Request for Comment Concerning Interpretations of the Magnuson-Moss Warranty Act; Rule Governing Disclosure of Written Consumer Product Warranty Terms and Conditions; Rule Governing Pre-Sale Availability of Written Warranty Terms; Rule Governing Informal Dispute Settlement Procedures; and Guides for the Advertising of Warranties and Guarantees, 52596-52599 [2011-21527]
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Federal Register / Vol. 76, No. 163 / Tuesday, August 23, 2011 / Proposed Rules
Germany, has adopted and requires
compliance with the Transport Canada AD.
Issued in Fort Worth, Texas, on June 3,
2011.
Kim Smith,
Manager, Rotorcraft Directorate, Aircraft
Certification Service.
[FR Doc. 2011–21472 Filed 8–22–11; 8:45 am]
BILLING CODE 4910–13–P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 71
Proposed Establishment of Class C
Airspace for Long Beach, CA; Public
Meetings
Federal Aviation
Administration (FAA), DOT.
ACTION: Notice of meetings.
AGENCY:
This notice announces two
fact-finding informal airspace meetings
to solicit information from airspace
users and others, concerning a proposal
to establish Class C airspace at Long
Beach, CA. The purpose of these
meetings is to provide interested parties
an opportunity to present views,
recommendations, and comments on the
proposal. All comments received during
these meetings will be considered prior
to any issuance of a notice of proposed
rulemaking.
DATES: The informal airspace meetings
will be held on October 25 and 26, 2011.
Meetings will run from 6 p.m. until
9 p.m. Comments must be received on
or before December 12, 2011.
ADDRESSES: The meetings will be held at
the Holiday Inn Long Beach Airport,
2640 N. Lakewood Blvd., Long Beach,
CA 90815, 562–597–4401.
Comments: Send comments on the
proposal, in triplicate, to: John Warner,
Operations Support Group, AJV–W2,
Western Service Area, Air Traffic
Organization, Federal Aviation
Administration, 1601 Lind Avenue,
SW., Renton, WA 98057.
FOR FURTHER INFORMATION CONTACT: Pat
Anderson (838) 537–5847 or Rick
Pfahler, (858) 537–5830, FAA Support
Managers, Southern California
TRACON, 9175 Kearny Villa Road, San
Diego, CA 92126:
SUPPLEMENTARY INFORMATION:
srobinson on DSK4SPTVN1PROD with PROPOSALS
SUMMARY:
FAA will present a briefing on the
proposed establishment of Class C
airspace at Long Beach, CA. Each
participant will be given an opportunity
to deliver comments or make a
presentation, although a time limit may
be imposed. Only comments concerning
the proposal to establish Long Beach
Class C airspace will be accepted.
(b) The meetings will be open to all
persons on a space-available basis.
There will be no admission fee or other
charge to attend and participate.
(c) Any person wishing to make a
presentation to the FAA panel will be
asked to sign in and estimate the
amount of time needed for such
presentation. This will permit the panel
to allocate an appropriate amount of
time for each presenter. These meetings
will not be adjourned until everyone on
the list has had an opportunity to
address the panel.
(d) Position papers or other handout
material relating to the substance of
these meetings will be accepted.
Participants wishing to submit handout
material should present an original and
two copies (3 copies total) to the
presiding officer. There should be
additional copies of each handout
available for other attendees.
(e) These meetings will not be
formally recorded. However, a summary
of comments made at the meetings will
be filed in the docket.
Agenda for the Meetings
—Sign-in.
—Presentation of meeting procedures.
—FAA briefing on the proposed
establishment of the Class C Airspace
Area.
—Solicitation of public comments.
—Closing comments.
Issued in Washington, DC, on August 16,
2011.
Gary A. Norek,
Acting Manager, Airspace, Regulations and
ATC Procedures Group.
[FR Doc. 2011–21424 Filed 8–22–11; 8:45 am]
BILLING CODE 4910–13–P
Meeting Procedures
(a) Doors open 30 minutes prior to the
beginning of each meeting. The
meetings will be informal in nature and
will be conducted by one or more
representatives of the FAA Western
Service Area. A representative from the
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FEDERAL TRADE COMMISSION
16 CFR Parts 239, 700, 701, 702 and
703
Request for Comment Concerning
Interpretations of the Magnuson-Moss
Warranty Act; Rule Governing
Disclosure of Written Consumer
Product Warranty Terms and
Conditions; Rule Governing Pre-Sale
Availability of Written Warranty Terms;
Rule Governing Informal Dispute
Settlement Procedures; and Guides for
the Advertising of Warranties and
Guarantees
Federal Trade Commission.
Request for public comment.
AGENCY:
ACTION:
As part of its systematic
review of all Federal Trade Commission
(‘‘AFTC’’ or ‘‘Commission’’) rules and
guides, the FTC seeks public comment
on a set of warranty-related
Interpretations, Rules and Guides: its
Interpretations of the Magnuson-Moss
Warranty Act (‘‘Interpretations’’ or
‘‘Rule 700’’); its Rule Governing
Disclosure of Written Consumer Product
Warranty Terms and Conditions (‘‘Rule
701’’); its Rule Governing Pre-Sale
Availability of Written Warranty Terms
(‘‘Rule 702’’); its Rule Governing
Informal Dispute Settlement Procedures
(‘‘Rule 703’’); and its Guides for the
Advertising of Warranties and
Guarantees (‘‘Guides’’). The
Commission requests public comment
on the overall costs, benefits, necessity
and regulatory and economic impact of
these Interpretations, Rules and Guides.
