Rule Governing Disclosure of Written Consumer Product Warranty Terms and Conditions; Rule Governing Pre-Sale Availability of Written Warranty Terms, 32680-32686 [2016-12030]
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Federal Register / Vol. 81, No. 100 / Tuesday, May 24, 2016 / Proposed Rules
The Proposal
The FAA is proposing an amendment
to Title 14 Code of Federal Regulations
(14 CFR) Part 71 by establishing Class E
airspace extending upward from 700
feet above the surface within a 7-mile
radius of Park River Airport—WC
Skjerven Field, Park River, ND, to
accommodate new standard instrument
approach procedures. Controlled
airspace is needed for the safety and
management of IFR operations at the
airport.
Class E airspace designations are
published in paragraph 6005 of FAA
Order 7400.9Z, dated August 6, 2015,
and effective September 15, 2015, which
is incorporated by reference in 14 CFR
71.1. The Class E airspace designations
listed in this document will be
published subsequently in the Order.
Regulatory Notices and Analyses
The FAA has determined that this
regulation only involves an established
body of technical regulations for which
frequent and routine amendments are
necessary to keep them operationally
current, is non-controversial and
unlikely to result in adverse or negative
comments. It, therefore: (1) Is not a
‘‘significant regulatory action’’ under
Executive Order 12866; (2) is not a
‘‘significant rule’’ under DOT
Regulatory Policies and Procedures (44
FR 11034; February 26, 1979); and (3)
does not warrant preparation of a
regulatory evaluation as the anticipated
impact is so minimal. Since this is a
routine matter that will only affect air
traffic procedures and air navigation, it
is certified that this rule, when
promulgated, would not have a
significant economic impact on a
substantial number of small entities
under the criteria of the Regulatory
Flexibility Act.
§ 71.1
[Amended]
2. The incorporation by reference in
14 CFR 71.1 of FAA Order 7400.9Z,
Airspace Designations and Reporting
Points, dated August 6, 2015, and
effective September 15, 2015, is
amended as follows:
■
Paragraph 6005 Class E Airspace Areas
Extending Upward From 700 Feet or More
Above the Surface of the Earth.
*
*
*
*
*
AGL ND E5 Park River, ND [New]
Park River Airport—WC Skjerven Field
(Lat. 48°23′39″ N., long. 097°46′51″ W.)
That airspace extending upward from 700
feet above the surface within a 7-mile radius
of Park River Airport—WC Skjerven Field.
Issued in Fort Worth, Texas, on May 10,
2016.
Robert W. Beck,
Manager, Operations Support Group, ATO
Central Service Center.
[FR Doc. 2016–11957 Filed 5–23–16; 8:45 am]
BILLING CODE 4910–13–P
FEDERAL TRADE COMMISSION
16 CFR Parts 701 and 702
RIN 3084–AB24 and AB25
Rule Governing Disclosure of Written
Consumer Product Warranty Terms
and Conditions; Rule Governing PreSale Availability of Written Warranty
Terms
Airspace, Incorporation by reference,
Navigation (air).
The Proposed Amendment
Accordingly, pursuant to the
authority delegated to me, the Federal
Aviation Administration proposes to
amend 14 CFR part 71 as follows:
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The Federal Trade
Commission (FTC or Commission)
proposes to amend the rules on
Disclosure of Written Consumer Product
Warranty Terms and Conditions
(Disclosure Rule) and Pre-Sale
Availability of Written Warranty Terms
(Pre-Sale Availability Rule) to give effect
to the E-Warranty Act, which allows for
the use of Internet Web sites to
disseminate warranty terms to
consumers in some circumstances.
DATES: Comments must be received on
or before June 17, 2016.
ADDRESSES: Interested parties may file a
comment online or on paper, by
SUMMARY:
List of Subjects in 14 CFR Part 71
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Authority: 49 U.S.C. 106(f), 106(g); 40103,
40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR,
1959–1963 Comp., p. 389.
Notice of proposed rulemaking;
request for public comment.
This proposal will be subject to an
environmental analysis in accordance
with FAA Order 1050.1F,
‘‘Environmental Impacts: Policies and
Procedures’’ prior to any FAA final
regulatory action.
17:13 May 23, 2016
1. The authority citation for 14 CFR
part 71 continues to read as follows:
■
ACTION:
Environmental Review
VerDate Sep<11>2014
PART 71—DESIGNATION OF CLASS A,
B, C, D, AND E AIRSPACE AREAS; AIR
TRAFFIC SERVICE ROUTES; AND
REPORTING POINTS
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following the instructions in the
Request for Comment part of the
SUPPLEMENTARY INFORMATION section
below. Write ‘‘Amending Warranty
Rules Pursuant to the E-Warranty Act,
Matter No. P044403’’ on your comment,
and file your comment online at https://
ftcpublic.commentworks.com/ftc//EWarrantyAmendments, by following the
instructions on the web-based form. If
you prefer to file your comment on
paper, write ‘‘Amending Warranty Rules
Pursuant to the E-Warranty Act, Matter
No. P044403’’ on your comment and on
the envelope, and mail your comment to
the following address: Federal Trade
Commission, Office of the Secretary,
600 Pennsylvania Avenue NW., Suite
CC–5610 (Annex E), Washington, DC
20580, or deliver your comment to the
following address: Federal Trade
Commission, Office of the Secretary,
Constitution Center, 400 7th Street SW.,
5th Floor, Suite 5610 (Annex E),
Washington, DC 20024.
