Manufacturers often place a disclaimer on their products: “If the consumer does ‘X,’ any warranty promises become voided.” This common practice seems to be facing a challenge in the technology industry. The Federal Trade Commission (FTC) has chosen to take a close look at the warranty practices of Sony, Microsoft, and Nintendo. These companies utilize the “warranty void if removed” sticker, something that the FTC appears to believe has been abused.
An edict issued by the FTC flat out tells tech companies to remove the stickers. Specifically, the companies have 30 days to comply with the demand. Fighting back against the FTC’s mandate could prove difficult. The government agency has the law on its side. In 1975, Congress passed the Magnuson-Moss Warranty Act, a law that bars technology/electronics companies from barring repairs on any electronics product valued at more than $5. For 43 years, the law-violating warranty stickers remained in place without any challenges. Those days appear to be ending.
Non-compliance with the FTC’s demand would mean legal ramifications. Likely, the sanction levied against the company take the form of fines. The amount of the fines might turn out to be staggering.
The possibility of the tech companies choosing to sue the FTC exists. Doing so comes with risks. The companies may face a public relations disaster since the resultant effect of the lawsuit may create the impression the big companies don’t want to make good on defective products.
The companies do maintain a financial motive for not wishing to deliver on warranty repairs. Every time a repair is performed, a company spends money. Money spent on warranties cut into profits. Profits drive up stock prices while keeping companies solvent. Regardless, the law makes itself very clear in matters related to warranty stickers. Sony, Microsoft, and Nintendo probably will be performing a lot more warranty repairs in the future than they ever did in the past.
Dil Bole Oberoi