DATES: Written comments must be
received on or before October 24, 2011.
ADDRESSES: Interested parties may file a
comment online or on paper by
following the instructions in the
Request for Comment portion of the
SUPPLEMENTARY INFORMATION section
below. Write ‘‘Magnuson-Moss
Warranty Act Rule Review, 16 CFR Part
700, P114406,’’ on your comment, and
file your comment online at https://
ftcpublic.commentworks.com/ftc/
warrantyrulesanprm by following the
instructions on the Web-based form. If
you prefer to file your comment on
paper, mail or deliver your comment to
the following address: Federal Trade
Commission, Office of the Secretary,
Room H–113 (Annex G), 600
Pennsylvania Avenue, NW.,
Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT:
Svetlana S. Gans, Attorney, Division of
Marketing Practices, Bureau of
Consumer Protection, Federal Trade
Commission, H–286, 600 Pennsylvania
SUMMARY:
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Federal Register / Vol. 76, No. 163 / Tuesday, August 23, 2011 / Proposed Rules
Avenue, NW., Washington, DC 20580,
(202) 326–3708.
SUPPLEMENTARY INFORMATION:
I. Background
A. 16 CFR 700: Interpretations of the
Magnuson-Moss Warranty Act
The Magnuson-Moss Warranty Act
(‘‘Act’’), 15 U.S.C. 2301–2312, which
governs written warranties on consumer
products, was signed into law on
January 4, 1975. After the Act was
passed, the Commission received many
questions concerning the Act’s
requirements. In responding to these
inquiries, the Commission initially
published, on June 18, 1975, a policy
statement in the Federal Register (40 FR
25721) providing interim guidance
during the initial implementation of the
Act. As the Commission continued to
receive questions and requests for
advisory opinions, however, it
determined that more comprehensive
guidance was appropriate. Therefore, on
July 13, 1977, the Commission
published in the Federal Register (42
FR 36112) its Interpretations of the
Magnuson-Moss Warranty Act to assist
warrantors and suppliers of consumer
products in complying with the Act.
These Interpretations are intended to
clarify the Act’s requirements for
manufacturers, importers, distributors
and retailers. The Interpretations
provide explanation on a number of
topics, including guidance on whether a
particular product would be considered
a ‘‘consumer product’’ under the Act;
permissible uses of warranty registration
cards under the Act; illegal tying
arrangements under Section 2302(c) of
the Act 1; and service contracts.2 These
srobinson on DSK4SPTVN1PROD with PROPOSALS
1 Section
2302(c) prohibits warrantors from
employing ‘‘tying’’ arrangements—i.e., conditioning
a written warranty’s coverage on the consumer’s
using, in connection with the warranted product, an
article or service identified by brand, trade, or
corporate name (unless the warrantor provides that
article or service to the consumer without charge).
The interpretations contained in Section 700.10
explain that ‘‘[n]o warrantor may condition the
continued validity of a warranty on the use of only
authorized repair service and/or authorized
replacement parts for non-warranty service and
maintenance.’’ 16 CFR 700.10. Section 700.10
further provides that a warrantor is prohibited from
denying liability where the warrantor cannot
demonstrate that the defect or damage was caused
by the use of unauthorized articles or services. Id.
2 The Act specifies that ‘‘[t]he term ‘service
contract’ means a contract in writing to perform,
over a fixed period of time or for a specified
duration, services relating to the maintenance or
repair (or both) of a consumer product.’’ 15 U.S.C.
2301(8). Although a service contract is similar to a
written warranty, § 700.11 distinguishes a service
contract from a warranty on the basis that a
warranty must be ‘‘part of the basis of the bargain
[to purchase a consumer product].’’ 16 CFR
700.11(a). In other words, to be a warranty, it ‘‘must
be conveyed at the time of sale of the consumer
product and the consumer must not give any
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Interpretations, like industry guides, are
administrative interpretations of the
law. Therefore, they do not have the
force of law and are not independently
enforceable. The Commission may take
action under the FTC Act, however, if
a business makes claims inconsistent
with the Interpretations. In any such
enforcement action, the Commission
must prove that the act or practice at
issue is unfair or deceptive in violation
of Section 5 of the FTC Act.
B. 16 CFR 701: Disclosure of Written
Consumer Product Warranty Terms and
Conditions
Section 2302(b)(1)(A) of the Act
authorizes the Commission to
promulgate rules regarding the
disclosure of written warranty terms.
Accordingly, on December 31, 1975, the
Commission published in the Federal
Register (40 FR 60188) its Rule
Governing Disclosure of Written
Consumer Product Warranty Terms and
Conditions. Rule 701 establishes
disclosure requirements for written
warranties on consumer products that
cost more than $15.00 (40 FR 60171–
60172). It also specifies the aspects of
warranty coverage that must be
disclosed in written warranties, as well
as the exact language that must be used
for certain disclosures regarding state
law on the duration of implied
warranties and the availability of
consequential or incidental damages.