Gary
Ivens, (202) 326–2330, Attorney,
Division of Marketing Practices, Federal
Trade Commission, 600 Pennsylvania
Ave. NW., Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT:
SUPPLEMENTARY INFORMATION:
I. Summary of the Proposed Rules
A. The Disclosure Rule
The Disclosure Rule 1 establishes
disclosure requirements for written
warranties on consumer products that
cost more than $15.00.2 In 1975, the
Commission issued the Disclosure Rule
as authorized by Congress in the
Magnuson-Moss Warranty Act 3
(MMWA).
The Disclosure Rule 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 with respect
to state law regarding the duration of
implied warranties and the availability
of consequential or incidental damages.
Under the Disclosure Rule, warranty
information must be disclosed in
simple, easily understandable, and
concise language in a single document.
Similarly, the warrantor must disclose
any limitations on the duration of
implied warranties on the face of the
warranty, as mandated by MMWA.4 In
promulgating the Disclosure Rule, the
Commission determined that certain
material facts about product warranties
1 16
CFR part 701.
FR 60171–60172 (Dec. 31, 1975).
3 15 U.S.C. 2302.
4 See 15 U.S.C. 2308(b).
2 40
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Federal Register / Vol. 81, No. 100 / Tuesday, May 24, 2016 / Proposed Rules
must be disclosed because the failure to
do so would be deceptive or misleading.
Briefly, the Commission proposes to
revise the Disclosure Rule to specify
that disclosures mandated to appear ‘‘on
the face’’ of a warranty posted on an
Internet Web site or displayed
electronically must be placed in close
proximity to the location where the text
of the warranty terms begins.
B. The Pre-Sale Availability Rule
The Pre-Sale Availability Rule 5
details the methods by which
warrantors and sellers must provide
warranty terms to consumers prior to
sale of the warranted item. The
Commission issued the Pre-Sale
Availability Rule in response to a
mandate from Congress as set forth in
the MMWA.
Briefly, the Commission proposes to
revise the Pre-Sale Availability Rule to
allow warrantors to post warranty terms
on Internet Web sites if they also
provide a non-Internet based method for
consumers to obtain the warranty terms
and satisfy certain other conditions.
As discussed more fully below, these
rule revisions are required to comply
with Congress’s passage of the EWarranty Act 6 (E-Warranty or the Act).
The Commission invites comment on
the proposed rule revisions generally
and on the specific issues outlined in
Section III of this Notice. The
Commission seeks comment on the
proposal through June 17, 2016.
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II. Background
The MMWA authorizes the
Commission to prescribe rules requiring
disclosure of warranty terms and
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.7 In 1975, the Commission
issued both the Disclosure Rule, which
establishes disclosure requirements for
written warranties, and the Pre-Sale
Availability Rule, which includes
requirements for sellers and warrantors
to make the text of any warranty on a
consumer product available to the
consumer prior to sale. Among other
things, the Pre-Sale Availability Rule
requires most 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
5 16
CFR part 702.
Act, Public Law 114–51 (Sept. 24,
6 E-Warranty
2015).
7 15 U.S.C. 2302.
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warranties are available. The Pre-Sale
Availability Rule requires warrantors to
provide materials to enable sellers to
comply with the Rule’s requirements.
The Rule also sets out how sellers
should make warranty information
available pre-sale if selling the product
at retail locations, through catalogs, mail
order, or door-to-door sales.
E-Warranty amends the MMWA to
allow, under certain circumstances, the
posting of warranties on warrantors’
Internet Web sites as an alternative
method of complying with the Pre-Sale
Availability Rule, and to permit sellers
to make warranty terms available to
consumers pre-sale via electronic means
where the warrantor has chosen the
online option.8 E-Warranty charges the
Commission with promulgating
consistent changes to the Disclosure
Rule and the Pre-Sale Availability Rule
within one year of the Act’s passage.9
III. The Commission’s Proposed Rule
Changes
The Commission proposes to modify
the Disclosure Rule and the Pre-Sale
Availability Rule to implement the EWarranty Act and effectuate its
purposes. Currently, sellers are obliged
to provide warranty terms pre-sale to
consumers through a variety of methods
such as displaying them in close
proximity to the warranted products, or
by furnishing them upon request prior
to sale and posting prominent signs to
let customers know that warranties can
be examined upon request, posting them
in a catalog in close conjunction to the
warranted product, or having them
available for consumers’ review in a
door-to-door sales presentation. The
proposed amendments will allow sellers
the additional option of using an
electronic method to make warranty
terms available to consumers at the
point of sale for warranted products
8 In a recent review of the warranty
interpretations, rules, and guides (16 CFR parts
700–703 and 239), which was completed before
enactment of the E-Warranty Act, the Commission
declined certain commenters’ requests to allow
brick-and-mortar sellers to refer consumers to
online warranty terms as a method of complying
with the Pre-Sale Availability Rule. The
Commission noted that the intent of the Rule is to
make warranty information available at the point of
sale, so for the seller simply to refer the consumer
to a Web site where the warranty could be found
would be insufficient. See 80 FR 42710, 42717 (July
20, 2015).
