FTC Staff Warns Companies that It Is Illegal to Condition Warranty Coverage on the Use of Specified Parts or Services
On April 10, 2018, the Federal Trade Commission (“FTC”) issued warning letters to six prominent companies involved in the marketing of automobiles, cellular devices, and video gaming systems in the U.S. The letters express concern over these companies' claims that consumers must use specific parts or services to maintain their warranty coverage. According to the Magnuson-Moss Warranty Act, such claims are generally prohibited unless the warrantor provides the parts or services for free or has obtained a waiver from the FTC. Additionally, these statements may be deemed deceptive under the FTC Act.
The letters highlighted various examples of potentially misleading warranty provisions, such as stipulations requiring the use of specific company parts or services to keep warranties valid. The FTC emphasized that these practices not only burden consumers with higher costs but also negatively impact small businesses that offer competitive alternatives.
The FTC staff urged the companies to review their promotional and warranty materials to ensure compliance with the law, and requested revisions to their practices. The companies were informed that the FTC would assess their websites after 30 days, warning that failure to address these concerns could lead to law enforcement action.
For more information, see here: https://www.ftc.gov/news-events/press-releases/2018/04/ftc-staff-warns-companies-it-illegal-condition-warranty-coverage
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