Under Rule 701, warranty information
must be disclosed in simple, easily
understandable, and concise language in
a single document. In promulgating
Rule 701, the Commission determined
that certain material facts about product
warranties must be disclosed because
failure to do so would be deceptive or
misleading. In addition to specifying the
information that must appear in a
written warranty, Rule 701 also requires
that, if the warrantor uses a warranty
registration or owner registration card,
the warranty must disclose whether
return of the registration card is a
condition precedent to warranty
coverage.
consideration beyond the purchase price of the
consumer product in order to benefit from the
agreement.’’ Id. By contrast, a service contract is not
part of the basis of the bargain—it is often sold
separately and for consideration additional to the
price of the product itself. ‘‘An agreement which
would meet the [Act’s] definition of written
warranty * * * but for its failure to satisfy the basis
of the bargain test is a service contract.’’ 16 CFR
700.11(c). The interpretations, however, do not set
forth the specific manner in which service contract
terms and conditions should be disclosed.
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52597
C. 16 CFR Part 702: Pre-Sale Availability
of Written Warranty Terms
Section 2302(b)(1)(A) of the Act
directs the Commission to promulgate
rules requiring that the terms of any
written warranty on a consumer product
be made available to the prospective
purchaser prior to the sale of the
product. Accordingly, on December 31,
1975, the Commission published Rule
702. In promulgating Rule 702, the
Commission determined that the
availability of warranty information
prior to sale is an important tool for
consumers in making a purchasing
decision either about the product itself
or about buying a service contract for
the product. The Rule was amended on
March 12, 1987 (52 FR 7569). Among
other things, Rule 702 now requires
sellers to make warranties readily
available either by (1) Displaying the
warranty document in close proximity
to the product or (2) furnishing the
warranty document on request and
posting signs in prominent locations
advising consumers that warranties are
available. The Rule requires warrantors
to provide materials to enable sellers to
comply with the Rule’s requirements,
and also sets out the methods by which
warranty information can be made
available prior to the sale if the product
is sold through catalogs, mail order or
door-to-door sales. Though discussed in
staff guidelines, Rule 702 currently does
not set out the methods by which
warranty information can be made
available for products sold over the
Internet.
D. 16 CFR Part 703: Informal Dispute
Settlement Procedures
Section 2310(a)(2) of the Act directs
the Commission to prescribe the
minimum standards for any informal
dispute settlement mechanism
(‘‘IDSM’’) that a warrantor, by including
a ‘‘prior resort’’ clause in its written
warranty, requires consumers to use
before they may file suit under the Act
to obtain a remedy for warranty nonperformance. Accordingly, on December
31, 1975, the Commission published
Rule 703. Rule 703 contains extensive
procedural safeguards for consumers
that an IDSM must incorporate if a
warrantor requires consumers seeking
warranty redress to use it. These
standards include, but are not limited
to, requirements concerning the IDSM’s
structure (e.g., funding, staffing and
neutrality), the qualifications of staff or
decision makers, the IDSM’s procedures
for resolving disputes, recordkeeping
and annual audits.
As noted, Rule 703 comes into play
only if the warranty includes a ‘‘prior
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Federal Register / Vol. 76, No. 163 / Tuesday, August 23, 2011 / Proposed Rules
resort requirement.’’ Though few
warrantors have such a requirement,
many state lemon laws, paralleling
Section 2310(a)(3) of the Act, prohibit
the consumer from pursuing any state
lemon law rights in court unless the
consumer first seeks a resolution of the
claim through an available IDSM. A
threshold question for many state lemon
lawsuits is whether the IDSM complies
with Rule 703 and thus whether the
consumer must use the specified IDSM
or may proceed directly to a court
action. Thus, in effect, these states
incorporate Rule 703 into their lemon
laws.
srobinson on DSK4SPTVN1PROD with PROPOSALS
E. 16 CFR Part 239: Guides for the
Advertising of Warranties and
Guarantees
The Commission first adopted its
Guides Against Deceptive Advertising of
Guarantees (later re-designated as the
‘‘Guides for the Advertising of
Warranties and Guarantees’’) on April
26, 1960 ‘‘for the use of its staff in
evaluation of the advertising of
guarantees’’ (32 FR 15541). The Guides
were subsequently published in the
Federal Register on November 8, 1967,
and were codified at 16 CFR part 239.
The Guides were revised in 1985 to
harmonize them with the Act’s
requirements (50 FR 18470, May 1, 1985
and 50 FR 20899, May 21, 1985). They
were again reviewed in 1996.
The Guides recommend that
advertisements mentioning warranties
or guarantees should contain a
disclosure that the actual warranty
document is available for consumers to
read before they buy the advertised
product. In addition, the Guides set
forth advice for using the terms
‘‘satisfaction guarantees,’’ ‘‘lifetime’’
and similar representations. Finally, the
Guides state that sellers or
manufacturers should not advertise that
a product is warranted or guaranteed
unless they promptly and fully perform
their warranty obligations. As
mentioned previously, these Guides do
not have the force of law and are not
independently enforceable, however,
the Commission may take action under
the FTC Act, if a business makes claims
inconsistent with the Guides, and the
act or practice is unfair or deceptive in
violation of Section 5 of the FTC Act.
II. Regulatory Review
The Commission reviews its rules and
guides periodically. These reviews seek
information about the costs and benefits
of the rules and guides as well as their
regulatory and economic impact. These
reviews assist the Commission in
identifying rules and guides that
warrant modification or rescission.
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Therefore, the Commission now solicits
comments on, among other things, the
economic impact of, and the continuing
need for, the Interpretations, Rules and
the Guides; their benefits to consumers;
and their burdens on firms subject to
their requirements.
