According to an April 10 statement published to the Federal Trade Commission (FTC) website, the agency has sent out letters of warning to no fewer than six unnamed companies about potentially illegal warranty policies. Although those companies have not been identified, that could change if those policies aren’t updated. That’s because the agency has requested that those policies be changed or rewritten in order to avoid legal action – with each being granted a 30-day period to enact changes. The companies are said to include those that sell automobiles, cellular devices, and video gaming systems in the U.S. It hasn’t been specified whether those tech companies those are based in the country.
With regard to the violations themselves, the FTC has cited three warranty policies in particular that seem to place illegal conditions for the honoring of the warranties. Those conditions center around the policy that only company-made parts or services can be used or the warranty is void. For instance, one example warranty provided by the agency states that “This warranty shall not apply if this product . . . is used with products not sold or licensed by [company name].” Another suggests that a damaged, removed, or altered warranty seal will void the warranty. In order for those types of warranty conditions to stand from a legal perspective, the company needs to provide the parts or services for free. Alternatively, although uncommon, a waiver can also be obtained by the companies from the FTC. Otherwise, they are considered harmful to both consumers and the continuation of a competitive and innovative industry.
It’s not unusual for the FTC to make these kinds of requests but it is, more often than not, a good idea for companies to heed the warnings. The names of the companies involved here could easily become public knowledge and, as previous cases have clearly shown, warranty lawsuits and other legal ramifications can be extremely messy affairs. Litigation for big corporate cases tend to carry on for extended periods of time, which can result in damage to a company’s reputation and market standing that isn’t so easily measured. Moreover, that damage can occur regardless of the outcome of such cases is in favor of or against the company in question.