Consumers trust warranties. Many consumers even use warranty terms to decide which product to buy. And warranty coverage is so important insurance companies have made a small fortune selling extended warranties to give consumers additional peace of mind.

But how do warranties work, what is Magnuson Moss Warranty Act, and how does it govern them? More importantly, what rights do you have, and what must a manufacturer provide when you make a warranty claim?

What Is Magnuson Moss Warranty Act?

The Magnuson Moss Warranty Act of 1975 is a federal law about product warranties. Warranties are contracts or terms in agreements that pertain to the condition of the product.

Most warranties ensure the product performs as specified for a defined time or use. Thus, a computer warranty might state the product will function without any defects for three years. An automobile warranty might guarantee the vehicle will remain free of manufacturer defects for at least 30,000 miles.

Contracts are usually governed by state rather than federal law. Most state laws create two types of warranties. Express warranties are given in writing. Implied warranties are made by the conduct of the parties, customs in the industry, or fundamental fairness.

The Magnuson Moss Warranty Act does not affect state laws. It also does not mandate that manufacturers give warranties on their products. Instead, it sets standards for how sellers must disclose the terms of their contracts. The act also provides a forum for warranty lawsuits when sellers and manufacturers fail to meet the terms.

Consumer Protection with Warranties

The act intends to protect consumers from hidden or misleading warranty terms. It accomplishes this goal by requiring warranty information to be disclosed openly to consumers. It was theorized that open disclosure would have four primary effects.

First, customers could make informed buying decisions because they know the warranty terms before purchasing products. They would also understand what to do if the product had a defect. Together, these effects would increase customer satisfaction because they would feel informed rather than facing what they felt were hidden or surprise warranty terms.

Second, comparison shoppers could use warranty terms as part of their buying decision. For example, if a more expensive product had a better warranty, the shopper could decide whether the higher cost was worth the additional coverage. That allowed consumers to get the combination of warranty coverage, price, and features that made the most sense for them.

Third, competitors can also learn warranty terms when they are openly disclosed. That can create warranty competition in which manufacturers offer the best warranty terms. You have probably already seen this when shopping for cars and hearing from a salesperson that the product has the “best warranty” on the market.

Fourth, manufacturers needed legal incentives to satisfy their warranty obligations. It was not enough for consumers to complain to news outlets or even state attorneys general that manufacturers needed to be living up to their warranty terms. They required a remedy through the court system to satisfy the losses they incurred due to the product defect.

Magnuson Moss Warranty Act for Dummies: An Overview

What is Magnuson Moss Warranty Act? In a nutshell, it is a set of federal laws in two parts. The first part tells manufacturers that they must present product warranties clearly and conspicuously if they choose to offer them. The second part gives consumers the right to bring a private lawsuit in court to enforce their consumer rights under the act.

Key Provisions and Purpose of the Magnuson Moss Warranty Act

What does the Magnuson Moss Warranty Act do? First, it applies to sales of consumer products, including automobiles. It does not apply to service contracts. Thus, it applies to used car dealerships when you buy a used car with a warranty. But it does not apply when you take your vehicle to an auto repair shop to have the tires you already own balanced and rotated.

Second, it requires manufacturers and sellers of products to satisfy three warranty requirements when they choose to offer them:

• The warranty must state whether it is “full” or “limited”
• It must state the coverage terms in a single document in easy-to-read language
• The warranty must be conspicuously available to consumers to read before buying the product

The act also includes three restrictions on warranties offered by manufacturers or sellers. Warranties cannot:

Disclaim the Implied Warranty of Merchantability

Under the common law, it was believed that all products came with an implied warranty of merchantability. This warranty simply promised that the product was fit for its intended purpose. For example, suppose that you bought a car battery. You have the right to expect it to meet its essential purpose of holding an electrical charge.

Require a Tie-In Sale

Tie-in sales are sales of related products or services from a particular company to keep the warranty in force. In other words, it must give the consumer a choice about how to meet any maintenance requirements.

Thus, suppose an automobile warranty says you must change the oil every 3,000 miles to keep the contract in force. This warranty does not have a prohibited tie-in sale and would comply with the Magnuson Moss Warranty Act.