9 Under the E-Warranty Act, the Commission
must issue the final amended rules by September
24, 2016. The Commission determines that taking
of oral presentations from interested parties would
interfere with its ability to amend the Disclosure
Rule and the Pre-Sale Availability Rule in a timely
fashion. Accordingly, as provided by the EWarranty Act, the Commission waives the
requirement to give interested persons an
opportunity for oral presentation. See Public Law
114–51, sec. 3(b)(2).
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where the warrantor has chosen the
online method of disseminating the
warranty terms.
Warrantors currently must provide
retailers the warranty materials sellers
need to meet their requirements under
the Pre-Sale Availability Rule, such as
providing copies of the warranty,
providing warranty stickers, tags, signs,
or posters, or printing the warranty on
the product’s packaging. The
amendment does not alter the duties of
warrantors who do not choose to
employ an online method to supply
warranty terms. The E-Warranty Act
provides that warrantors who choose
the online method of disseminating
warranty terms must provide consumers
the address of the Internet Web site
where the specific product’s warranty
terms can be reviewed and also supply
a non-Internet method, such as a phone
number or mailing address, for
consumers and sellers to request the
warranty terms. If a consumer or
seller 10 makes such a request, the
warrantor must provide the warranty
terms promptly and free and of charge.
The first proposed revisions alter
§ 701.1 to add a definition of the term
‘‘manufacturer’’ at § 701.1(g) (defining
manufacturer as ‘‘any person engaged in
the business of making a consumer
product’’), add that term in the
definition of ‘‘warrantor,’’ and re-letter
the paragraphs in § 701.1 to account for
the additional definition. The
Commission proposes these revisions in
light of E-Warranty’s use of the term
‘‘manufacturer.’’
The next proposed revision adds a
new § 701.1(j)(3) to specify that, in
conjunction with warranty terms posted
on an Internet Web site or displayed
electronically, the phrase ‘‘on the face’’
means in close proximity to the location
where the warranty terms begin.
Although the Disclosure Rule does not
explicitly mention online commerce, it
applies to the sale of warranted
consumer products online. Commission
staff recently updated the .Com
Disclosures to provide additional
guidance on disclosure obligations in
10 Sellers are given the option of requesting the
warranty terms free of charge from the warrantor
because not all sellers will be equipped to employ
an electronic option in cases where the warrantor
has chosen the online method to supply warranty
terms. For example, a small seller may not have
Internet access or electronic devices to download
and display warranty terms for consumers’ review
at the point of sale. Those sellers’ duties to have
warranty terms available pre-sale, however, have
not changed under E-Warranty. The Commission
believes that requiring warrantors to supply sellers
with warranty terms upon request so that sellers
can make them available for consumers’ review at
the point of sale effectuates Congress’s desire to
ensure the continued availability of pre-sale
warranty terms.
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Federal Register / Vol. 81, No. 100 / Tuesday, May 24, 2016 / Proposed Rules
the online context. As stated in the
updated .Com Disclosures, warranties
communicated through visual text
online are no different from paper
versions and the same rules apply.11
The Commission therefore proposes to
clarify this requirement for online
disclosures.
The next proposed revision is to
§ 702.1(d) to include the manufacturer
in the definition of ‘‘warrantor.’’ The
Commission proposes this revision to
comport with E-Warranty’s use of the
term ‘‘manufacturer.’’ The next revision
adds a new § 702.1(g) to define a
‘‘manufacturer’’ (in the same manner as
the proposed revision of § 701.1(g)) as
‘‘any person engaged in the business of
making a consumer product.’’
The next proposed revisions are to
§ 702.3(a) to provide that sellers can
provide warranty terms pre-sale through
electronic means if the warrantor of the
product has chosen the online option. If
a seller uses an electronic means, that
seller must still make the warranty text
readily available for consumers’
examination prior to sale.
The proposed changes to
§ 702.3(b)(1)(i) would remove
superfluous instances of the term ‘‘and/
or’’ and ‘‘and’’ in that paragraph, as the
prefatory language already notes that the
warrantor must use one or more of the
methods described in that paragraph to
provide sellers with the prescribed
warranty materials.
The next proposed revision adds a
new § 702.3(b)(2) to reflect that, as an
alternative method of compliance with
the Pre-Sale Availability Rule, a
warrantor may refer consumers to an
accessible digital copy of the warranty
by providing to the consumer the
Internet address where the specific
product’s warranty has been posted in a
clear and conspicuous manner. To
employ this option, the warrantor,
among other duties, must supply in the
product manual, or on the product or
product packaging, the Internet address
where the consumer can review and
obtain the specific product’s warranty
terms, as well as the phone number,
postal mailing address, or other
reasonable non-Internet based means for
the consumer to request a free copy of
the warranty terms.
