligated under the Act. Suppliers are advised to consult State law to determine those actions and representations which may make them co-warrantors, and therefore obligated under the warranty of the other person or business.

FEDERAL WARRANTY ACT FREQUENTLY ASKED QUESTION #6

WHAT KIND OF LANGUAGE IS A WARRANTOR REQUIRED TO USE IN A PRODUCT WARRANTY?

Under the Act, warranty information must be disclosed in simple, easily understandable and concise language in one document. If the warrantor of a limited warranty uses a warranty registration or owner registration card, the warranty must explain if the consumer must return the registration card before getting warranty coverage. Written warranties on consumer products manufactured after July 4, 1975, and actually costing the consumer more than $10, excluding tax, must be designated either “Full (statement of duration) Warranty” or “Limited Warranty”. Warrantors may include a statement of duration in a limited warranty designation. The designation or designations should appear clearly and conspicuously as a caption, or prominent title, clearly separated from the text of the warranty. The full (statement of duration) warranty and limited warranty are the exclusive designations permitted under the Act, unless a specific exception is created by rule. A full warranty may not expressly restrict the warranty rights of a transferee during its stated duration. However, where the duration of a full warranty is defined solely in terms of first purchaser ownership, the duration of the warranty expires, by definition, at the time of transfer. No rights of a subsequent transferee are cut off as there is no transfer of ownership “during the duration of (any) warranty.” Thus, these provisions do not preclude the offering of a full warranty with its duration determined exclusively by the period during which the first purchaser owns the product, or uses it in conjunction with another product. For example, an automotive battery or muffler warranty may be designated as “full warranty for as long as you own your car.” Because this type of warranty leads the consumer to believe that proof of purchase is not needed so long as he or she owns the product a duty to furnish documentary proof may not be reasonably imposed on the consumer under this type of warranty. The burden is on the warrantor to prove that a particular claimant under this type of warranty is not the original purchaser or owner of the product. Warrantors or their designated agents may, however, ask consumers to state or affirm that they are the first purchaser of the product. A warrantor shall not indicate in any written warranty or service contract either directly or indirectly that the decision of the warrantor, service contractor, or any designated third party is final or binding in any dispute concerning the warranty or service contract. Nor shall a warrantor or service contractor state that it alone shall determine what is a defect under the agreement. Such statements are deceptive since the Act gives state and federal courts jurisdiction over suits for breach of warranty and service contract. Any warrantor warranting to a consumer by means of a written warranty a consumer product actually costing the consumer more than $15.00 shall clearly and conspicuously disclose in a single document in simple and readily understood language, the following items of information: (1) The identity of the party or parties to whom the written warranty is extended, if the enforceability of the written warranty is limited to the original consumer purchaser or is otherwise limited to persons other than every consumer owner during the term of the warranty; (2) 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; (3) A statement of what the warrantor will do in the event of a defect, malfunction or failure to conform with the written warranty, including the items or services the warrantor will pay for or provide, and, where necessary for clarification, those which the warrantor will not pay for or provide; (4) The point in time or event on which the warranty term commences, if different from the purchase date, and the time period or other measurement of warranty duration; (5) A step-by-step explanation of the procedure which the consumer should follow in order to obtain performance of any warranty obligation, including the persons or class of persons authorized to perform warranty obligations. This includes the name(s) of the warrantor(s), together with: The mailing address(es) of the warrantor(s), and/or the name or title and the address of any employee or department of the warrantor responsible for the performance of warranty obligations, and/or a telephone number which consumers may use without charge to obtain information on warranty performance; (6) Information respecting the availability of any informal dispute settlement mechanism elected by the warrantor in compliance with the Act; (7) Any limitations on the duration of implied warranties, disclosed on the face of the warranty as provided in the, accompanied by the following statement: “Some States do not allow limitations on how long an implied warranty lasts, so the above limitation may not apply to you.” (8) Any exclusions of or limitations on relief such as incidental or consequential damages, accompanied by the following statement: “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.” (9) A statement in the following language: “This warranty gives you specific legal rights, and you may also have other rights which vary from State to State.” Many of these requirements don’t apply to statements of general policy on emblems, seals or insignias issued by third parties promising replacement or refund if a consumer product is defective, which statements contain no representation or assurance of the quality or performance characteristics of the product; provided that: (1) The disclosures are published by such third parties in each issue of a publication with a general circulation, and (2) such disclosures are provided free of charge to any consumer upon written request.

