Deceptive Warranty Terms Warranties must not contain any lies or misleading terms. You cannot offer a warranty that looks like it appears to provide coverage but, in fact, doesn't provide any. For example, a warranty that covers only moving parts on an electronic product that has no moving parts would be deceptive and illegal. Also, any warranty that promises service that the warrantor had no intention of providing or could not provide would be deceptive and illegal.
How the Magnuson Moss Act May Affect Warranty problems To start, the Act makes it easier for consumers to take any of your unresolved warranty problems to court. Secondly, it encourages companies to use a less formal, and cheaper, alternative to going to court. These alternatives, which are commonly known as dispute resolution mechanisms, can be used to settle warranty complaints before they reach the courts.
Consumer Lawsuits The Act makes it easier for buyers to sue for breach of warranty by making breach of warranty a violation of federal law, and this act also allows buyers to recover court costs and reasonable attorneys' fees. This means that if you lose a lawsuit for breach of either a written or an implied warranty, you may have to pay the customer's costs for bringing the suit, including their lawyer's fees. It really makes the whole process useless.
Alternatives to Consumer Lawsuits Although the Act makes consumer lawsuits for breach of warranty easier to bring against you, the goal of the act is not to promote more warranty court visits. The Act encourages companies to use informal dispute resolution mechanisms in order for them to settle warranty disputes with their customers. Just in case you weren't sure, an informal dispute resolution mechanism is a system that works to resolve warranty problems that are at a stand-still.
This kind of mechanism may be run by an unbiased third party, such as the Better Business Bureau, or by company employees whose only purpose is to administer the informal dispute resolution system. The third party then uses various means like conciliation, mediation, or arbitration to settle the warranty disputes. The Act lets warranties include a provision that asks customers to try to resolve warranty disputes before going to court. If you include such a requirement in your warranty, your dispute resolution mechanism must meet the requirements as they are stated in the FTC's Rule on Informal Dispute Settlement Procedures (the Dispute Resolution Rule). To put it in short form, the Rule requires that a mechanism must:
|
Join Our FREE mailing list |