Proposed § 702.3(b)(2)(iv) requires the
warrantor utilizing the online option to
provide sufficient information with the
consumer product or on the Internet
Web site so that the consumer can
readily locate the specific product’s
11 See FTC, .Com Disclosures: How to Make
Effective Disclosures in Digital Advertising (2013),
at 3, fn.7, available at https://ftc.gov/os/2013/03/
130312dotcomdisclosures.pdf.
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warranty terms. The Commission
believes that this requirement comports
with Congress’s directive that online
warranties be available to consumers
‘‘in a clear and conspicuous manner.’’ 12
Similarly, if a consumer or seller
requests via phone, mail, or other
reasonable non-Internet-based means,
that the warrantor provide a hard copy
of the warranty, proposed
§ 702.3(b)(2)(ii) requires the warrantor to
provide it promptly and free of charge,
which comports with existing pre-sale
requirements for catalog and mail order
sales.
The next proposed revision alters
§ 702.3(c)(2)(i)(B) to reflect that the
mail-order or catalog seller must
provide the address of the Internet Web
site of the warrantor where the warranty
terms can be reviewed (if such Internet
Web site exists), as well as either a
phone number or address that the
consumer can use to request a free copy
of the warranty, and notes that the copy
may be provided electronically if the
product’s warrantor has used the online
option.
Finally, the next proposed revision
alters § 702.3(d)(2) to reflect that the
door-to-door seller may supply the
warranty through an electronic option if
the product’s warrantor has employed
the online method.
IV. Regulatory Flexibility Act
The Regulatory Flexibility Act 13
(RFA) requires each agency either to
provide an Initial Regulatory Flexibility
Analysis (IRFA) with a proposed rule, or
certify that the proposed rule will not
have a significant economic impact on
a substantial number of small entities.14
The FTC does not expect that the rule
revisions necessitated by E-Warranty
will have a significant economic impact
on small sellers and warrantors. As
discussed above, the proposed revisions
will relieve those warrantors who
choose the online method from
providing warranty materials to certain
sellers. Affected sellers, however,
should be able easily to obtain the
warranties and provide them to
consumers for review at the point of
sale, either by obtaining the warranties
from the warrantor’s Web site or by
requesting a hard copy from the
warrantor. Also, the proposed
amendment allows sellers of goods
whose warrantors have employed the
online method the ability to provide
pre-sale warranty terms electronically.
Thus, if the proposal is adopted, a small
seller that is in compliance with current
12 See
15 U.S.C. 2302(b)(4)(A)(i).
U.S.C. 603.
14 5 U.S.C. 605.
13 5
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law would need to take only minimal
additional action to remain compliant.
The small warrantor that does not
choose the Internet option to supply
warranty terms can remain compliant
simply by continuing with its existing
practices. The small warrantor that has
been including the entire warranty with
the warranted product and supplying
warranty materials so that sellers can
meet Pre-Sale Availability Rule
obligations will have a smaller
compliance burden under the proposal
by being able to provide the warranty
terms solely on an Internet Web site.
That small warrantor, however, will
likely incur costs to establish a phone
number, address, or other non-Internet
based method that consumers and
sellers can use to request a free hard
copy of warranty terms.
With respect to the amendments to
the Disclosure Rule, a small entity that
is in compliance with current law need
not take any different or additional
action if the proposal is adopted, as the
proposed revisions merely explain how
the ‘‘on the face of the warranty’’
requirement applies to online warranty
terms.
Accordingly, this document serves as
notice to the Small Business
Administration of the FTC’s
certification of ‘‘no effect.’’ To ensure
the accuracy of this certification,
however, the Commission requests
comment on whether the proposed rule
will have a significant impact on a
substantial number of small entities,
including specific information on the
number of entities that would be
covered by the proposed rule, the
number of these companies that are
small entities, and the average annual
burden for each entity. Although the
Commission certifies under the RFA
that the rule proposed in this notice
would not, if promulgated, have a
significant impact on a substantial
number of small entities, the
Commission has determined,
nonetheless, that it is appropriate to
publish an IRFA in order to inquire into
the impact of the proposed rule on small
entities. Therefore, the Commission has
prepared the following analysis:
A. Reasons for the Proposed Rule
Revisions
As outlined in Section II, above, the
Commission is proposing to amend the
Disclosure Rule and Pre-Sale
Availability Rule in connection with
Congress’s passage of E-Warranty. EWarranty allows, under certain
circumstances, the posting of warranties
on manufacturers’ Web sites as an
alternative method of complying with
the Pre-Sale Availability Rule, and
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Federal Register / Vol. 81, No. 100 / Tuesday, May 24, 2016 / Proposed Rules
certain sellers’ use of an electronic
method to supply pre-sale warranty
terms.
