Breaking News on Consumer Product Warranties

It is rare that there is breaking news on contract law, but the Federal Trade Commission is currently settling with three major consumer products companies for offering illegal warranties (Weber-Stephen Products LLC, motorcycle manufacturer Harley-Davidson Motor Company Group, LLC, and MWE Investments, LLC, which manufactures Westinghouse outdoor power equipment).

The Magnuson-Moss Warranty Act is the federal law that governs consumer product warranties. Passed by Congress in 1975, the Act requires manufacturers of consumer products to provide consumers with detailed information about warranty coverage. If you manufacture consumer goods, you are not required to offer a product warranty. If you do, however, your warranty language cannot be unfair or misleading.

Under this act, a company can’t tell customers it will void a customer’s warranty or deny warranty coverage if the customer uses a part made by someone else (third-party or aftermarket parts) or has someone other than the manufacturer repair the product (independent repair shop).

For example:

You can’t say: “The use and/or installation of parts on your WEBER products that are not genuine WEBER parts will void this warranty . . . .”
You also can’t say: “the use of parts and service procedures other than Harley-Davidson approved parts and service procedures may void the limited warranty” and that the “use of aftermarket performance parts may void all or parts of your limited warranty. See an authorized Harley-Davidson dealer for details.”
You also can’t “exclude” coverage for “generators that utilize non-MWE Investments, LLC replacement parts” and “products that are altered or modified in a manner not authorized in writing by MWE Investments, LLC.

Finally, the Magnuson-Moss Act also requires warranties for consumer products to be disclosed in a single document that is readily understood. Harley-Davidson told customers to refer to their dealer for more warranty information. This was a violation of the single-document provision.

What the smart business owner should do now: