Warranties Go Digital: Manufacturers Gain Flexibility with E-Warranty Act

In passing this amendment, Congress explicitly noted that the electronic warranty option would not only provide an environmentally-friendly way to expand consumer access to relevant product information, but it would provide additional flexibility to manufacturers in terms of complying with labeling and warranty requirements.

While there are no requirements that manufacturers or sellers of consumer products provide written warranties for their products, if they do choose to do so, the Magnuson-Moss Warranty Act and implementing regulations promulgated by the Federal Trade Commission (FTC) require sellers and manufacturers of products costing more than $15 at retail to disclose the full text of the warranty terms to consumers and to make those terms available to consumers prior to sale. Many companies currently print their complete warranty terms on the outside of product packaging, or include the terms on product manuals or on inserts placed inside the packaging.

Under the E-Warranty Act, companies are now permitted to set up a website link that will electronically display the complete written warranty terms clearly and conspicuously and to print the website address for the warranty information on product packaging, on the product itself, in product manuals, or on package inserts. In addition to this website link, the manufacturer will be required to provide information on how consumers can obtain and review the warranty terms (such as by instructing consumers to visit the website link for complete warranty terms), and to print one of the following pieces of information to allow consumers without internet access to obtain the warranty information: the phone number of the manufacturer, the postal mailing address of the manufacturer, or another reasonable non-Internet based means of contacting the manufacturer to obtain and review the warranty terms.

As a final note, the E-Warranty Act does not change the requirement for pre-sale disclosure of warranty terms in physical retail locations, in catalogs, or through door-to-door sales (i.e., FTC’s Pre-Sale Availability Rule). That is, manufacturers must still provide a means for retail sellers to provide pre-sale disclosure of the full text of written warranties through electronic or other means at the retail location (or in a print catalog) even if the new option for a printed website link on the package or product is utilized under the new law. The Pre-Sale Availability Rule requires that retail sellers make warranties readily available to prospective buyers, but it does not specify the methods that must be used. Retail sellers may display warranties in close proximity to the products, may provide hard copy versions of the warranty terms upon request, or use kiosks, mobile devices, or other electronic means to allow consumers to access the warranty terms.

The law specifies that the FTC has 1 year to issue updated regulations to implement the E-Warranty Act, but the law appears to be immediately effective. However, in the absence of formal guidance or rules from the FTC, companies should proceed cautiously before implementing any significant changes based on the new law.