On the other hand, suppose an automobile warranty has the same oil change provision but requires you to have the oil change performed at the dealership. This term now contains an illegal tie-in and violates the act.

Use Deceptive Warranty Terms

Contracts generally cannot use deceptive or misleading terms. The Magnusson Moss Act takes particular aim at deceptive or misleading warranty terms. Some examples of this language include when the seller makes it seem like the product is covered but creates exceptions for all the operative parts.

Another example of deceptive and misleading warranties happens when a manufacturer promises warranty services it cannot provide. Thus, suppose an overseas manufacturer states that you can have warranty services performed at authorized repair centers. But if the manufacturer has no authorized repair centers, this term is deceptive in practice, even though it seems reasonable at the time.

Understanding the Basic Rights and Remedies for Consumers

The act has two provisions that create fundamental rights and remedies for consumers. First, it allows consumers a private right to file lawsuits against warrantors for breach of warranty. Since the act turns warranty breaches into a federal claim, consumers can bring a case to any state or federal court. Similarly-situated consumers can get a class action warranty lawsuit under its provisions.

More importantly, the act allows consumers to include court costs and attorney’s fees in their claims. That radically widens consumers’ ability to bring warranty lawsuits because their claims might not cost anything.

Second, the Magnuson Moss Act encourages sellers and manufacturers to set up informal processes, like mediation, to resolve warranty disputes. These informal dispute resolution procedures are supposed to help warrantors work with consumers to address their warranty issues without the expense and time of a lawsuit.

To use an informal dispute resolution process, the warrantor must:

• Adequately fund and staff the process so it can resolve disputes quickly
• Make the dispute resolution process available for free
• Use an independent third party to decide the dispute
• Have written procedures in place for the process
• Allow each party to submit information
• Issue non-binding decisions

But in their attempts to maintain the upper hand, some warrantors require all disputes to go to binding arbitration. Courts have split on whether the act allows this since it deprives consumers of their access to courts.

Debunking Common Misconceptions About the Act

Before pursuing a claim under the act, you should first understand what it does not do. It does not:

• Require sellers and manufacturers to warrant their products
• Dictate the terms that sellers and manufacturers must include in their warranties
• Apply to products sold to you for resale
• Cover warranties for services, although it covers those for parts combined with services

Most importantly, many people mistakenly view the act as ineffective. On the contrary, it can provide valuable tools for pressuring a manufacturer or seller to honor their warranties.

Federal Magnuson Moss Warranty Act: Steps for Compensation

An action under the act allows you to pursue your financial losses as well as any consequential losses. Thus, the price of a defective vehicle is a direct loss, and the cost to tow it after it broke down is a consequential loss.

When understanding “what is magnuson moss warranty act” and how to pursue a claim, you must follow a sequence of steps, including the following:

Documentation Requirements

The act applies to written warranties. You do not need a copy of your product warranty to pursue a claim. But this document gives you the roadmap for the steps you need to take.

Generally, you need to document the following:

• When the warranty came into effect
• When the defect was identified
• Efforts to maintain the product
• How you complied with the process outlined in the warranty for repair or replacement

Documents could include receipts, communications, service records, and other evidence showing the process toward resolution.

Warranty Coverage

You must review your warranty terms to determine whether the defect is covered. For example, if the warranty only covers the car’s powertrain, you will not get coverage for a steering problem.

Similarly, if the coverage is for three years/36,000 miles, it expires when you reach the first of those limits. Most people hit the mileage limit before three years, so their warranty expires when they put 36,000 miles on the odometer.

How the Act Applies to Used Car Warranties

The act covers used goods, including used or previously owned vehicles. You do not need any particular analysis for this situation. The Magnuson Moss Warranty Act used car protections are the same as if you bought a new car. In other words, you have the right to:

• See the warranty before you purchase
• Read a single, clear explanation of the full or limited warranty
• Receive terms that are free of deceptive wording and disclaimers of implied warranties
• Have no obligation to make tie-in purchases

Used car warranties are often a huge sales point with dealers because they want to overcome your fear of buying a lemon. As a result, they will often be more than willing to walk you through the entire warranty so you understand it fully.

