Locke Lord QuickStudy: FTC Decides to Retain Existing Magnuson-Moss Rules with Limited Modifications

by Locke Lord LLP

The Federal Trade Commission (FTC) completed its review of the rules under the Magnuson-Moss Warranty Act (the MM Act)1 and voted to retain the current rules with limited modifications. The MM Act provides certain disclosure and other requirements for written warranties on consumer products and to a limited extent, service contracts covering consumer products. The FTC has promulgated several rules, interpretations and guides (collectively, the Rules) regarding the MM Act.2

In 2011, the FTC began a review of the Rules. As part of the review process, the FTC sought public comment on the Rules, including comments on specific questions raised by the FTC. On its website, the FTC recently posted a notice to be published in the Federal Register (the Notice) discussing the review of the Rules and the comments received.3 The Notice also includes the text of certain changes to the Rules, including two substantive changes to the Rules.

The first substantive change to the Rules involves the MM Act’s prohibition on certain tying arrangements. As described in the current Rules (15 CFR § 700.10), the MM Act “prohibits tying arrangements that condition coverage under a written warranty on the consumer’s use of an article or service identified by brand, trade, or corporate name unless that article or service is provided without charge to the consumer.” This Rule is now being revised to add the following clarifying language:

warranty language that implies to a consumer acting reasonably in the circumstances that warranty coverage requires the consumer’s purchase of an article or service identified by brand, trade or corporate name is similarly deceptive. For example, a provision in the warranty such as, “use only an authorized ‘ABC’ dealer” or “use only ‘ABC’ replacement parts,” is prohibited where the service or parts are not provided free of charge pursuant to the warranty.

Besides this Rule change, the tying restriction in the MM Act has been the subject of recent FTC attention, including an FTC consumer alert (published in 2011 and updated in 2015) and a recently announced proposed settlement between the FTC and a motor vehicle manufacturer for alleged violations of the tying restriction.

The second substantive change to the Rules relates to the application of the MM Act to service contracts that are regulated under state law as contracts of insurance. Trying to clarify the extent to which the McCarran-Ferguson Act may preempt the application of the MM Act to such service contracts, the revised language of the Rule (15 CFR § 700.11) states: “… to the extent the Magnuson-Moss Warranty Act’s service contract provisions apply to the business of insurance, they are effective so long as they do not invalidate, impair, or supersede a State law enacted for the purpose of regulating the business of insurance.” The Notice’s discussion of this change includes one commentator’s example, with which the FTC appears to agree, where “state insurance law provides a remedial scheme for breach of a service contract regulated as insurance, [and] the additional availability of Magnuson-Moss remedies for the same misconduct does not ‘impair’ the insurance regulatory scheme.” We note that in most states, service contracts are not regulated as insurance contracts.

The Notice includes changes to other Rules, but the changes are limited to technical changes. Specifically, the Rules currently include citations to sections of the public law enacting the MM Act. The Rule adds parallel citations to the applicable sections of the United States Code.

The Notice also discusses certain comments that were received by the FTC regarding the Rules where the FTC declined to make a change. For example, the MM Act expressly states that FTC may prescribe by rule the manner and form for disclosing the terms and conditions of service contracts. Certain commentators urged the FTC to amend the Rules to include such disclosure requirements. The FTC declined to add service contract disclosure requirement to the Rules, citing the MM Act’s existing requirement that a service contract “fully, clearly, and conspicuously discloses its terms and conditions in simple and readily understood language.”

115 U.S.C. §§2301-2312.
216 CFR Part 700 (Interpretations of the MM Act), 16 CFR Part 701 (Disclosure of Written Consumer Product Warranty Terms and Conditions), 16 CFR Part 702 (Pre-Sale Availability of Written Warranty Terms), 16 CFR Part 703 (Informal Dispute Resolution Procedures) and 16 CFR Part 239 (Guides for the Advertising of Warranties and Guarantees).
3For the text of the Notice, go to

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.

© Locke Lord LLP | Attorney Advertising

Written by:

Locke Lord LLP

Locke Lord LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.