Federal Trade Commission Warns Console Companies About Warranty Policies

The Federal Trade Commission announced that it has sent out warnings to six unnamed companies, some of which are creators of "video gaming systems," regarding the companies' product warranties.

According to the press release that was made available by the FTC through the government organization's site, the warning letters that were sent to these six companies had to do with restrictions that were being put on warranties that demanded customers user certain service providers or parts to keep the warranties intact. These letters were said to be distributed to "six major companies that market and sell automobiles, cellular devices, and video gaming systems in the United States."

"The letters warn that FTC staff has concerns about the companies' statements that consumers must use specified parts or service providers to keep their warranties intact. Unless warrantors provide the parts or services for free or receive a waiver from the FTC, such statements generally are prohibited by the Magnuson-Moss Warranty Act, a law that governs consumer product warranties. Similarly, such statements may be deceptive under the FTC Act."

The Magnuson-Moss Warranty Act that the FTC mentioned above deals with warranties that companies put on their products. Though it's important to note that the FTC release didn't explicitly name console creators in particular such as Microsoft, Sony, or Nintendo in the announcement, a couple of examples were provided to show some of the concerning company statements regarding their warranties.

• The use of [company name] parts is required to keep your . . . manufacturer's warranties and any extended warranties intact.
• This warranty shall not apply if this product . . . is used with products not sold or licensed by [company name].
• This warranty does not apply if this product . . . has had the warranty seal on the [product] altered, defaced, or removed.

"Provisions that tie warranty coverage to the use of particular products or services harm both consumers who pay more for them as well as the small businesses who offer competing products and services," said Thomas B. Pahl, Acting Director of the FTC's Bureau of Consumer Protection.

The FTC also asked the unnamed companies that received the letters to "review [their] promotional and warranty materials to ensure that such materials do not state or imply that warranty coverage is conditioned on the use of specific parts of services." Within the next 30 days, the FTC will review these companies' warranty details via the businesses' websites, and if no corrections have been made, the lack of changes may result in legal action.