III. Request for Comment
The Commission invites comment on
the Interpretations, Rules 701, 702, 703
and the Guides. In addition, the
Commission requests responses to the
following general and specific
questions.
A. General Questions for Comment
1. Is there a continuing need for
specific provisions of the
Interpretations, Rules and Guides? Why
or why not?
2. What benefits and costs have the
Interpretations, Rules and Guides had
on businesses or firms that are subject
to their requirements?
(a) What changes, if any, should be
made to the Interpretations, Rules and
Guides to minimize any burden or cost
imposed on businesses or firms subject
to their requirements?
(b) What evidence supports these
proposed changes?
(c) How would these changes affect
consumers and businesses, including
small businesses?
3. What benefits and costs have the
Interpretations, Rules and Guides had
on consumers who purchase the
warranted products affected by the Act?
(a) What changes, if any, should be
made to the Interpretations, Rules and
Guides to increase the benefits to
consumers?
(b) What evidence supports these
proposed changes?
(c) How would these changes affect
consumers and businesses, including
small businesses?
4. Do the Interpretations, Rules and
Guides overlap or conflict with other
federal, state, or local laws or
regulations? What evidence supports
these asserted conflicts? Should the
Interpretations, Rules or Guides be
changed in light of these asserted
conflicts? If so, how?
5. Provide any evidence concerning
the degree of industry compliance with
the Interpretations, Rules and Guides.
Does this evidence indicate the
Interpretations, Rules or Guides should
be modified? If so, why and how? If not,
why not?
6. Have changes in technology,
including but not limited to, the Internet
and mobile technology, or economic
conditions affected the need or purpose
for the Interpretations, Rules and
Guides? Should the Interpretations,
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Rules or Guides be changed because of
these developments? If so, how?
7. What are the effects, if any, of the
Interpretations, Rules and Guides on the
costs, profitability, competitiveness and
employment of small business entities?
B. Specific Questions for Comment
1. Should Rule 700.10, specifically, its
interpretation of the Act’s tying
prohibition contained in Section
2302(c), be revised to improve the
effectiveness of the prohibition? Why or
why not? What changes, if any, should
be considered? What evidence supports
these changes?
2. Should the Interpretations, Rules or
Guides be amended to address service
contracts? Why or why not? What
changes, if any, should be considered?
What evidence supports these changes?
3. Should Rule 702 be amended to
specifically address making warranty
documents accessible via online
commerce? Why or why not? What
changes, if any, should be considered?
What evidence supports these changes?
4. Should the informal dispute
settlement mechanism requirements of
Rule 703 be changed? Why or why not?
What changes, if any, should be made?
What evidence supports these changes?
IV. Instructions for Comment
Submissions
You can file a comment online or on
paper. For the Commission to consider
your comment, we must receive it on or
before October 24, 2011. Write
‘‘Magnuson-Moss Warranty Act Rule
Review, 16 CFR part 700, P114406,’’ on
your comment. Your comment—
including your name and your state—
will be placed on the public record of
this proceeding, including, to the extent
practicable, on the public Commission
Web site, at https://www.ftc.gov/os/
publiccomments.shtm. As a matter of
discretion, the Commission tries to
remove individual’ home contact
information from comments before
placing them on the Commission Web
site.
Because your comment will be made
public, you are solely responsible for
making sure that your comment does
not include any sensitive personal
information, like anyone’s Social
Security number, date of birth, driver’s
license number or other state
identification number or foreign country
equivalent, passport number, financial
account number, or credit or debit card
number. You are also solely responsible
for making sure that your comment does
not include any sensitive health
information, like medical records or
other individually identifiable health
information. In addition, do not include
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Federal Register / Vol. 76, No. 163 / Tuesday, August 23, 2011 / Proposed Rules
any ‘‘[t]rade secret or any commercial or
financial information which is obtained
from any person and which is privileged
or confidential,’’ as provided in Section
6(f) of the FTC Act, 15 U.S.C. 46(f), and
FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2).
In particular, do not include
competitively sensitive information
such as costs, sales statistics,
inventories, formulas, patterns, devices,
manufacturing processes or customer
names.
If you want the Commission to give
your comment confidential treatment,
you must file it in paper form, with a
request for confidential treatment, and
you have to follow the procedure
explained in FTC Rule 4.9(c), 16 CFR
4.9(c).3 Your comment will be kept
confidential only if the FTC General
Counsel, in his or her sole discretion,
grants your request in accordance with
the law and the public interest.
Postal mail addressed to the
Commission is subject to delay due to
heightened security screening. As a
result, we encourage you to submit your
comment online. To make sure that the
Commission considers your online
comment, you must file it at https://
ftcpublic.commentworks.com/ftc/
warrantyrulesanprm, by following the
instructions on the Web-based form. If
this Notice appears at https://
www.regulations.gov/#!home, you also
may file a comment through that Web
site.
If you file your comment on paper,
write ‘‘Magnuson-Moss Warranty Act
Rule Review, 16 CFR part 700,
P114406,’’ on your comment and on the
envelope, and mail or deliver it to the
following address: Federal Trade
Commission, Office of the Secretary,
Room H–113 (Annex G), 600
Pennsylvania Avenue, NW.,
Washington, DC 20580. If possible,
submit your paper comment to the
Commission by courier or overnight
service.
