In recent years, the FTC has actively enforced Section 102(c) of the MMWA. For example, in October 2015, the FTC approved a complaint and settlement against BMW for violating the anti-tying provision.[1] In its complaint, the FTC alleged that BMW violated the MMWA by conditioning the warranties it offered on its MINI cars on the use of MINI dealers and genuine MINI parts without providing such parts and services for free or seeking a waiver from the FTC. Subsequently, in April 2018, the FTC announced that staff issued several warning letters to companies marketing automobiles, cellular devices, and video gaming systems in the United States. The letters warned the companies that telling consumers they need to use specified parts or services to keep the warranties intact would violate the anti-tying provision. The letters also placed the companies on notice that violations of the MMWA may result in legal action.[2] The recipients changed their practices in response to the warning letters. A consumer education campaign accompanying the warning letters also promoted awareness about consumers’ rights under the MMWA.[3]
The Commission continues to receive reports of companies not complying with the MMWA. In response to staff’s call for empirical research and comments related to the Workshop, several organizations reported that warranty tying continues to be prevalent in the marketplace. For example, the Education Fund of U.S. PIRG, the federation of state Public Interest Research Groups (PIRGs), submitted an October 2018 study analyzing warranties from 50 companies.[4] U.S. PIRG concluded that 45 of the 50 companies had warranties that appeared to violate Section 102(c) of the MMWA.[5] Likewise, the Specialty Equipment Market Association (SEMA) submitted a comment stating that it regularly receives complaints that automobile dealerships void automobile warranties if the dealership finds a specialty part (e.g., custom wheels) had been installed on the automobile, regardless of whether the specialty part caused the automobile to malfunction.[6] Other commenters submitted information claiming that certain warrantors either expressly or by implication continue to condition warranty coverage of the use of particular products or services.[7] The Commission takes these allegations seriously and will continue to address illegal practices in the marketplace.
- ↑ In re BMW of N. Am., LLC, FTC No. 132-3150, https://www.ftc.gov/enforcement/cases-proceedings/132-3150/bmw-north-america-llc-matter.
- ↑ FTC Warns Companies that It Is Illegal to Condition Warranty Coverage on the Use of Specified Parts or Services (Apr. 10, 2018), https://www.ftc.gov/news-events/press-releases/2018/04/ftc-staff-warns-companies-it-illegal-condition-warranty-coverage. Some of the warning letters also advised companies to stop placing seals on their products that stated “warranty void if seal removed,” or contained similar language.
- ↑ See https://www.ftc.gov/news-events/blogs/business-blog/2018/04/ftc-staff-sends-warranty-warnings. Notably, however, the Automotive Oil Change Association submitted evidence showing that many consumers are still unaware of their rights under the MMWA. Automotive Oil Change Association comment (“AOCA empirical research”), at 12–14.
- ↑ U.S. PIRG empirical research. See Nixing the Fix: A Workshop on Repair Restrictions, Docket ID FTC-2019-0013, https://www.regulations.gov/docket?D=FTC-2019-0013. In this report, we refer to submissions as “comments” or “empirical research” based on how they were submitted to the Commission.
- ↑ Id. at 2–3.
- ↑ Special Equipment Market Association comment (“SEMA comment”), at 2. SEMA urged the Commission to require dealerships to state in writing why the warranty coverage was denied.
- ↑ E.g., Peter Pronko comment, at 1–2 (arguing that Rolex materials make statements such as, “only official Rolex repair centers are ‘allowed’ to repair and service a Rolex watch” and that repair work done by anyone other than a Rolex facility will void its warranty); Fixit Clinic empirical research, at 3 (describing “stickers or labels that warn or
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