FTC Actions Against Manufacturers Demonstrate Agency’s Priority in Enforcing Unlawful Repair Restrictions

Seyfarth Shaw LLP

On June 23, 2022, the Federal Trade Commission (FTC) announced that it had entered into consent orders with manufacturers Harley-Davidson Motor Company Group, LLC and MWE Investments, LLC (maker of Westinghouse outdoor generators) barring those companies from violations of the Magnuson-Moss Warranty Act and the FTC Act.

Harley-Davidson offers motorcycle purchasers a limited, 24-month warranty that starts from the date of the initial retail purchase.  According to the complaint filed by the FTC, Harley-Davidson’s 2021 warranty statement advised purchasers to “insist that your authorized Harley-Davidson dealer uses only genuine Harley-Davidson replacement parts and accessories to keep your Harley-Davidson motorcycle and its limited warranty intact.” The FTC alleges that this text runs afoul of the tying prohibition of the Magnuson-Moss Warranty Act, 15 U.S.C. § 2302(c); 16 C.F.R. § 700.10, which forbids the conditioning of a warranty for a consumer product on the consumer’s use of an article or service which is identified by brand that was not provided to the consumer without charge under the terms of the warranty. 

The FTC identified other problematic provisions in the Harley-Davidson warranty, including statements that “unapproved modifications . . . may void all or part of your new motorcycle warranty. See an authorized Harley-Davidson dealer for details” and that the use “of aftermarket performance parts may void all or parts of your limited warranty. See an authorized Harley-Davidson dealer for details.” In addition to running afoul of the tying prohibition, these provisions were alleged to violate the requirement under the Magnuson-Moss Warranty Act that all warranty terms be disclosed to consumers in a single document.

Westinghouse Outdoor Power Equipment similarly offers purchasers of its portable generators a limited warranty covering repair expenses for one year from the date of purchase and replacement parts for three years. According to the complaint filed by the FTC, Westinghouse’s warranty states that “exclusions” under the warranty include generators that utilize “non-MWE replacement parts” and “products that are altered or modified in a manner not authorized in writing by” Westinghouse. Under the consent order, Westinghouse is permitted to exclude warranty coverage if a generator is modified in a manner that results in removal of parts that affect the safe or intended use of the generator.

The FTC’s recent actions follow the agency’s announced intention in its Nixing the Fix report and Policy Statement on Repair Restrictions Imposed by Manufacturers to prioritize enforcement of the Magnuson-Mass Warranty Act. The Act’s purpose is to improve the adequacy of warranty information available to consumers, to prevent deception, and to improve competition in the marketing of consumer products. As part of these most recent enforcement actions, both manufacturers agreed to modify their written warranties to remove the offending language and notify existing customers about these changes. 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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