Visit the Commission Web site at
https://www.ftc.gov to read this Notice
and the news release describing it. The
FTC Act and other laws that the
Commission administers permit the
collection of public comments to
consider and use in this proceeding as
appropriate. The Commission will
consider all timely and responsive
public comments that it receives on or
before October 24, 2011. You can find
more information, including routine
uses permitted by the Privacy Act, in
3 In particular, the written request for confidential
treatment that accompanies the comment must
include the factual and legal basis for the request,
and must identify the specific portions of the
comment to be withheld from the public record. See
FTC Rule 4.9(c), 16 CFR 4.9(c).
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the Commission’s privacy policy, at
https://www.ftc.gov/ftc/privacy.shtm.
By direction of the Commission.
Richard C. Donohue,
Acting Secretary.
[FR Doc. 2011–21527 Filed 8–22–11; 8:45 am]
BILLING CODE 6750–01–P
DEPARTMENT OF HOMELAND
SECURITY
Coast Guard
33 CFR Part 110
[USCG–2011–0231]
RIN 1625–AA01
Anchorage Regulations; Wells, ME
Coast Guard, DHS.
Notice of proposed rulemaking.
AGENCY:
ACTION:
The Coast Guard proposes to
establish three special anchorage areas
in Wells Harbor, Wells, Maine. This
proposed action is necessary to facilitate
safe navigation in that area and provide
safe and secure anchorages for vessels
not more than 20 meters in length. This
action is intended to increase the safety
of life and property in Wells Harbor,
improve the safety of anchored vessels,
and provide for the overall safe and
efficient flow of vessel traffic and
commerce.
SUMMARY:
Comments and related material
must be received by the Coast Guard on
or before October 7, 2011. Requests for
public meetings must be received by the
Coast Guard on or before September 13,
2011.
ADDRESSES: You may submit comments
identified by docket number USCG–
2011–0231 using any one of the
following methods:
(1) Federal eRulemaking Portal:
https://www.regulations.gov.
(2) Fax: 202–493–2251.
(3) Mail: Docket Management Facility
(M–30), U.S. Department of
Transportation, West Building Ground
Floor, Room W12–140, 1200 New Jersey
Avenue, SE., Washington, DC 20590–
0001.
(4) Hand delivery: Same as mail
address above, between 9 a.m. and
5 p.m., Monday through Friday, except
Federal holidays. The telephone number
is 202–366–9329.
To avoid duplication, please use only
one of these four methods. See the
‘‘Public Participation and Request for
Comments’’ portion of the
SUPPLEMENTARY INFORMATION section
below for instructions on submitting
comments.
DATES:
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52599
If
you have questions on this proposed
rule, call or e-mail Mr. John J. Mauro,
Waterways Management Branch, First
Coast Guard District; telephone 617–
223–8355, e-mail
John.J.Mauro@uscg.mil. If you have
questions on viewing or submitting
material to the docket, call Renee V.
Wright, Program Manager, Docket
Operations, telephone 202–366–9826.
SUPPLEMENTARY INFORMATION:
FOR FURTHER INFORMATION CONTACT:
Public Participation and Request for
Comments
We encourage you to participate in
this rulemaking by submitting
comments and related materials. All
comments received will be posted
without change to https://
www.regulations.gov and will include
any personal information you have
provided.
Submitting Comments
If you submit a comment, please
include the docket number for this
rulemaking (USCG–2010–0231),
indicate the specific section of this
document to which each comment
applies, and provide a reason for each
suggestion or recommendation. You
may submit your comments and
material online (via https://
www.regulations.gov) or by fax, mail, or
hand delivery, but please use only one
of these means. If you submit a
comment online via https://
www.regulations.gov, it will be
considered received by the Coast Guard
when you successfully transmit the
comment. If you fax, hand deliver, or
mail your comment, it will be
considered as having been received by
the Coast Guard when it is received at
the Docket Management Facility. We
recommend that you include your name
and a mailing address, an e-mail
address, or a telephone number in the
body of your document so that we can
contact you if we have questions
regarding your submission.
To submit your comment online, go to
https://www.regulations.gov, click on the
‘‘submit a comment’’ box, which will
then become highlighted in blue. In the
‘‘Document Type’’ drop down menu
select ‘‘Proposed Rule’’ and insert
‘‘USCG–2011–0231’’ in the ‘‘Keyword’’
box. Click ‘‘Search’’ then click on the
balloon shape in the ‘‘Actions’’ column.
If you submit your comments by mail or
hand delivery, submit them in an
unbound format, no larger than 81⁄2 by
11 inches, suitable for copying and
electronic filing. If you submit
comments by mail and would like to
know that they reached the Facility,
please enclose a stamped, self-addressed
E:\FR\FM\23AUP1.SGM
23AUP1
]]>Agencies
[Federal Register Volume 76, Number 163 (Tuesday, August 23, 2011)]
[Proposed Rules]
[Pages 52596-52599]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-21527]
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FEDERAL TRADE COMMISSION
16 CFR Parts 239, 700, 701, 702 and 703
Request for Comment Concerning Interpretations of the Magnuson-
Moss Warranty Act; Rule Governing Disclosure of Written Consumer
Product Warranty Terms and Conditions; Rule Governing Pre-Sale
Availability of Written Warranty Terms; Rule Governing Informal Dispute
Settlement Procedures; and Guides for the Advertising of Warranties and
Guarantees
AGENCY: Federal Trade Commission.
ACTION: Request for public comment.
