By Virginia Navarrete Brooks
Vinson & Elkins LLP Many leading online retailers fail to make the written warranties for consumer products available to the consumer before a sale. These retailers are likely unaware of a legal statute in the United States that requires disclosure of written warranty information prior to the sale. For online retail, this means having to advise consumers of the warranty details, or how to obtain them, before the virtual checkout. The Magnuson-Moss Warranty Act is intended to prevent deception and improve competition by requiring warranty information to be made available to the consumer before a sale1. Failure by online retailers to comply with this statute not only inconveniences the consumer, but also violates applicable Federal Trade Commission (FTC) regulations. The pre-sale warranty disclosure requirements of the Magnuson-Moss Warranty Act apply to "consumer products" which are valued at more than $15; and for which the supplier or manufacturer provides either a written warranty or service contract.2 (A "consumer product" is defined as any product that can be sold for personal use, even if businesses also routinely buy and use the product). The Act applies to written warranties on tangible personal property which is normally used for personal, family, or household purposes.3 According to the FTC regulations implementing the Act, online retail sites are classified as "catalog and mail order sales"4. A "catalog and mail order sale" is defined as "any offer for sale, or any solicitation for an order for a consumer product with a written warranty, which includes instructions for ordering the product which do not require a personal visit to the seller's establishment." FTC regulations governing the pre-sale availability of written warranties for catalog and mail order sales, state that a seller must, clearly and conspicuously, and in close conjunction5 to the description of the warranted product, provide either the full text of the written warranty or a statement informing the consumer how a free copy of the written warranty can be obtained upon written request. The most common mistake online retailers make in compliance with the Warranty Act is to offer some warranty information (e.g., "1-yr. Limited Warranty"); but to fail to provide, in or near its description of the warranted product, either the full text of the written warranty, or information regarding how a free copy of the written warranty may be obtained upon written request. Retailers can safely comply with the Act's disclosure requirements by providing a conspicuous "Warranty" hyperlink (e.g., "For information regarding warranty, click here." or "Warranty") on the same page as the warranted product's description. The "warranty" hyperlink should connect to a page that informs the consumer about how to obtain a free copy of the written warranty upon written request. For example:
To obtain a free copy of the written warranty (where applicable) for a product, please send your written request to: ABC Corporation; One Main Street; Springfield, MO 00000-0000. Please be sure to include the full name of the product(s) for which you seek a written warranty, and to provide a return address to which the information should be mailed. Such a disclosure complies with the FTC's regulations regarding the pre-sale availability of written warranties for those products subject to the Magnuson-Moss Act. Footnotes: 1. 15 U.S.C. § 2302(b)(1). 2. See 16 CFR §§ 700.1-700.12 and 702.3; see also Robin Towing Corp. v. Honeywell, Inc., 859 F.2d 1218, 1222-23 (5th Cir. 1988). 3. This definition includes property which is intended to be attached to or installed in any real property without regard to whether it is so attached or installed. This means that a product is a "consumer product" if the use of that type of product is not uncommon. The percentage of sales or the use to which a product is put by any individual buyer is not determinative. For example, products such as automobiles and typewriters which are used for both personal and commercial purposes come within the definition of consumer product. 16 C.F.R. § 700.1(a). 4. 16 CFR § 702.3© 5. "Close conjunction" means on the page containing the description of the warranted product, or on the page facing that page. | 