FEDERAL WARRANTY ACT FREQUENTLY ASKED QUESTION #7

WHAT IS THE DUTY TO INSTALL PARTS UNDER A FULL WARRANTY?

the remedy under a full warranty must be given to the consumer without charge. If the warranted product has utility only when installed, a full warranty must provide such installation without charge regardless of whether or not the consumer originally paid for installation by the warrantor or his agent. However, this does not preclude the warrantor from imposing on the consumer a duty to remove, return, or reinstall where such duty can be demonstrated by the warrantor to meet the standard of reasonableness.

FEDERAL WARRANTY ACT FREQUENTLY ASKED QUESTION #8

WHAT ARE MY RIGHTS ABOUT THE USE OF AFTER MARKET PARTS TO FIX A VEHICLE SUBJECT TO A WARRANTY?

With some specific exceptions, the Federal Warranty Act prohibits warrantors from voiding a vehicle warranty merely because a consumer uses an aftermarket or recycled part or third-party repair services to repair a vehicle. Generally, the Act prevents warrantors from conditioning warranties on the consumer’s use of a replacement product or repair service identified by brand or name unless the article or service is provided without charge to the consumer or the warrantor has received a waiver from the consumer. Under a limited warranty that  provides only for replacement of defective parts and no portion of labor charges prohibits a condition that the consumer use only service (labor) identified by the warrantor to install the replacement parts. A warrantor or his designated representative may not provide parts under the warranty in a manner which impedes or precludes the choice by the consumer of the person or business to perform necessary labor to install such parts. No warrantor may condition the continued validity of a warranty on the use of only authorized repair service and/or authorized replacement parts for non-warranty service and maintenance (other than an article of service given without charge under the warranty or unless the warrantor has obtained a waiver under the Act). For example, provisions such as, “This warranty is void if service is performed by anyone other than an authorized `ABC' dealer and all replacement parts must be genuine `ABC' parts,” and the like, are prohibited where the service or parts are not covered by the warranty. These provisions violate the Act in two ways. First, they violate the Act’s ban against tying arrangements. Second, such provisions are deceptive because a warrantor cannot, as a matter of law, avoid liability under a written warranty where a defect is unrelated to the use by a consumer of “unauthorized” articles or service. In addition, warranty language that implies to a consumer acting reasonably in the circumstances that warranty coverage requires the consumer's purchase of an article or service identified by brand, trade or corporate name is similarly deceptive. For example, a provision in the warranty such as, “use only an authorized `ABC' dealer” or “use only `ABC' replacement parts,” is prohibited where the service or parts are not given free of charge pursuant to the warranty. This does not preclude a warrantor from expressly excluding liability for defects or damage caused by “unauthorized” articles or service; nor does it preclude the warrantor from denying liability where the warrantor can demonstrate that the defect or damage was so caused.

FEDERAL WARRANTY ACT FREQUENTLY ASKED QUESTION #9

DOES THE ACT TREAT WRITTEN WARRANTIES, SERVICE CONTRACTS AND INSURANCE DIFFERENTLY?

