- FairWarning - https://www.fairwarning.org -

Federal Trade Commission Warns Six Companies About Product Warranties

Six manufacturers of products including computers, cellphones, video game gear and autos have been told by federal regulators to change the language in their warranties or possibly face charges of “unfair or deceptive acts.”

The Federal Trade Commission sent warning letters three weeks ago to the six companies — Sony, Microsoft, Nintendo, Hyundai, ASUSTek Computer and HTC Corp.

The letters, obtained by FairWarning through a Freedom of Information Act request, cite a 1975 law designed to protect consumers’ warranty rights. Called the Magnuson-Moss warranty act,  the law bars companies from voiding a warranty because a consumer had repairs performed by someone not authorized by the manufacturer, or used a part made by another company.

The FTC gave the companies 30 days, until May 9, to make changes or possibly face legal action, including “monetary remedies.” The agency didn’t flatly say the companies were breaking federal law, but indicated  “concern” about language found on their websites.

FTC spokesman Frank Dorman said in an email to FairWarning that the agency “prefers voluntary action by industry, which can be faster and less costly than alternatives. Even so, law enforcement action is always a possibility if necessary to protect consumers.”

The FTC disclosed in an April 10  news release that it had issued the warning letters but the agency didn’t identify the manufacturers. Dorman said the agency has a “longstanding” practice with warning letters of releasing names only if requested under the FOIA law.

Norman Silber a professor at Hofstra Law School and research scholar at Yale who teaches consumer law, said that policy “is a disservice to consumers and is not required by any statute or regulation, to my knowledge.”

“It looks to me like the agency may have chosen intentionally to omit company names to prevent their embarrassment, at the expense of public awareness that specific companies are chilling consumers’ warranty claims,” Silber added. Dorman declined to comment on that point.

The warning letters pointed to warranty language used by each of the companies, including:

ASUSTek has been in trouble with the FTC before. In 2016 it agreed to a consent order to settle the agency’s charges “that critical security flaws in its routers put the home networks of hundreds of thousands of consumers at risk.” It did not admit wrongdoing but said it would remedy the problem and allow independent evaluations of those safeguards for 20 years.

Law professor Norman Silber called the Federal Trade Commission policy of omitting from news releases names of companies receiving warning letters “a disservice to consumers.”

In 2013 HTC tangled with the FTC on a different issue. The company agreed to a consent order after the FTC charged that software it developed for its smartphones and tablets had “security  flaws that placed sensitive information about millions of consumers at risk.” HTC, which didn’t admit or deny wrongdoing, promised to improve security and allow independent tests every two years.

In 2015, Sony agreed to settle FTC charges of false advertising involving the PlayStation Vita. Sony, without admitting or denying wrongdoing, agreed to offer $25 refunds, or $50 merchandise vouchers, to consumers.

The automaker is “currently revising the language on Hyundaiusa.com to address the FTC’s concerns,” Hyundai spokesman Miles Johnson said.

The five other companies did not respond to requests for comment from FairWarning.