Back to the Future: Manufacturers' Warranties May Go Digital with Updates to the Magnuson-Moss Warranty Act
On Tuesday, September 8, 2015, an overwhelming majority in the House passed S. 1359, the E-Warranty Act of 2015, which, if enacted, would revise the Magnuson-Moss Warranty Act to allow manufacturers to post consumer product warranties on their websites. The E-Warranty Act would also require the Federal Trade Commission to revise its implementing regulations (16 C.F.R. Part 700) accordingly.
The Senate unanimously passed the bill in July. The E-Warranty Act now heads to President Obama's desk.
The E-Warranty Act is reminiscent of the Electronic Signatures in Global and National Commerce Act (E-Sign Act) signed into law by President Clinton in 2000. As with the E-Sign Act, the E-Warranty Act is meant to bring law out of the Paper Age—this time by using the Internet to promote easy and efficient access to warranty information while reducing costs for manufacturers and consumers alike.
Under current law, generally speaking, a warranty disclosure must be made in tangible, physical form, even if an online form is available. The E-Warranty Act would change course by permitting manufacturers to provide warranty information online only, so long as it is provided "in an accessible digital format on the Internet website of the manufacturer of the consumer product in a clear and conspicuous manner." Although the bill does not define "clear and conspicuous," the FTC routinely uses that phrase in consumer protection policy and enforcement activities and will have no difficulty interpreting and applying it to online warranties.
The Act preserves a consumer's right to access paper copies of warranties by non-digital means. It would require manufacturers who avail themselves of the Act's digital option to also provide "the phone number of the manufacturer, the postal mailing address of the manufacturer, or another reasonable non-Internet based means of contacting the manufacturer to obtain and review [the warranty] terms."
The 2000 E-Sign Act caused consternation and anxiety when first proposed, but was readily embraced after passage by companies and consumers alike. The E-Warranty Act should receive a similar reception. The Internet is hardly new technology, and industries are now accustomed to expansive consumer-facing use of their websites.
Still, the Act will bring significant change in how product manufacturers and sellers think of warranties and the publishing of their terms. Savvy entities should be taking steps now to prepare to convert their warranty worlds to the Internet age—with easily accessible web platforms, warranty text that is both clear and reader-friendly in electronic form, and related actions to move swiftly and smartly away from the paper world.
Other Articles in This Month's Edition:
For more information, please contact the professional(s) listed below, or your regular Crowell & Moring contact.