The Act recognizes two types of agreements which may provide similar coverage of consumer products, the written warranty, and the service contract. In addition, other agreements may meet the statutory definitions of either “written warranty” or “service contract,” but are sold and regulated under state law as contracts of insurance. One example is the automobile breakdown insurance policies sold in many jurisdictions and regulated by the state as a form of casualty insurance. To the extent the Magnuson-Moss Warranty Act's service contract provisions apply to the business of insurance, they are effective so long as they do not invalidate, impair, or supersede a State law enacted for the purpose of regulating the business of insurance. “Written warranty” and “service contract” are defined differently in the Act. “Written warranty” means: (A) any written affirmation of fact or written promise made in connection with the sale of a consumer product by a supplier to a buyer which relates to the nature of the material or workmanship and affirms or promises that such material or workmanship is defect free or will meet a specified level of performance over a specified period of time, or (B) any undertaking in writing in connection with the sale by a supplier of a consumer product to refund, repair, replace, or take other remedial action with respect to such product in the event that such product fails to meet the specifications set forth in the undertaking, which written affirmation, promise, or undertaking becomes part of the basis of the bargain between a supplier and a buyer for purposes other than resale of such product. A written warranty must be conveyed at the time of sale of the consumer product and the consumer must not give any consideration beyond the purchase price of the consumer product in order to benefit from the agreement. It is not a requirement of the Act that an agreement obligate a supplier of the consumer product to a written warranty, but merely that it be part of the basis of the bargain between a supplier and a consumer. This contemplates written warranties by third-party non-suppliers. The term “service contract” means a contract in writing to perform, over a fixed period of time or for a specified duration, services relating to the maintenance or repair (or both) of a consumer product. An agreement which would meet the definition of written warranty but for its failure to satisfy the basis of the bargain test is a service contract. For example, an agreement which calls for some consideration in addition to the purchase price of the consumer product, or which is entered into at some date after the purchase of the consumer product to which it applies, is a service contract. An agreement which relates only to the performance of maintenance and/or inspection services and which is not an undertaking, promise, or affirmation with respect to a specified level of performance, or that the product is free of defects in materials or workmanship, is a service contract. An agreement to perform periodic cleaning and inspection of a product over a specified period of time, even when offered at the time of sale and without charge to the consumer, is an example of such a service contract.

FEDERAL WARRANTY ACT FREQUENTLY ASKED QUESTION #10

WHAT REMEDIES ARE AVAILABLE TO CONSUMERS UNDER THE ACT?

A consumer who is damaged by the failure of a supplier, warrantor, or service contractor to comply with any obligation under the Act or under a written warranty, implied warranty, or service contract, may bring suit for damages and other legal and equitable relief— in any court of competent jurisdiction in any State or the District of Columbia; or in an appropriate district court of the United States, subject to certain exceptions stated in the Act. If a consumer finally prevails in any such action, the consumer may be allowed by the court to recover as part of the judgment a sum equal to the aggregate amount of cost and expenses (including attorneys’ fees based on actual time expended) determined by the court to have been reasonably incurred by the plaintiff for or in connection with the commencement and prosecution of such action, unless the court in its discretion shall determine that such an award of attorneys’ fees would be inappropriate.

TO LEARN MORE, GET A NO OBLIGATION CONSULT

Call Perlman DePetris Consumer Law for a no obligation phone consultation. Handling your case wrong from the beginning may only cost you more money and time in the end!! Try to do it right the first time by seeking legal advice from a competent lawyer! You might be entitled to be represented on a contingent basis, meaning that the attorney won’t get paid unless the case is successful and that the lawyer gets paid from your recovery instead of requiring you to pay attorney’s fees out of your own pocket up front. Other cases can be handled for a relatively small one-time payment of an up-front fixed attorney’s fee and with a contingent fee at the end of the case. Filing a claim yourself is very risky, since businesses often hire experienced defense attorneys to fight your case. Also, if you try to negotiate a settlement yourself, you may get less money than you deserve. You should always speak with an attorney before coming to any conclusions about your claim. Do not try to interpret the law by reading a website! Even if the facts of your case do not fit the requirements of a Lemon Law, you may be entitled to sue the manufacturer or its selling dealer for a breach of your warranties under other state and federal laws.  If the manufacturer or selling dealer breached the warranties that came with your vehicle, you may be able to recover money damages, attorney’s fees and court costs.

DISCLAIMER

While this page gives some general background information, there is the danger that relying on this information alone could lead you to lose your claim. Laws and regulations frequently change and the law may have changed since the posting of this webpage. Factual differences between your case and cases described on this webpage can affect your chance of success. Don’t attempt to rely on the internet as the only source of information for your claim! Instead, get competent legal advice from a New Jersey licensed attorney. Call Perlman DePetris Consumer Law for a no obligation phone consultation.