The Magnuson-moss Warranty Act
First of all, Congress wanted to make sure that consumers could get complete information about warranty terms and conditions up front and in their truest form.
By providing people with a way of learning what warranty coverage is offered on a product before they buy, the Act actually gives them a way to know exactly what they should expect if something goes wrong.
It also goes a long way in increasing customer satisfaction.
Secondly, Congress wanted to make sure that people could compare warranty coverages before buying their cars because in doing this, consumers can choose a product that has the best combination of price, features, and warranty coverage to meet their individual needs.
Thirdly, Congress wanted to promote competition on the basis of warranty coverage alone. By making sure that consumers can get warranty information, the Act has practically forced dealers and manufacturers into hosting sales promotions on the basis of warranty coverage and this competition among companies has made it much easier for consumers to seek various levels of warranty coverage. (Are you seeing a trend yet?)
Finally, Congress wanted to strengthen the pre-existing incentives for companies to perform their warranty obligations in a timely and efficient manner so that it would be easier to resolve any consumer disputes with a minimum of delay and expense.
Because of this, the Act makes it easier for consumers to seek a private solution for any breach of warranty in the courts, but it also creates a foundation for companies to set up good operating procedures for resolving disputes inexpensively and informally, without litigation.
What the Magnuson-Moss Act Does Not Require for Businesses
In order for you to be able to understand how the Act affects you as a businessperson, it is important first to understand what the Act does not need from you.
First of all, the Act does not require that any business to provide a written warranty. The Act allows businesses to decide whether or not to warrant their products in writing. Although let me just say that it is just good business to do so.
However, once a business decides to offer a written warranty on a consumer product, it must follow those statutes of the Act.
Secondly, the Act does not apply to oral warranties of any kind.
Only written warranties are covered by the Act. Thirdly, the Act does not apply to any warranties that are made on services.
They only cover warranties that are made on goods.
However, if your warranty covers both the parts provided for a repair and the labor involved in making that repair, the Act does apply to you.
Finally, the Act does not apply to any warranties on products that are sold for resale or for commercial purposes. The Act covers only warranties on consumer products. This means that only the warranties that are made on tangible property normally used for personal, family, or household purposes are covered. You should note that applicability of the Act to a particular product does not, however, depend upon how an individual buyer will use it.
What the Magnuson-Moss Act Requires
When the Magnuson-Moss Warranty Act was passed, Congress specified a number of requirements that warrantors are obligated to meet. Congress also directed the FTC to adopt some rules that are designed to cover other requirements.
The FTC adopted three Rules under the Act, which are: 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).
Not to mention, the FTC has issued an interpretive rule that helps to clarify certain terms and explains some of the provisions of the Act. This section is going to summarize all of the requirements under the Act and the Rules.
The Act and the Rules set up three basic requirements that may apply to you, either as a warrantor or a seller. These rules are as follows:
- As a warranter, you must designate, or title, your written warranty as either full or limited in a clear way.
- As a warranter, you have to state certain specified information about the coverage of your warranty in a single, clear, and easy-to-read document.
- As a warranter, you must make sure that your warranties are available where your warranted consumer products are sold so that consumers can read them before buying your product.
The titling requirement, which is established by the Act, basically applies to all written warranties on products that cost more than $10. However, the disclosure and pre-sale availability requirements, which were established by FTC Rules, apply to ALL written warranties on products costing more than $15.
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