Magnuson–Moss Warranty Act

The Magnuson-Moss Warranty Act (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 manufacturers, particularly through unfair disclaimers and misleading practices.

Purpose

The intention of The Act is to establish federal standards for warranty content and disclosure, make warranties more transparent and enforceable for consumers, and to enhance the Federal Trade Commission's (FTC) consumer protection capabilities.

Key provisions

Warranty disclosure standards

Warranties must be written in clear, simple language and disclose terms conspicuously, they must specify:

• Coverage details and duration.
• Remedies available.
• Exclusions and limitations.
• Procedures for obtaining service.

Full vs. 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

Any warranty that doesn't meet full warranty standards must be conspicuously designated as "limited".

Implied warranties

The Act preserves state-law implied warranties (merchantability and fitness for particular purpose) and prohibits their disclaimer when a written warranty is provided.

Prohibitions

• Tie-In sales provisions: Manufacturers cannot require use of specific brands/parts (e.g., OEM parts) unless provided free of charge.
• Deceptive warranty terms: Warranties cannot mislead consumers about coverage or contain unfulfillable promises.
• Disclaimer of implied warranties: When a written warranty or service contract is offered, implied warranties cannot be disclaimed.

Consumer remedies

Legal action: Consumers can sue for breach of warranty and recover:

• Damages
• Costs and expenses
• Attorney's fees (a significant provision making lawsuits economically viable).

Alternative dispute resolution: The FTC encourages informal settlement procedures, though pre-dispute mandatory arbitration clauses are controversial.

Scope and limitations

• Applies only to consumer products (tangible personal property for personal/household use) costing more than $15.
• Does not require products to have warranties, can be sold "as is".
• Primarily covers written warranties, oral promises are excluded.
• Does not preempt state laws, working alongside state lemon laws and UCC provisions.

Historical enforcement incidents

• General Motors Engine Interchange Litigation (1981): A class action alleged GM 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 (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 (2011): Initially found pre-dispute mandatory arbitration clauses violated The Act, though 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. The 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