The FTC says that if companies don't change their warranty practices, it may take 'legal action.'
The Federal Trade Commission put six companies on notice in early April for illegally telling customers that getting third-party repairs voids the warranty on their electronics. You’ve seen the stickers before and read the messages buried in end user license agreements. Plastered on the back of my PlayStation 4 is a little sticker that says “warranty void if removed.” That’s illegal.
Motherboard has obtained copies of the letters via a Freedom of Information Act request and has learned the names of the six companies that were warned. They are Sony, Microsoft, Nintendo, Hyundai, HTC, and computer hardware manufacturer ASUS.
The letters were sent by Lois Greisman, the FTC’s associate director of marketing practices, on April 9; the FTC has given each company 30 days to change its official warranty policies and says that it may take legal action against the companies.
“This letter places you on notice that violations of the Warranty and FTC Acts may result in legal action,” the letters state in bold, adding that the FTC had reviewed warranty language on each manufacturers’ websites and found it to be infringing. “ FTC investigators have copied and preserved the online pages in question, and we plan to review your company's written warranty and promotional materials after 30 days. You should review the Warranty and FTC Acts and if necessary, revise your practices to comply with the Acts' requirements. By sending this letter, we do not waive the FTC's right to take law enforcement action and seek appropriate injunctive and monetary remedies against [company name] based on past or future violations.”
The FTC believes all six companies are violating the 1975 Magnuson-Moss Warranty Act, which states that no manufacturer charging more than $5 for a product may put repair restrictions on a device its offering a warranty on. Despite being illegal, many companies have such restrictions. Apple, noticeably absent in this round of of warning letters, often steers customers away from third-party repair services.
“Warranty language that implies to a consumer acting reasonably under the circumstances that warranty coverage requires the consumer to purchase an article or service identified by brand, trade or corporate name is similarly deceptive and prohibited,” the FTC letters said.
The only difference between the letters is that each calls out the specific language from each manufacturer that violates federal law, for example, Microsoft’s Xbox One warranty states “Microsoft is not responsible and this warranty does not apply if your Xbox One or Accessory is...repaired by anyone other than Microsoft.” The FTC letter specifically states that this type of language is illegal.
In three cases, the letters also specifically say that the use of warranty-void-if-removed stickers or “seals” break the law; language in the Playstation 4, HTC, and Asus warranties mention that the warranties are void if a seal is removed, something that the FTC mentioned it is “particularly concerned” about.
Nintendo, HTC, Microsoft, HTC, ASUS, Hyundai, and the FTC did not immediately respond to our request for comment.