Passed in 1975, the Magnuson-Moss Warranty Act (“MMWA”) requires, among other things, manufacturers and sellers of consumer products to provide consumers with detailed warranty coverage information. Often, original equipment manufacturers (OEMs) and automotive dealers must comply with the MMWA. The MMWA broadly defines “written warranties” as (1) “any written affirmation of fact or written promise made” by a supplier to a buyer relating to the sale of a consumer product and the product’s material or workmanship and “affirms or promises that such material or workmanship is defect free or will meet a specified level of performance over a specified period of time” or (2) “any undertaking in writing in connection with the sale” by a supplier of a consumer product to refund, repair, replace, or take other remedial action with respect to such product in the event that such product fails to meet the specifications set forth in the undertaking, which “becomes part of the basis of the bargain.” As recent court decisions have held, this definition can extend even to written advertisements. A broad definition coupled with increasingly liberal courtroom interpretations exposes dealers and OEMs to significant risk of litigation.
Advertising and Infotainment
With increasing frequency, consumers are prioritizing technology when it comes to automotive purchases. This has led to an emphasis on infotainment systems. An estimated 30 percent of car buyers listed entertainment systems as very important to their purchasing decision. Consequently, consumers are more likely to rely on the statements of dealers and OEMs, necessitating caution around advertising. Advertising can be construed as a written warranty, and some court cases have already begun to blur the line.
In Kelley v. Microsoft Corporation, a Washington court agreed with part of the plaintiffs’ claims. The court determined that a “Windows Vista Capable” sticker on Microsoft’s personal computers warranted a “specified level of performance,” satisfying the first prong of their MMWA violation claim. However, the sticker did not satisfy the second prong as it did not warrant this specified level of performance “over a specified period of time.” Thus, the court ruled in favor of Microsoft. Similarly, in Forcellati v. Hyland’s, Inc., a California court found that without warranting a specified level of performance over a specified period of time, a company’s claims that its products were “effective” and “fast-acting” did not constitute an express warranty, because it was not a guarantee that the product would be free of flaws.
However, a California court more recently found an express warranty in advertising. In Reid v. GMC Skin Care USA, a skincare company’s promise of firmer, more hydrated and elastic skin within 28 days constituted a written warranty. Thus, such promise in this case satisfied the MMWA’s temporal prong that proved fatal to Kelley. Similarly, a Massachusetts district court held for the plaintiffs in Rottner v. AVG Technologies USA, Inc. That court found that since the company declared its software’s functionality each time the software was run, it formed an express warranty that Plaintiffs could reasonably rely on.
Competition is stiff and technology continues to grow in importance. In an attempt to stand out from the crowd, some businesses may embark on aggressive advertising campaigns. In order to mitigate exposure to risk, please consider the following:
- Proceed with caution. Always consider the consequences of your actions, or the tried and true platitude: “Think before you speak.”
- Keep statements general in scope.
- Be open about your limitations (even if it’s in fine print).
This article was written by Lauren Potocsky while Lauren was a summer associate at Varnum in 2016.