B. Statement of Objectives and Legal
Basis
The objective of the proposed
amendments is to provide warrantors an
online method of complying with the
Disclosure Rule and the Pre-Sale
Availability Rule, allow certain sellers
to use an electronic method to provide
pre-sale warranty terms to consumers,
and to define what ‘‘on the face’’ of an
online warranty means in the Disclosure
Rule. The legal authority for this NPRM
is the E-Warranty Act and the MMWA.
C. Description of Small Entities to
Which the Rules Will Apply
The small entities to which the
Disclosure Rule applies are warrantors.
The small entities to which the Pre-Sale
Availability Rule applies are warrantors
and sellers of warranted consumer
products costing more than fifteen
dollars. The Disclosure Rule and the
Pre-Sale Availability Rule currently
define a ‘‘warrantor’’ as ‘‘any supplier or
other person who gives or offers to give
a written warranty.’’ The Pre-Sale
Availability Rule defines a ‘‘seller’’ as
‘‘any person who sells or offers for sale
for purposes other than resale or use in
the ordinary course of the buyer’s
business any consumer product.’’ The
proposed changes add ‘‘manufacturers’’
to both Rules’ definitions of
‘‘warrantor.’’ Sellers include retailers,
catalog and mail order sellers, and doorto-door sellers.
In 2014, the Commission estimated
that there were 13,395 small
manufacturers (warrantors) and 452,553
small retailers (sellers) impacted by the
Rules.15
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D. Description of the Projected
Reporting, Recordkeeping, and Other
Compliance Requirements
The proposed amendments to the
Disclosure Rule do not impose any new
reporting, recordkeeping, or other
compliance requirements, because the
proposed amendments merely explain
how the existing ‘‘on the face of the
warranty’’ requirement applies to online
and electronic warranty terms.
The Pre-Sale Availability Rule
imposes disclosure obligations on
sellers and warrantors of warranted
consumer goods actually costing more
than fifteen dollars. Specifically, sellers
must make warranty terms available
prior to sale. Under the proposed
15 See 79 FR 8185 (Feb. 11, 2014), which relates
to the Pre-Sale Availability Rule, but should also
apply to the Disclosure Rule.
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revision, if the warrantor has chosen the
online option, sellers may incur
minimal additional costs if they need to
request the warranty terms from the
warrantor to provide them to
consumers, but sellers will also have
additional flexibility to make pre-sale
warranty terms available to consumers
electronically. Warrantors must provide
sellers with warranty materials for
sellers’ use at the point of sale, or, under
the proposed revision, provide the
address of the warrantor’s Internet Web
site where consumers can review and
obtain warranty terms in the product
manual or on the product or product
packaging, and the warrantor’s contact
information for the consumer to obtain
the warranty terms via a non-Internet
method.
Neither the existing Pre-Sale
Availability Rule nor the proposed
amendments require sellers or
warrantors to retain more records than
may be necessary to provide consumers
the warranty terms. The small entities
potentially covered by these proposed
amendments will include all such
entities subject to the Rules, including
suppliers, manufacturers and others
who warrant consumer goods costing
more than fifteen dollars and retailers,
catalog and mail-order sellers, and doorto-door sellers who offer the warranted
products. The professional skills
necessary for compliance with the Rules
as modified by the proposed
amendments would include (1)
warrantors’ office and administrative
support staff to receive consumers’ and
sellers’ requests for warranty terms
using a non-Internet based method and
(2) sellers’ office and administrative
support staff to request warranty terms
for pre-sale availability to consumers for
warranted goods where the warrantor
has elected only the Internet option.
The Commission invites comment on
the proposed amendments’ impact on
small sellers who might cease to receive
point-of-sale warranty materials from
those warrantors who choose to employ
the online method to supply warranty
terms.
E. Duplication, Overlap, or Conflict
With Other Federal Rules
The Commission has not identified
any other federal statutes, rules, or
policies that would duplicate, overlap,
or conflict with the proposed
amendments. The Commission invites
comment and information on this issue.
F. Significant Alternatives to the
Proposed Amendments
As noted above at footnote 8, in a
recent rule review of the Pre-Sale
Availability Rule, the Commission
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32683
declined commenters’ requests to allow
offline sellers to comply with the Rule
by advising buyers of the availability of
the warranty at a particular Web site.
The Commission noted that, because the
intent of the Rule is to make warranty
information available at the point of
sale, a seller could not comply with its
Pre-Sale Availability Rule obligations
simply by referring the consumer to a
Web site where the warranty could be
found. The proposed revisions allow
sellers to provide warranty terms
electronically, but only in cases where
the warrantor has chosen the online
option.16 The proposed revisions
comport with Congress’s desire to allow
warrantors the option of providing
warranty terms online, as long as
warrantors offer a non-Internet based
method for consumers to obtain the
warranty terms, as well as with
Congress’s mandate that the online
method not supplant the seller’s duty to
provide warranty terms at the point of
sale.