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SUMMARY: As part of its systematic review of all Federal Trade
Commission (``AFTC'' or ``Commission'') rules and guides, the FTC seeks
public comment on a set of warranty-related Interpretations, Rules and
Guides: its Interpretations of the Magnuson-Moss Warranty Act
(``Interpretations'' or ``Rule 700''); its Rule Governing Disclosure of
Written Consumer Product Warranty Terms and Conditions (``Rule 701'');
its Rule Governing Pre-Sale Availability of Written Warranty Terms
(``Rule 702''); its Rule Governing Informal Dispute Settlement
Procedures (``Rule 703''); and its Guides for the Advertising of
Warranties and Guarantees (``Guides''). The Commission requests public
comment on the overall costs, benefits, necessity and regulatory and
economic impact of these Interpretations, Rules and Guides.
DATES: Written comments must be received on or before October 24, 2011.
ADDRESSES: Interested parties may file a comment online or on paper by
following the instructions in the Request for Comment portion of the
SUPPLEMENTARY INFORMATION section below. Write ``Magnuson-Moss Warranty
Act Rule Review, 16 CFR Part 700, P114406,'' on your comment, and file
your comment online at https://ftcpublic.commentworks.com/ftc/warrantyrulesanprm by following the instructions on the Web-based form.
If you prefer to file your comment on paper, mail or deliver your
comment to the following address: Federal Trade Commission, Office of
the Secretary, Room H-113 (Annex G), 600 Pennsylvania Avenue, NW.,
Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT: Svetlana S. Gans, Attorney, Division
of Marketing Practices, Bureau of Consumer Protection, Federal Trade
Commission, H-286, 600 Pennsylvania
[[Page 52597]]
Avenue, NW., Washington, DC 20580, (202) 326-3708.
SUPPLEMENTARY INFORMATION:
I. Background
A. 16 CFR 700: Interpretations of the Magnuson-Moss Warranty Act
The Magnuson-Moss Warranty Act (``Act''), 15 U.S.C. 2301-2312,
which governs written warranties on consumer products, was signed into
law on January 4, 1975. After the Act was passed, the Commission
received many questions concerning the Act's requirements. In
responding to these inquiries, the Commission initially published, on
June 18, 1975, a policy statement in the Federal Register (40 FR 25721)
providing interim guidance during the initial implementation of the
Act. As the Commission continued to receive questions and requests for
advisory opinions, however, it determined that more comprehensive
guidance was appropriate. Therefore, on July 13, 1977, the Commission
published in the Federal Register (42 FR 36112) its Interpretations of
the Magnuson-Moss Warranty Act to assist warrantors and suppliers of
consumer products in complying with the Act.
These Interpretations are intended to clarify the Act's
requirements for manufacturers, importers, distributors and retailers.
The Interpretations provide explanation on a number of topics,
including guidance on whether a particular product would be considered
a ``consumer product'' under the Act; permissible uses of warranty
registration cards under the Act; illegal tying arrangements under
Section 2302(c) of the Act \1\; and service contracts.\2\ These
Interpretations, like industry guides, are administrative
interpretations of the law. Therefore, they do not have the force of
law and are not independently enforceable. The Commission may take
action under the FTC Act, however, if a business makes claims
inconsistent with the Interpretations. In any such enforcement action,
the Commission must prove that the act or practice at issue is unfair
or deceptive in violation of Section 5 of the FTC Act.
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\1\ Section 2302(c) prohibits warrantors from employing
``tying'' arrangements--i.e., conditioning a written warranty's
coverage on the consumer's using, in connection with the warranted
product, an article or service identified by brand, trade, or
corporate name (unless the warrantor provides that article or
service to the consumer without charge). The interpretations
contained in Section 700.10 explain that ``[n]o warrantor may
condition the continued validity of a warranty on the use of only
authorized repair service and/or authorized replacement parts for
non-warranty service and maintenance.'' 16 CFR 700.10. Section
700.10 further provides that a warrantor is prohibited from denying
liability where the warrantor cannot demonstrate that the defect or
damage was caused by the use of unauthorized articles or services.
Id.
\2\ The Act specifies that ``[t]he term `service contract' means
a contract in writing to perform, over a fixed period of time or for
a specified duration, services relating to the maintenance or repair
(or both) of a consumer product.'' 15 U.S.C. 2301(8). Although a
service contract is similar to a written warranty, Sec. 700.11
distinguishes a service contract from a warranty on the basis that a
warranty must be ``part of the basis of the bargain [to purchase a
consumer product].'' 16 CFR 700.11(a). In other words, to be a
warranty, it ``must be conveyed at the time of sale of the consumer
product and the consumer must not give any consideration beyond the
purchase price of the consumer product in order to benefit from the
agreement.'' Id. By contrast, a service contract is not part of the
basis of the bargain--it is often sold separately and for
consideration additional to the price of the product itself. ``An
agreement which would meet the [Act's] definition of written
warranty * * * but for its failure to satisfy the basis of the
bargain test is a service contract.'' 16 CFR 700.11(c). The
interpretations, however, do not set forth the specific manner in
which service contract terms and conditions should be disclosed.
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B. 16 CFR 701: Disclosure of Written Consumer Product Warranty Terms
and Conditions
Section 2302(b)(1)(A) of the Act authorizes the Commission to
promulgate rules regarding the disclosure of written warranty terms.
