Last month, we reported that the Federal Trade Commission (FTC) had sent letters to six companies warning them that their warranty policies were anti-competitive. At that time, the FTC did not reveal which companies it was targeting. All it would say is that companies market and sell automobiles, mobile devices and video game consoles.
With Motherboard's request for a Freedom of Information Act (FOIA), we now know which companies received the warnings. The automaker is Hyundai. The mobile device manufacturers are Asus and HTC. The three major manufacturers of Sony consoles, Microsoft and Nintendo complete the group.
The letters that these companies received from the FTC warn that their warranty practices may violate a 1975 Magnuson-Moss Warranty Act. This law states that a company can not put any repair restrictions on its products unless they provide the parts or services for free or are granted a waiver on the part of the FTC.
"Provisions that link the coverage of the warranty to the use of particular products or services are detrimental both to consumers who pay more for them and to small businesses that offer competing products and services."
One of the provisions that the FTC disputes are the stickers inside products that inform you that your warranty will be void if the label is tampered with or removed. Of course, these seals are placed in places where they must be removed or broken to make a repair.
The FTC also mentions other warranty terms that could violate the law, including:
The use of [company name] parts is necessary to keep your. . . manufacturer's warranties and any extended warranty intact.
This warranty does not apply if this product. . . is used with products not sold or licensed by [company name].
Although many other companies have similar warranty practices, the FTC probably uses these high-level manufacturers to send a message to others that this conduct is not acceptable and that it is, in fact fact, illegal to restrict consumers with these types of policies.
This is actually a big blow to companies like Apple, AT & T, John Deere and others who have been lobbying against the Right to Repair movement. Having the FTC in the R2R court is a great benefit for repair shops and third party consumers who push for freedom to choose where to have their products repaired.
Several regions, including California, are considering redundant legislation that essentially incorporates the wording of the Magnuson-Moss Guarantee Act since it appears that the federal law has been forgotten. Hopefully, the FTC's letters will remind businesses that the rules are still in effect.
The affected companies had 30 days from receipt of the letters to update their guarantee policies. This delay comes in a little over a week. The FTC will check at this time if the appropriate changes have been made. Companies found to be in non-compliance may be subject to enforcement actions by the government.
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