The Commission has not proposed
any specific small entity exemption,
differing timetables, or other significant
alternatives, as the proposed
amendments are narrowly tailored to
permit E-Warranty’s stated objectives of
allowing warrantors to post warranty
terms on Internet Web sites, certain
sellers to use an electronic method to
provide warranty terms pre-sale to
consumers, and the ancillary purpose of
clarifying that ‘‘on the face of the
warranty’’ in the Web site or electronic
context means ‘‘in close proximity’’ to
the location where the warranty text
begins. The Commission does not
believe a special exemption for small
entities or significant compliance
alternatives are necessary or appropriate
to minimize the compliance burden on
small entities while achieving the
intended purposes of E-Warranty.
The Commission believes its
proposed revisions will be minimally
burdensome for small businesses and
that they comply with Congress’s
mandate to allow warrantors to post
warranty terms on an Internet Web site
and certain sellers to employ a pre-sale
electronic option, while ensuring presale availability of warranty terms at the
point of sale. The Commission,
however, invites comment on regulatory
alternatives that the Commission has
not expressly considered for complying
16 FTC staff noted in an opinion letter in 2009,
however, that neither the MMWA nor its related
rules prescribe making the warranty terms available
only on paper. Letter from Allyson Himelfarb to
Thomas Hughes (February 17, 2009), available at
https://www.ftc.gov/sites/default/files/documents/
advisory_opinions/opinion-09-1/opinion0901_
0.pdf.
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mstockstill on DSK3G9T082PROD with PROPOSALS
with the proposed rule that might
reduce compliance burdens on small
entities while still achieving EWarranty’s objectives.
V. Paperwork Reduction Act
Under the Paperwork Reduction Act
of 1995 (PRA),17 Federal agencies are
generally required to seek Office of
Management and Budget (OMB)
approval for information collection
requirements prior to implementation.
Under the PRA, the Commission may
not conduct or sponsor, and,
notwithstanding any other provision of
law, a person is not required to respond
to an information collection, unless the
information displays a valid control
number assigned by OMB.
This proposal would amend 16 CFR
parts 701 and 702. The collection of
information related to the Disclosure
Rule has been previously reviewed and
approved by OMB in accordance with
the PRA and assigned OMB Control
Number 3084–0111.18 The collection of
information related to the Pre-Sale
Availability Rule has been previously
reviewed and approved by OMB in
accordance with the PRA and assigned
OMB Control Number 3084–0112.19
As explained below, the proposed
amendments only slightly modify or
add to information collection
requirements that were previously
approved by OMB. Under this proposal,
a warrantor will be permitted, but not
required, to use an online method for
supplying warranty terms. The
Commission does not believe that this
proposed rule would impose any new or
substantively revised collections of
information as defined by the PRA.
Under the most recent proposed
clearance for the Pre-Sale Availability
Rule,20 the Commission estimated the
total annual hours burden to be
2,446,610. This figure represented a
20% reduction from the 2010 estimate
based in large part on the growth of
online sales and the online posting of
warranty terms related to those sales.
The Commission estimated the hours
burden at 2,315,608 for retailers and
131,002 for manufacturers. The
Commission estimated the total annual
labor cost in 2014 to be $51,379,000
(rounded to the nearest thousand).
The Commission estimated the total
annual capital or other non-labor costs
to be de minimis, because the vast
majority of retailers and warrantors
already have developed systems to
provide the information required by the
17 44
U.S.C. 3501–3520.
18 See 78 FR 70046 (Nov. 22, 2013).
19 See 79 FR 8185 (Feb. 11, 2014).
20 See 78 FR 68446 (Nov. 14, 2013).
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Jkt 238001
Pre-Sale Availability Rule. Compliance
by retailers typically entails keeping
warranties on file, in binders or
otherwise, and posting an inexpensive
sign indicating warranty availability.
Warrantor compliance under the
proposed revisions entails providing
retailers with a copy of the warranties
included with their product or
providing with the warranted good the
address of the warrantor’s Internet Web
site where the consumer can review and
obtain such terms, along with the
contact information where the consumer
may use a non-Internet based method to
obtain a free copy of the warranty terms.
Sellers of warranted goods for which the
warrantor has chosen the online option
may, unless the warrantor provides the
seller a hard copy of the warranty terms
to make such terms, incur a slightly
increased burden because the seller will
have to ensure it provides consumers a
method of reviewing the warranty terms
at the point of sale, prior to sale. That
burden, however, should be minimal,
given that the warrantor will have to
make the warranty terms available on an
Internet Web site, and given the
proposed provision requiring the
warrantor to supply a hard copy of the
warranty terms, promptly and free of
charge, in response to a seller’s request.
The Commission believes that, in light
of the proposed amendment, the annual
capital or other non-labor costs will
continue to be de minimis.
