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FTC Sends Out Warnings to Manufacturers to Revise Their Warranty Statements

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Yesterday, Apple was on the spotlight again for a problem with its latest iOS 11.3 update killing touch functionality on iPhones and iPads that had their displays repaired by third-party repair shops. Shortly after this report circulated online, a staff of the Federal Trade Commission (FTC) sent out warning letters to six U.S. companies.

Although there was no word on which companies received a warning letter, sources say it was sent out to six major companies involved in the industry of video gaming systems, cellular devices, and automobiles.

On its press release published on its website, the FTC wrote that the letter consists of the concerns on the warranty statements given by the corresponding companies. These statements give out warnings to the consumers to only use specified parts or service providers so that their warranties can be kept intact.

It's important to point out that statements such as these are generally prohibited by the implemented Magnuson-Moss Warranty Act. This law governs consumer product warranties unless the warrantors provide services or product parts for free or receive an FTC waiver.

These warranty statements are considered deceptive under the FTC Act:


  • This warranty shall not apply if this product . . . is used with products not sold or licensed by [company name].
  • The use of [company name] parts is required to keep your . . . manufacturer's warranties and any extended warranties intact. 
  • This warranty does not apply if this product . . . has had the warranty seal on the [product] altered, defaced, or removed. 


No matter how different the language is used in such statements, it still has some questionable provisions. And for FTC Bureau of Consumer Protection Acting Director, Thomas B. Pahl, these provisions are harmful for both consumers who are paying more for them and also the small businesses that are offering competing products and services.

In its letter, the FTC staff requested that the promotional and warranty materials sent out by such companies are reviewed carefully. This is so that these materials do not imply or state that there is a conditional warranty covering the use of specific parts and services.

The companies in question are also requested to revise its practices so that they are compliant with the implemented laws. After 30 days, the FTC staff will be reviewing the websites of these companies to ensure proper action has been taken. Failure to do so may lead to law enforcement action from the FTC.



Source: FTC

7 comments:

Comment Page :
  1. A lot of commenters from the iOS 11.3 article need to read this...

    ReplyDelete
  2. This isn’t really related to the screen issue. The FTC says you can’t put a “warranty void if broken” sticker on your device. All that means is if customer drops the phone and cracks the screen, which isn’t a manufacturer warrantable claim, you are free to open the device yourself (or a third party of your choosing) to repair or replace parts as you desire if you decide not to go with OEM repair service. This means in the future, you don’t have to worry about Apple denying a warranty claim when your headphone port stops working (if you still have one, ha!) because the phone was previously opened / modified without their involvement.

    What it does not mean is that Apple cannot use DRM to lockout unlicensed parts (see: Lexmark ink cartridges, Kuerig coffee pods) to protect their intellectual property or hardware trust chain (see HDCP).

    It’s a really complex issue. A lot of suppprt services have business models that are built around these informal “gentleman’s agreements” (such as one price depot repair service - if you can open up a spare and Frankenstein all of the broken parts from 15 phones into one phone to be returned, that’s a huge cost to the manufacturer). Customer protection actions may not produce the intended effect of either wider availability of repair services or lower “total cost of ownership”, as manufacturers will simply front load support costs into the MSRP allowing them to undercut third parties on backend support.

    ReplyDelete
    Replies
    1. Apple refused to work on my iPhone 6S at all (I wanted a new battery). I bought it as a "refurbished" phone on eBay. Apple said it had been tampered with. The person who refurbished it apparently left out some part needed for CDMA to work, so they created a custom, GSM-only iPhone 6S. They also did a very poor, prior battery replacement. The store tech said they see quite a few iPhones like mine.
      This is another example of the headaches that 'right-to-repair' legislation will enable.

      Delete
    2. Anon900, I'm not seeing the obvious connection to 'right to repair' here. Did your iPhone have warranty left or not? If not, Apple's well within its rights to refuse repair on your phone.

      'Right-to-repair' or the 1975 warranty law does not cover shoddy workmanship, as long as the work didn't impact what you're invoking the warranty for.

      So in your case, if you had warranty left and didn't have a poor, prior battery replacement, Apple would have to demonstrate--and the burden would be entirely on them--that the missing CDMA part somehow abnormally impacted your battery to deny you warranty coverage.

      Delete
  3. If you want your fruit phone to work properly, you shouldn't get one unless you can afford quality fruit parts.

    With that said, prepare to have prices jacked up to cover support for botched DIY chop jobs.

    Fruit phones are truly the rich man's Android, because only rich men and their women will be able to afford one once forced warranties and right to repair go into effect.

    Of course, the iSheeple will say what they always do whenever Big Apple screws people over:

    "Thank you sir, may I have another?"

    Welcome to Apple's House, folks.

    ReplyDelete
  4. This article is irresponsible because the author strongly implies via the lead-in that Apple is one of the 6 companies that received a letter from the FTC.
    There is NO EVIDENCE of this. Timing of the letter is nothing more than a coincidence at this point.
    The only hints about the list of companies is in the examples given by the FTC of improper warranty statements:

    "- Hyundai's warranty states that "the use of Hyundai Genuine Parts is required to keep your Hyundai manufacturer’s warranties and any extended warranties intact."
    - Nintendo's warranty states that "this warranty shall not apply if this product is used with products not sold or licensed by Nintendo."
    - Sony's warranty states that "this warranty does not apply if this product... has had the warranty seal on the PS4™ system altered, defaced, and removed."

    As usual, the haters don't care about facts or even evidence before hitting the keyboard.

    ReplyDelete
    Replies
    1. "This article is irresponsible because the author strongly implies via the lead-in that Apple is one of the 6 companies that received a letter from the FTC. "

      uhh...I see no such implication, strong or otherwise.

      Delete
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