Accordingly, on December 31, 1975, the Commission published in the
Federal Register (40 FR 60188) its Rule Governing Disclosure of Written
Consumer Product Warranty Terms and Conditions. Rule 701 establishes
disclosure requirements for written warranties on consumer products
that cost more than $15.00 (40 FR 60171-60172). It also specifies the
aspects of warranty coverage that must be disclosed in written
warranties, as well as the exact language that must be used for certain
disclosures regarding state law on the duration of implied warranties
and the availability of consequential or incidental damages. Under Rule
701, warranty information must be disclosed in simple, easily
understandable, and concise language in a single document. In
promulgating Rule 701, the Commission determined that certain material
facts about product warranties must be disclosed because failure to do
so would be deceptive or misleading. In addition to specifying the
information that must appear in a written warranty, Rule 701 also
requires that, if the warrantor uses a warranty registration or owner
registration card, the warranty must disclose whether return of the
registration card is a condition precedent to warranty coverage.
C. 16 CFR Part 702: Pre-Sale Availability of Written Warranty Terms
Section 2302(b)(1)(A) of the Act directs the Commission to
promulgate rules requiring that the terms of any written warranty on a
consumer product be made available to the prospective purchaser prior
to the sale of the product. Accordingly, on December 31, 1975, the
Commission published Rule 702. In promulgating Rule 702, the Commission
determined that the availability of warranty information prior to sale
is an important tool for consumers in making a purchasing decision
either about the product itself or about buying a service contract for
the product. The Rule was amended on March 12, 1987 (52 FR 7569). Among
other things, Rule 702 now requires sellers to make warranties readily
available either by (1) Displaying the warranty document in close
proximity to the product or (2) furnishing the warranty document on
request and posting signs in prominent locations advising consumers
that warranties are available. The Rule requires warrantors to provide
materials to enable sellers to comply with the Rule's requirements, and
also sets out the methods by which warranty information can be made
available prior to the sale if the product is sold through catalogs,
mail order or door-to-door sales. Though discussed in staff guidelines,
Rule 702 currently does not set out the methods by which warranty
information can be made available for products sold over the Internet.
D. 16 CFR Part 703: Informal Dispute Settlement Procedures
Section 2310(a)(2) of the Act directs the Commission to prescribe
the minimum standards for any informal dispute settlement mechanism
(``IDSM'') that a warrantor, by including a ``prior resort'' clause in
its written warranty, requires consumers to use before they may file
suit under the Act to obtain a remedy for warranty non-performance.
Accordingly, on December 31, 1975, the Commission published Rule 703.
Rule 703 contains extensive procedural safeguards for consumers that an
IDSM must incorporate if a warrantor requires consumers seeking
warranty redress to use it. These standards include, but are not
limited to, requirements concerning the IDSM's structure (e.g.,
funding, staffing and neutrality), the qualifications of staff or
decision makers, the IDSM's procedures for resolving disputes,
recordkeeping and annual audits.
As noted, Rule 703 comes into play only if the warranty includes a
``prior
[[Page 52598]]
resort requirement.'' Though few warrantors have such a requirement,
many state lemon laws, paralleling Section 2310(a)(3) of the Act,
prohibit the consumer from pursuing any state lemon law rights in court
unless the consumer first seeks a resolution of the claim through an
available IDSM. A threshold question for many state lemon lawsuits is
whether the IDSM complies with Rule 703 and thus whether the consumer
must use the specified IDSM or may proceed directly to a court action.
Thus, in effect, these states incorporate Rule 703 into their lemon
laws.
E. 16 CFR Part 239: Guides for the Advertising of Warranties and
Guarantees
The Commission first adopted its Guides Against Deceptive
Advertising of Guarantees (later re-designated as the ``Guides for the
Advertising of Warranties and Guarantees'') on April 26, 1960 ``for the
use of its staff in evaluation of the advertising of guarantees'' (32
FR 15541). The Guides were subsequently published in the Federal
Register on November 8, 1967, and were codified at 16 CFR part 239. The
Guides were revised in 1985 to harmonize them with the Act's
requirements (50 FR 18470, May 1, 1985 and 50 FR 20899, May 21, 1985).
They were again reviewed in 1996.
The Guides recommend that advertisements mentioning warranties or
guarantees should contain a disclosure that the actual warranty
document is available for consumers to read before they buy the
advertised product. In addition, the Guides set forth advice for using
the terms ``satisfaction guarantees,'' ``lifetime'' and similar
representations. Finally, the Guides state that sellers or
manufacturers should not advertise that a product is warranted or
guaranteed unless they promptly and fully perform their warranty
obligations. As mentioned previously, these Guides do not have the
force of law and are not independently enforceable, however, the
Commission may take action under the FTC Act, if a business makes
claims inconsistent with the Guides, and the act or practice is unfair
or deceptive in violation of Section 5 of the FTC Act.
II. Regulatory Review
The Commission reviews its rules and guides periodically. These
reviews seek information about the costs and benefits of the rules and
guides as well as their regulatory and economic impact. These reviews
assist the Commission in identifying rules and guides that warrant
modification or rescission. Therefore, the Commission now solicits
comments on, among other things, the economic impact of, and the
continuing need for, the Interpretations, Rules and the Guides; their
benefits to consumers; and their burdens on firms subject to their
requirements.
III. Request for Comment
The Commission invites comment on the Interpretations, Rules 701,
702, 703 and the Guides. In addition, the Commission requests responses
to the following general and specific questions.
A. General Questions for Comment
1. Is there a continuing need for specific provisions of the
Interpretations, Rules and Guides? Why or why not?