Invitation To Comment
You can file a comment online or on
paper. For the Commission to consider
your comment, we must receive it on or
before June 17, 2016. Write ‘‘Amending
Warranty Rules Pursuant to the EWarranty Act, Matter No. P044403’’ 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 Commission Web
site, at https://www.ftc.gov/os/
publiccomments.shtm. As a matter of
discretion, the Commission tries to
remove individuals’ 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, such as 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
PO 00000
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Fmt 4702
Sfmt 4702
not include any sensitive health
information, including medical records
or other individually identifiable health
information. In addition, do not include
any ‘‘[t]rade secret or any commercial or
financial information which . . . is
privileged or confidential,’’ as discussed
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).21 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
comments online. To make sure that the
Commission considers your online
comment, you must file it at https://
ftcpublic.commentworks.com/ftc//EWarrantyAmendments 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 ‘‘Amending Warranty Rules
Pursuant to the E-Warranty Act, Matter
No. P044403’’ on your comment and on
the envelope, and mail your comment to
the following address: Federal Trade
Commission, Office of the Secretary,
600 Pennsylvania Avenue NW., Suite
CC–5610 (Annex E), Washington, DC
20580, or deliver your comment to the
following address: Federal Trade
Commission, Office of the Secretary,
Constitution Center, 400 7th Street SW.,
5th Floor, Suite 5610 (Annex E),
Washington, DC 20024. 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
21 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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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 June 17, 2016. For information on
the Commission’s privacy policy,
including routine uses permitted by the
Privacy Act, see https://www.ftc.gov/ftc/
privacy.shtm.
List of Subjects in 16 CFR Parts 701 and
702
Trade practices, Warranties.
For the reasons set forth in the
preamble, the Commission proposes to
amend 16 CFR part 701 as follows:
PART 701—DISCLOSURE OF
WRITTEN CONSUMER PRODUCT
WARRANTY TERMS AND CONDITIONS
1. The authority citation for this part
continues to read as follows:
■
Authority: 15 U.S.C. 2302 and 2309.
2. Amend § 701.1 by redesignating
paragraphs (g) through (i) as paragraphs
(h) through (j), adding new paragraph
(g), and revising redesignated paragraph
(j) to read as follows:
■
§ 701.1
Definitions.
*
*
*
*
*
(g) Manufacturer means any person
engaged in the business of making a
consumer product.
*
*
*
*
*
(j) On the face of the warranty means:
(1) Where the warranty is a single
sheet with printing on both sides of the
sheet or where the warranty is
comprised of more than one sheet, the
page on which the warranty text begins;
(2) Where the warranty is included as
part of a larger document, such as a use
and care manual, the page in such
document on which the warranty text
begins;
(3) Where the warranty is on an
Internet Web site or displayed
electronically, in close proximity to the
location where the warranty text begins.
PART 702—PRE-SALE AVAILABILITY
OF WRITTEN WARRANTY TERMS
3. The authority citation for part 702
continues to read as follows:
■
Authority: 15 U.S.C. 2302 and 2309.
4. Amend § 702.1 by revising
paragraph (d) and adding paragraph (g)
to read as follows:
mstockstill on DSK3G9T082PROD with PROPOSALS
■
§ 702.1
Definitions.
*
*
*
*
*
(d) Warrantor means any supplier,
manufacturer, or other person who gives
or offers to give a written warranty.
*
*
*
*
*
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17:13 May 23, 2016
Jkt 238001
(g) Manufacturer means any person
engaged in the business of making a
consumer product.
■ 5. Revise § 702.3 to read as follows:
§ 702.3 Pre-sale availability of written
warranty terms.
The following requirements apply to
consumer products actually costing the
consumer more than $15.00:
(a) Duties of seller. Except as provided
in paragraphs (c) and (d) of this section,
the seller of a consumer product with a
written warranty shall make a text of the
warranty readily available for
examination by the prospective buyer
by:
(1) Displaying it in close proximity to
the warranted product (including
through electronic or other means, if the
warrantor has elected the option
described in paragraph (b)(2) of this
section), or
(2) Furnishing it upon request prior to
sale (including through electronic or
other means, if the warrantor has
elected the option described in
paragraph (b)(2) of this section) and
placing signs reasonably calculated to
elicit the prospective buyer’s attention
in prominent locations in the store or
department advising such prospective
buyers of the availability of warranties
upon request.
(b) Duties of the warrantor. (1) A
warrantor who gives a written warranty
warranting to a consumer a consumer
product actually costing the consumer
more than $15.00 shall:
(i) Provide sellers with warranty
materials necessary for such sellers to
comply with the requirements set forth
in paragraph (a) of this section, by the
use of one or more by the following
means:
(A) Providing a copy of the written
warranty with every warranted
consumer product;
(B) Providing a tag, sign, sticker, label,
decal or other attachment to the
product, which contains the full text of
the written warranty;
(C) Printing on or otherwise attaching
the text of the written warranty to the
package, carton, or other container if
that package, carton or other container
is normally used for display purposes.
If the warrantor elects this option a copy
of the written warranty must also
accompany the warranted product; or
(D) Providing a notice, sign, or poster
disclosing the text of a consumer
product warranty. If the warrantor elects
this option, a copy of the written
warranty must also accompany each
warranted product.
(ii) Provide catalog, mail order, and
door-to-door sellers with copies of
written warranties necessary for such
PO 00000
Frm 00007
Fmt 4702
Sfmt 4702
32685
sellers to comply with the requirements
set forth in paragraphs (c) and (d) of this
section.
