FTC warns tech companies against illegal warranty demands
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The Federal Trade Commission (FTC) has issued warnings to six major US companies which manufacture vehicles, phones and gaming systems that it is illegal to condition warranty coverage on the use of specified parts of services.
According to a statement by the FTC, its staff members are concerned about companies’ warranties being dependent on using consumers only seeking repairs from specified services using particular parts. Unless the companies are willing to provide these parts or services for free – or have been granted a waiver from the FTC – this practice is forbidden by the 1975 Magnuson-Moss Warranty Act.
Provisions such as, “This warranty shall not apply if this product […] is used with products not sold or licensed by [company name]” or “This warranty does not apply if this product […] has had the warranty seal on the [product] altered, defaced or removed” could be considered deceptive, and are prohibited, the FTC stated.
Companies including Microsoft and Sony have been criticised for placing warranty seals on their gaming consoles and other devices which warn that the warranty does not apply if the seal is removed and casing opened. Manufacturers argue that these seals are necessary to ensure that no damage has been caused by tampering inside a device.
Apple has come under heavy criticism for requiring its products to be repaired at official Apple stores, encouraging consumers to buy new products rather than pay for expensive repairs. It has stated that third parties repairing its devices could put its trade secrets at risk and make it harder to keep its products secure. Apple is among a number of tech companies lobbying against state legislation in New York aiming to make it easier for consumers to fix their devices by requiring many tech companies to sell replacement parts and tools to the general public.
Apple’s latest iOS 11.3 software update has been criticised for causing iPhone 8 touchscreens to stop working if they have been repaired by a third party.
The FTC has requested that the six unnamed companies it has contacted revise its practices to company with the law within 30 days in order to avoid possible legal action.
“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,” said Thomas Pahl, acting director of the FTC’s Bureau of Consumer Protection, in a statement.
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