Consumer product manufacturers will be able to post warranties online rather than include printed warranty terms on slips of paper on or within product packaging, under industry-backed legislation signed into law by President Obama on September 24, 2015. The E-Warranty Act of 2015 passed overwhelmingly in Congress and represents a significant modernization of the law governing warranty disclosures.
What has changed?
The E-Warranty Act (S. 1359, 114th Cong. § 3 (2015)) does away with a requirement that has been on the books since passage of the Magnuson-Moss Warranty Act of 1975, which compelled manufacturers to include warranty terms on a single printed document on or within packaging of products costing more than US$15. The E-Warranty Act now permits, but does not compel, manufacturers to avoid the requirement by directing consumers to their websites to find the terms and conditions of their consumer warranties. Product manufacturers who elect to post warranty information online will be required to include the URL where consumers can find warranty terms on the product itself, on the product's packaging or in the product manual. Manufacturers also will be required to include a phone number, mailing address or other non-Internet based method of obtaining warranty terms. The law requires that the manufacturer's website include warranty terms in a clear and conspicuous manner.
Manufacturers will still be required to make warranty terms available to consumers at the point of sale prior to purchase, but the E-Warranty Act provides that manufacturers may meet this requirement by providing electronic access at the point of sale.
The Federal Trade Commission (FTC) has one year from final enactment of the law to revise its current warranty rules and regulations to comport with the E-Warranty Act.
What has not changed?
Manufacturers should be mindful that, except for the warranty disclosure rules, other requirements of the Magnuson-Moss Warranty Act remain unchanged. These include, for example, the requirement that manufacturers title their warranties as either full or limited warranties, the requirements regarding what content must be contained in a written warranty and the prohibitions on tie-in sales requirements and disclaimers of implied warranties.
What's next?
The E-Warranty Act represents a significant reduction in the cost and environmental burden of including printed warranty terms on or within product packing. However, manufacturers should continue to monitor the regulatory landscape, as the FTC may clarify or offer guidance on issues such as how prominent the warranty terms must be on manufactures' websites, where the URL must be printed and how manufacturers will be permitted to satisfy the point-of-sale disclosure requirement electronically.
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