Warranty Repairs and Replacements

Warranties often state what services you will receive for a claim. The typical approach is to attempt to repair the product first. If the product cannot be repaired or the repairs are unsuccessful, the warrantor may be obligated to replace it.

For new or used cars, this can be a double-edged sword. Since a vehicle is modular, a seller can repair or replace specific parts to fix a problem without replacing the entire car. On the other hand, some issues are notoriously hard to pinpoint, and a seller might need several tries before fixing a problem or determining it cannot be restored to the condition it was promised at the time of the sale.

Statute of Limitations for Filing Claims

The Magnuson Moss Warranty Act statute of limitations depends on your state. It does not contain a time limit. Instead, the time limit for bringing a claim for a warranty violation comes from your state’s statute of limitations.

Most states set a four-year time limit from the date the violation occurred. But you should consider speaking to a lawyer to check the exact time limit for your claim.

Magnuson Moss Warranty Act and Car Modifications

Your Magnuson Moss Warranty Act car modification rights depend on the nature of the modification and the defect. Generally, the prohibition on tie-in sales means that your warranty will continue in force even after you make after-market modifications.

Potential Impact of Modifications

The warranty can state that specific changes will void your warranty. If you make a prohibited modification, the seller may have the right to refuse warranty service. But the warrantor must be careful not to create a tie-in sales situation or make your warranty deceptive by prohibiting all after-market modifications because some parts, like tires or filters on a vehicle, are necessary.

Preserving Warranty Rights

A warrantor could refuse warranty service if the after-market part caused the breakdown. Thus, maintaining your warranty rights may require you to forego some after-market modifications that might increase stress on the product.

Relevant Court Cases and Interpretations

The Federal Trade Commission (FTC) has taken a strong position on modifications. Warrantors cannot void warranties on modified vehicles unless they can prove the aftermarket or recycled part caused the failure. The FTC believes these provisions violate the Magnuson Moss Warranty Act and antitrust laws.

The FTC has used this interpretation to bring cases against manufacturers. In 2015, it brought a claim against BMW because the automaker’s MINI car warranties required genuine BMW parts. BMW settled and changed its practices moving forward.

Magnuson Moss Warranty Act: Legal Considerations

Before bringing a case under the act, you should review your case with a lawyer who can help you understand the legal implications of your case, including:

Potential Legal Implications of Violating the Act

When a warrantor violates the act, it becomes liable for the consumer’s direct losses. Sometimes, this simply covers the cost of repairing or replacing the product. But consumers can also seek a return on their purchase cost.

Remember that if the warrantor is required to return your purchase price, it can retain a reasonable amount based on your use. Since perceptions can differ about the value of a defective product, the appropriate amount the warrantor can expect can become a point of contention.

Attorney Fees and Costs

You can seek to pursue Magnuson Moss Warranty Act attorney fees and court costs. Your attorney must file a statement listing the expenses incurred so the court can verify that they were reasonable. But if granted, the warrantor will pay your lawyer rather than you.

Filing a Claim or Seeking Legal Recourse

Before you can file a claim or seek legal recourse, you must exhaust all your rights under the warranty and any informal dispute resolution procedure provided.

State Consumer Protection Laws

The act was intended to work with state consumer protection laws. You should consult a lawyer to make sure your claim pursues all possible rights you may have under federal and state laws.

Availability of Jury Instructions for Act-Related Cases

Nearly every state provides model Magnuson Moss Warranty Act jury instructions. The National Consumer Law Center also provides general jury instructions that can work in almost any state court.

Importance of the Magnuson Moss Warranty Act

The act was created to address warranty practices that harmed consumers. Some of these practices no longer occur simply because of the requirements for transparent, understandable warranties. But when you encounter warranty disputes, the act also gives you the tools to seek legal redress.

Leveraging the Magnuson Moss Warranty Act with Timothy Abeel

Timothy Abeel focuses on warranty litigation, and the Magnuson Moss Warranty Act often plays a central role in getting a fair resolution for consumers. Contact us to discuss your warranty claim and how we can help you.

Timothy J. Abeel & Associates, P.C. represent clients throughout California, Florida, New Jersey, Ohio, Pennsylvania, and West Virginia. Reviews can be seen on AVVO, Google, Glen Mills Yelp, Roseland Yelp, & Pittsburgh Yelp.