On July 7, 2022, the Federal Trade Commission (“FTC” or “Commission”) announced it is acting against grill manufacturer Weber-Stephen Products, LLC, arguing that Weber’s warranties illegally restrict consumers’ right-to-repair. The Weber complaint is the third salvo in the FTC’s recent string of right-to-repair administrative complaints, after issuing two similar complaints against Harley-Davidson Motor Company Group, LLC and MWE Investments, LLC mere weeks prior. The FTC’s recent action thus signals that it will continue prioritizing enforcement of tying rules under the Magnuson Moss Warranty Act (“MMWA”).
Under the MMWA, companies may not “condition” a consumer’s “written or implied warranty of [a] product on the consumer’s using, in connection with such product, any article or service … which is identified by brand, trade, or corporate name,” unless they are free. 15 U.S.C. § 2302(c); see also 16 C.F.R. § 700.10. Thus, language conditioning a consumer’s warranty on use of brand name replacement parts when repairing a product is considered a “tying” arrangement and prohibited under the Act. In limited circumstances, the FTC can waive this prohibition, such as if “the warranted product will function properly only if the article or service … is used in connection with the warranted product” or the waiver is in the public interest. Consumer advocates argue that “repair restrictions prevent timely repairs, raise the prices consumers must pay for repairs, result in harm to the environment, and threaten small and local businesses.”
The FTC’s right-to-repair priority also does not end at voided warranties. The FTC has also criticized other potentially problematic repair restrictions as potentially illegal tying arrangements, including the following: warranty language discouraging use of third-party parts or services; physical restrictions which limit the ability to open devices or replace parts or using “highly specialized nuts and bolts”; unavailability of replacement parts except to authorized repair networks; and unavailability of manuals or diagnostic software or tools for use in replacement.
The FTC has taken aim at tying arrangements for over a year, releasing a report to Congress in May 2021 (“Nixing the Fix”) that provided an overview of the MMWA’s restrictions on such arrangements. Soon after the FTC issued its report, President Biden issued an Executive Order encouraging the FTC to “limit powerful equipment manufacturers from restricting people’s ability to use independent repair shops or do DIY repairs[.]” Days after President Biden’s Order, the FTC issued a Policy Statement announcing that it would “devote more enforcement resources to combat” “unlawful repair restrictions,” including by prioritizing investigations into tying arrangements under the MMWA.
The FTC’s most recent action against Weber demonstrates that the Commission intends to keep its right-to-repair enforcement promise. The FTC’s Order imposes several restrictions:
- Subjects Weber to Future Penalties. If Weber violates the MMWA again, the FTC may seek civil penalties of up to $46,517 per violation in federal court.
- Prohibits Tying Arrangements. Weber may not tell consumers that it will void their warranties if they use third-party replacement parts, or that they can only use Weber-branded replacement parts.
- Requires Disclosures. Weber must now disclose, in its warranty, that “Using third-party parts will not void this warranty.” Weber must also notify consumers that their warranties will remain effect regardless of their use of third-party replacement parts.
Given the FTC’s recent and sustained activity on this issue, consumer products companies should consider the following:
- Review warranties. Audit all consumer product warranties for language that may constitute a tying arrangement contrary to the MMWA. Remove language that voids the warranty due to use of third-party replacement parts or requires use of brand replacement parts.
- Evaluate other right-to-repair concerns. Even if your consumer product warranties do not void upon use of after-market or third-party tools, parts, or services, consider whether repair parts are realistically available to consumers, whether due to limited availability or replacement difficulty. Under pressure from right-to-repair consumer advocates, Apple recently launched its Self Service Repair program this year, where consumers can pay to rent the necessary tools to repair select iPhone products. Apple’s example demonstrates that consumer pressure on these issues may continue to mount and draw more focus from the FTC.
Crowell’s deep bench of experienced warranty lawyers would be glad to assist you with evaluating your consumer product warranties and repair practices for compliance with the MMWA.
For further information, please contact:
Lauren Aronson, Partner, Crowell & Moring
laronson@crowell.com
