Magnuson–Moss Warranty Act

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TODO: Would like someone to look over the law's textand give a more robust summary; until then the summary is from Wikipedia.

Summary

The Magnuson-Moss Warranty Act of 1975 (the Act) is a landmark U.S. federal law (15 U.S.C. § 2301 et seq.) enacted on January 4, 1975, to govern consumer product warranties. Sponsored by Senator Warren G. Magnuson and representative John E. Moss, the Act was designed to address widespread misuse of warranties by manufactures through unfair disclaimers and misleading practices.

Primary objectives:

• Make warranties more transparent and enforceable for consumers.
• Establish federal standards for warranty content and disclosure.
• Enhance the Federal Trade Commission's consumer protection capabilities.

Warranty requirements:

• Disclosure standards
  • Must disclose terms conspicuously in clear simple language and specify:
    • Coverage details and duration.
    • Remedies available.
    • Exclusions and limitations.
    • Procedures for obtaining service.

• Full and limited warranties:
  • Full warranty: Must meet federal minimum standards including free repair/replacement, no time limits on implied warranties, and option for refund/replacement after reasonable repair attempts.
  • Limited warranty: Must be conspicuously designated 'limited' if federal minimum standards are not meet.
  • Implied Warranties: The Act preserves state-law implied warranties and prohibits their disclaimer when a written warranty is provided.

Prohibitions

• Tie-in sales provisions: requiring the use of specific brands of OEM parts, unless provided for no charge.
• Deceptive warranty terms: misleading consumers about coverage or containing unfulfillable promises.
• Disclaimer of implied warranties: when service contract or written warranty is offered, implied warranties can not be disclaimed.

In cases of violation, consumers are encouraged to negotiate with warrantors under arbitration. Additionally, the federal government and consumers are able to file civil suits in the courts.

History of Enforcement

• In 1981 class action alleged General Motors breached warranties by using Chevrolet engines in Oldsmobiles without disclosure. The case involved both written warranty and implied warranty claims under the Act.
• Skelton v. General Motors: In 1981, the 7th Circuit ruled that general advertising claims don't constitute "written warranties" under the Act, limiting the scope of actionable warranty statements.
• Kolev v. Porsche Cars North America: In 2011, initially found mandatory pre-dispute arbitration clauses violated the Act, this decision was later withdrawn.
• Hyundai/Kia Theta II Engine Case (2018): The FTC issued compliance warnings against Hyundai and Kia for attempting to require use of OEM parts to maintain warranty coverage, violating tie-in sales prohibitions. Companies revised their warranty language after FTC intervention.
• FTC's 2018 Industry-Wide Compliance Warnings: The FTC issued warnings to six major companies about illegal warranty terms, particularly regarding tie-in provisions and improper warranty voiding practices.

The Act is an important piece of legislation, but its enforcement is a mixed bag. Although it is enforced, often the fines are little to nothing, which encourages manufacturers to disregard it. This effectively prevents the act from properly keeping vendors accountable.

Toyota held labile for all damages in used car's in-warranty repair case - June 16, 1992.

"Due to the purchase of the subject vehicle in used `as is' condition, the Defendant (Toyota) dealer assumed and bore no responsibility for subsequent repair of the vehicle or its road worthiness. " the plaintiff (vehicle owner) was found to be correct and the defendant (toyota) was found liable for damages plaintiff (vehicle owner) suffered as a result of that violation