Repair Restrictions & Illegal “Tying Arrangements”
FTC Report To Congress Finds There Is Little Evidence To Support Manufacturers’ Justifications For Repair Restrictions
In a new report to Congress, the Federal Trade Commission (“FTC”) identified numerous types of repair restrictions, such as using adhesives that make parts difficult to replace, limiting the availability of spare parts, and making diagnostic software unavailable.
The report’s findings, including that “there is scant evidence to support manufacturers’ justifications for repair restrictions,” are primarily based on responses to the FTC’s requests for public comments and empirical research issued in connection with its July 2019 workshop, “Nixing the Fix: A Workshop on Repair Restrictions.”
Congress directed the FTC to issue the report, noting that it “is aware of the FTC’s ongoing review of how manufacturers – in particular mobile phone and car manufacturers – may limit repairs by consumers and repair shops, and how those limitations may increase costs, limit choice, and impact consumers’ rights under the Magnuson-Moss Warranty Act.”
The Anti-Tying Provision Of The Magnuson-Moss Warranty Act (“MMWA”)
The MMWA is a consumer protection law passed in 1975 to clarify how written warranties may be used when marketing products to consumers.
The MMWA requires warrantors of consumer products to provide consumers with detailed information about warranty coverage.
Section 102(c) of the MMWA, known as the anti-tying provision, prohibits warrantors from conditioning warranty coverage on the consumer’s use of an article or service identified by brand, trade, or corporate name, unless the warrantor provides that article or service without charge or the warrantor has received a waiver from the FTC.
This provision, for example, bars an automobile manufacturer from voiding a warranty if a consumer has scheduled maintenance performed by someone other than the dealer, prohibits a printer manufacturer from conditioning its warranty on the purchaser’s use of the manufacturer’s branded ink, and forbids a smartphone manufacturer from voiding a warranty when a consumer has a new battery installed at a kiosk at the mall.
Essentially, the anti-tying provision bars manufacturers from using access to warranty coverage as a way of obstructing consumers’ ability to have their consumer products maintained or repaired using third-party replacement parts and independent repair shops.
Companies may seek a waiver of this prohibition if: (1) the warrantor satisfies the FTC that the manufacturers’ parts or services are necessary for the product to function, and (2) the waiver is in the public interest. Since 1975, only three waiver requests have been made to the FTC, all of which were denied.
Types Of Repair Restrictions
There are certain manufacturer practices that “right to repair” advocates assert have the effect of limiting consumer repair choices.
Repair restrictions discussed at the FTC’s July 2019 Workshop on Repair Restrictions generally fall into eight categories:
1) Physical restrictions; 2) Unavailability of parts, repair manuals, and diagnostic software and tools; 3) Designs that make independent repairs less safe; Telematics (i.e., information on the operation and status of a vehicle that is collected by a system contained in the vehicle and wirelessly relayed to a central location, often the manufacturer or dealer of the vehicle); 4) Application of patent rights and enforcement of trademarks; 5) Disparagement of non-OEM parts and independent repair; 6) Software locks; 7) Digital Rights Management and Technical Protection Measures; and 8) End User License Agreements.
Source: Federal Trade Commission
If you feel that you have been prevented or obstructed from having a consumer product repaired using third-party replacement parts or independent repair shops or facilities, or that your warranty was voided, or will be voided, because of independent repair, please complete the form on the right or e-mail [email protected] for a free, no-obligation evaluation of potential legal claims.
Kehoe Law Firm, P.C.