What is the Magnuson-Moss Act (the Federal Lemon Law)?
The Act provides that any warrantor such as an automobile or product manufacturer warranting a consumer product to a consumer by means of a written warranty must disclose, fully and conspicuously, in simple and readily understood language, the terms and conditions of the warranty to the extent required by rules of the Federal Trade Commission. The FTC has enacted regulations governing the disclosure of written consumer product warranty terms and conditions on consumer products actually costing the consumer more than $15. The Rules can be found at 16 C.F.R. Part 700.
Under the terms of the Act, ambiguous statements in a warranty are construed against the drafter of the warranty.
Likewise, service contracts must fully, clearly, and conspicuously disclose their terms and conditions in simple and readily understood language.
Full Warranty Requirements Under The Federal Lemon Law
Under a full warranty, in the case of a defect, malfunction, or failure to conform with the written warranty, the warrantor:
- must, as a minimum, remedy the consumer product within a reasonable time and without charge;
- may not impose any limitation on the duration of any implied warranty on the product;
- may not exclude or limit consequential damages for a breach of any written or implied warranty on the product, unless the exclusion or limitation conspicuously appears on the face of the warranty; and
- if the product, or a component part, contains a defect or malfunction, must permit the consumer to elect either a refund or replacement without charge, after a reasonable number of repair attempts.
In addition, the warrantor may not impose any duty, other than notification, upon any consumer, as a condition of securing the repair of any consumer product that malfunctions, is defective, or does not conform to the written warranty. However, the warrantor may require consumers to return a defective item to its place of purchase for repair.
Remedies under the Magnuson-Moss Act
The Act is meant to provide consumers with access to reasonable and effective remedies where there is a breach of warranty on a consumer product. The Act provides for informal dispute-settlement procedures and for actions brought by the government and by private parties.
The FTC has been mandated by Congress to promulgate rules to encourage the use of alternative dispute resolution, and full warranties may require mediation and/or arbitration as a first step toward settling disputes. In addition, the federal government has the authority to take injunctive action against a supplier or warrantor who fails to meet the requirements of the Act.
Finally, consumers may seek redress in the courts for alleged violations of the Magnuson-Moss Act.
Limitations of the Magnuson-Moss Act
The *Magnuson-Moss Warranty Act does not invalidate or restrict any right or remedy of any consumer under any other federal law, nor does the Act supersede the Federal Trade Commission Act as it pertains to antitrust actions.
The Act does not invalidate or restrict any right or remedy of any consumer under state law. The Act is not the dominant regulation of consumer product warranties, and while it prescribes certain disclosures and restricts certain limitations on warranties, it leaves other warranty law untouched. Richardson v. Palm Harbor Homes, Inc., 254 F.3d 1321, 45 U.C.C. Rep. Serv. 2d 56 (11th Cir. 2001).
Although the Act covers warranties on repair or replacement parts in consumer products, warranties on services for repairs are not covered.
The federal minimum standards for full warranties are waived if the warrantor can show that the problem associated with a warranted consumer product was caused by damage while in the possession of the consumer, or by unreasonable use, including a failure to provide reasonable and necessary maintenance.
