U.S. Government (Sort Of) Moves to Protect Consumers

If you’ve bought a pricey electronics product in the last couple decades, you may have seen the ominous sticker attached to the device: “Warranty void if this sticker is removed or damaged,” or words to that effect. Or you may not have seen it unless something went wrong and you opened it up to repair it yourself or took it to a local repair shop.

Many consumers have encountered this threat on their Apple or Microsoft or other products. The meaning of the sticker is clear: If you don’t use an “authorized” repair service—which can often cost a great deal more than a shop nearby—the entire warranty on the device is worthless.

Now the Federal Trade Commission (FTC) has warned six unnamed major manufacturers that not only are these stickers completely unenforceable, they are actually illegal. The companies market and sell “automobiles, cellular devices, and video gaming systems in the United States,” according to the FTC.

It turns out that these warning labels violate the 1975 Magnuson-Moss Warranty Act, which governs what can and can’t be covered by product warranties. Any purchase over $15 is covered by the law. It also said the practices could be seen as deceptive, which could trigger legal repercussions.

In a press release accompanying its action, the FTC said, “The letters [sent to the six firms] warn that FTC staff has concerns about the companies’ statements that consumers must use specified parts or service providers to keep their warranties intact. “Unless warrantors provide the parts or services for free or receive a waiver from the FTC, such statements generally are prohibited by the Magnuson-Moss Warranty Act, a law that governs consumer product warranties. Similarly, such statements may be deceptive under the FTC Act.”

“Provisions that tie warranty coverage to the use of particular products or services harm both consumers who pay more for them as well as the small businesses who offer competing products and services,” Thomas B. Pahl, acting director of the FTC’s Bureau of Consumer Protection, said in a statement.

So hooray for consumers as well as government regulation, right? Not quite. Besides refusing to make public the names of the offending firms, the FTC declined to say what action—if any—it would take against these companies if they fail to heed the agency’s “concerns.”

Fortune magazine tried to trace the FTC’s quoted language to specific companies.

“For example, the FTC quotes the phrase, ‘The use of [company name] parts is required to keep your ... manufacturer’s warranties and any extended warranties intact.’ That language matches the warning used by auto-maker Hyundai,” the magazine writes.

“The phrase, ‘This warranty shall not apply if this product ... is used with products not sold or licensed by [company name]’ matches the terms of video-game firm Nintendo.

“And as for, ‘This warranty does not apply if this product ... has had the warranty seal on the [product] altered, defaced, or removed,’ this is the same wording used for Sony’s PlayStation VR,” Fortune noted.

Although neither Nintendo or Sony had replied to Fortune’s request for comment, Hyundai provided a statement to Fortune, which read in part:

“The language on the website was part of a consumer awareness campaign to inform Hyundai vehicle owners of their rights after a collision to ensure that their vehicle is restored to its pre-collision condition. This language does not appear in Hyundai’s written warranty terms or anywhere else on [the website]. Hyundai apologizes for any confusion this may have caused.”

So it appears Hyundai wants to avoid “confusion” over its stated warranty policy. What about other manufacturers? And what will the government do to them?

Tim Cushing, writing for the consumer website TechDirt, isn’t impressed with the government’s action.

“As the law stands now, it’s easy to avoid even without using void-if-removed stickers. Apple’s warranty policy—like that of several other device manufacturers—follows the letter of the law while avoiding its spirit entirely. The company tells consumers that repairing devices on their own or seeking the assistance of non-Apple techs may result in a voided warranty. No specifics are offered as to what non-Apple services won’t void the warranty so most customers play it safe and go directly to the manufacturer for service.”

He echoed the sentiments of many who regard the FTC’s action as the least it could do to rein in this unfair and costly practice.

Billshark believes the FTC should initiate legal actions against the offending firms, or at least more widely publicize to consumers that the warning stickers are illegal. This would give buyers more leverage when dealing with the manufacturers of their products when they require repairs.

Meanwhile, why not let our sharks tear into your bills and see how much money we can save you every month. You’ll be amazed at the amount of savings we can find for you!