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Briefing
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- Illegal Warranty Policies – U.S. Federal Trade Commission (FTC) declared that policies that void warranties if consumers use unauthorized repair services or third-party parts, as well as if “warranty seal” is broken are illegal
- Law Violated – Such warranty provisions violate Magnuson-Moss Warranty Act, law passed in 1975 that governs consumer product warranties
- Six Companies Warned – FTC wrote and sent warning letters to six major companies on April 10, 2018 for implementing illegal warranty policies, ordering them to revise warranty statements within 30 days or face legal action
- Speculation – Research by Ars Technica identified Hyundai, Nintendo, and Sony as some of potential violators, with warranty statements matching those provided by FTC
- Consequences of Illegal Practices – FTC said such illegal practices harm consumers who pay more for repairs, as well as hinder competition from small businesses
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Market Disruption
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Sector
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Consumer Durables
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Organization
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U.S. Federal Trade Commission
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Source
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"FTC staff warns companies that it is illegal to condition warranty coverage on the use of specified parts or services,"
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Lee, T., "FTC: Warranty-voiding language like Nintendo’s and Sony’s is illegal",
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McAloon, A., "FTC warns that, yes, those warranty-voiding stickers on consoles are illegal",
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Arif, S., "FTC letter indicates void warranty language on video game consoles is illegal",
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AcceleratingBiz analysis
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Original Publication Date
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April 10, 2018
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