2. What benefits and costs have the Interpretations, Rules and
Guides had on businesses or firms that are subject to their
requirements?
(a) What changes, if any, should be made to the Interpretations,
Rules and Guides to minimize any burden or cost imposed on businesses
or firms subject to their requirements?
(b) What evidence supports these proposed changes?
(c) How would these changes affect consumers and businesses,
including small businesses?
3. What benefits and costs have the Interpretations, Rules and
Guides had on consumers who purchase the warranted products affected by
the Act?
(a) What changes, if any, should be made to the Interpretations,
Rules and Guides to increase the benefits to consumers?
(b) What evidence supports these proposed changes?
(c) How would these changes affect consumers and businesses,
including small businesses?
4. Do the Interpretations, Rules and Guides overlap or conflict
with other federal, state, or local laws or regulations? What evidence
supports these asserted conflicts? Should the Interpretations, Rules or
Guides be changed in light of these asserted conflicts? If so, how?
5. Provide any evidence concerning the degree of industry
compliance with the Interpretations, Rules and Guides. Does this
evidence indicate the Interpretations, Rules or Guides should be
modified? If so, why and how? If not, why not?
6. Have changes in technology, including but not limited to, the
Internet and mobile technology, or economic conditions affected the
need or purpose for the Interpretations, Rules and Guides? Should the
Interpretations, Rules or Guides be changed because of these
developments? If so, how?
7. What are the effects, if any, of the Interpretations, Rules and
Guides on the costs, profitability, competitiveness and employment of
small business entities?
B. Specific Questions for Comment
1. Should Rule 700.10, specifically, its interpretation of the
Act's tying prohibition contained in Section 2302(c), be revised to
improve the effectiveness of the prohibition? Why or why not? What
changes, if any, should be considered? What evidence supports these
changes?
2. Should the Interpretations, Rules or Guides be amended to
address service contracts? Why or why not? What changes, if any, should
be considered? What evidence supports these changes?
3. Should Rule 702 be amended to specifically address making
warranty documents accessible via online commerce? Why or why not? What
changes, if any, should be considered? What evidence supports these
changes?
4. Should the informal dispute settlement mechanism requirements of
Rule 703 be changed? Why or why not? What changes, if any, should be
made? What evidence supports these changes?
IV. Instructions for Comment Submissions
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before October 24,
2011. Write ``Magnuson-Moss Warranty Act Rule Review, 16 CFR part 700,
P114406,'' on your comment. Your comment--including your name and your
state--will be placed on the public record of this proceeding,
including, to the extent practicable, on the public Commission Web
site, at https://www.ftc.gov/os/publiccomments.shtm. As a matter of
discretion, the Commission tries to remove individual' home contact
information from comments before placing them on the Commission Web
site.
Because your comment will be made public, you are solely
responsible for making sure that your comment does not include any
sensitive personal information, like anyone's Social Security number,
date of birth, driver's license number or other state identification
number or foreign country equivalent, passport number, financial
account number, or credit or debit card number. You are also solely
responsible for making sure that your comment does not include any
sensitive health information, like medical records or other
individually identifiable health information. In addition, do not
include
[[Page 52599]]
any ``[t]rade secret or any commercial or financial information which
is obtained from any person and which is privileged or confidential,''
as provided in Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC
Rule 4.10(a)(2), 16 CFR 4.10(a)(2). In particular, do not include
competitively sensitive information such as costs, sales statistics,
inventories, formulas, patterns, devices, manufacturing processes or
customer names.
If you want the Commission to give your comment confidential
treatment, you must file it in paper form, with a request for
confidential treatment, and you have to follow the procedure explained
in FTC Rule 4.9(c), 16 CFR 4.9(c).\3\ Your comment will be kept
confidential only if the FTC General Counsel, in his or her sole
discretion, grants your request in accordance with the law and the
public interest.
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\3\ In particular, the written request for confidential
treatment that accompanies the comment must include the factual and
legal basis for the request, and must identify the specific portions
of the comment to be withheld from the public record. See FTC Rule
4.9(c), 16 CFR 4.9(c).
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Postal mail addressed to the Commission is subject to delay due to
heightened security screening. As a result, we encourage you to submit
your comment online. To make sure that the Commission considers your
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/warrantyrulesanprm, by following the instructions on the Web-based
form. If this Notice appears at https://www.regulations.gov/#!home, you
also may file a comment through that Web site.
If you file your comment on paper, write ``Magnuson-Moss Warranty
Act Rule Review, 16 CFR part 700, P114406,'' on your comment and on the
envelope, and mail or deliver it to the following address: Federal
Trade Commission, Office of the Secretary, Room H-113 (Annex G), 600
Pennsylvania Avenue, NW., Washington, DC 20580. If possible, submit
your paper comment to the Commission by courier or overnight service.
Visit the Commission Web site at https://www.ftc.gov to read this
Notice and the news release describing it. The FTC Act and other laws
that the Commission administers permit the collection of public
comments to consider and use in this proceeding as appropriate. The
Commission will consider all timely and responsive public comments that
it receives on or before October 24, 2011. You can find more
information, including routine uses permitted by the Privacy Act, in
the Commission's privacy policy, at https://www.ftc.gov/ftc/privacy.shtm.
By direction of the Commission.
Richard C. Donohue,
Acting Secretary.
[FR Doc. 2011-21527 Filed 8-22-11; 8:45 am]
BILLING CODE 6750-01-P