(2) As an alternative method of
compliance with paragraph (b)(1) of this
section, a warrantor may provide the
warranty terms in an accessible digital
format on the warrantor’s Internet Web
site. If the warrantor elects this option,
the warrantor must:
(i) Provide information to the
consumer that will inform the consumer
how to obtain warranty terms by
indicating, in a clear and conspicuous
manner, in the product manual or on
the product or product packaging:
(A) The Internet Web site of the
warrantor where such warranty terms
can be reviewed; and
(B) The phone number, the postal
mailing address of the warrantor, or
other reasonable non-Internet based
means for the consumer to request a
copy of the warranty terms;
(ii) Provide a hard copy of the
warranty terms promptly and free of
charge upon request by a consumer or
seller made pursuant to paragraph
(b)(2)(i)(B) of this section;
(iii) Ensure that warranty terms are
posted in a clear and conspicuous
manner and remain accessible to the
consumer on the Internet Web site of the
warrantor; and
(iv) Provide information with the
consumer product or on the Internet
Web site of the warrantor sufficient to
allow the consumer to readily identify
on such Internet Web sites the warranty
terms that apply to the specific product
purchased by the consumer.
(3) Paragraph (a)(1) of this section
shall not be applicable with respect to
statements of general policy on
emblems, seals or insignias issued by
third parties promising replacement or
refund if a consumer product is
defective, which statements contain no
representation or assurance of the
quality or performance characteristics of
the product; provided that
(i) The disclosures required by
§ 701.3(a)(1) through (9) of this part are
published by such third parties in each
issue of a publication with a general
circulation, and
(ii) Such disclosures are provided free
of charge to any consumer upon written
request.
(c) Catalog and mail order sales. (1)
For purposes of this paragraph:
(i) Catalog or mail order sales means
any offer for sale, or any solicitation for
an order for a consumer product with a
written warranty, which includes
instructions for ordering the product
which do not require a personal visit to
the seller’s establishment.
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Federal Register / Vol. 81, No. 100 / Tuesday, May 24, 2016 / Proposed Rules
(ii) Close conjunction means on the
page containing the description of the
warranted product, or on the page facing
that page.
(2) Any seller who offers for sale to
consumers consumer products with
written warranties by means of a catalog
or mail order solicitation shall:
(i) Clearly and conspicuously disclose
in such catalog or solicitation in close
conjunction to the description of
warranted product, or in an information
section of the catalog or solicitation
clearly referenced, including a page
number, in close conjunction to the
description of the warranted product,
either:
(A) The full text of the written
warranty; or
(B) The address of the Internet Web
site of the warrantor where such
warranty terms can be reviewed (if such
Internet Web site exists), as well as that
the written warranty can be obtained
free upon specific request, and the
address or phone number where such
warranty can be requested. If this option
is elected, such seller shall promptly
provide a copy of any written warranty
requested by the consumer (and may
provide such copy through electronic or
other means, if the warrantor has
elected the option described in
paragraph (b)(2) of this section).
(ii) [Reserved].
(d) Door-to-door sales. (1) For
purposes of this paragraph:
(i) Door-to-door sale means a sale of
consumer products in which the seller
or his representative personally solicits
the sale, including those in response to
or following an invitation by a buyer,
and the buyer’s agreement to offer to
purchase is made at a place other than
the place of business of the seller.
(ii) Prospective buyer means an
individual solicited by a door-to-door
seller to buy a consumer product who
indicates sufficient interest in that
consumer product or maintains
sufficient contact with the seller for the
seller reasonably to conclude that the
person solicited is considering
purchasing the product.
(2) Any seller who offers for sale to
consumers consumer products with
written warranties by means of door-todoor sales shall, prior to the
consummation of the sale, disclose the
fact that the sales representative has
copies of the warranties for the
warranted products being offered for
sale, which may be inspected by the
prospective buyer at any time during the
sales presentation. Such disclosure shall
be made orally and shall be included in
any written materials shown to
prospective buyers. If the warrantor has
elected the option described in
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17:13 May 23, 2016
Jkt 238001
paragraph (b)(2) of this section, the sales
representative may provide a copy of
the warranty through electronic or other
means.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2016–12030 Filed 5–23–16; 8:45 am]
I. Background
BILLING CODE 6750–01–P
SECURITIES AND EXCHANGE
COMMISSION
17 CFR Part 275
[Release No. IA–4388; File No. S7–08–16]
Performance-Based Investment
Advisory Fees
Securities and Exchange
Commission.
ACTION: Notice of intent to issue order.
AGENCY:
The Securities and Exchange
Commission (‘‘Commission’’) intends to
issue an order that would adjust for
inflation, as appropriate, dollar amount
thresholds in the rule under the
Investment Advisers Act of 1940 that
permits investment advisers to charge
performance-based fees to ‘‘qualified
clients.’’ Under that rule, an investment
adviser may charge performance-based
fees if a ‘‘qualified client’’ has a certain
minimum net worth or minimum dollar
amount of assets under the management
of the adviser. The Commission’s order
would increase, to reflect inflation, the
minimum net worth that a ‘‘qualified
client’’ must have under the rule. The
order would not increase the minimum
dollar amount of assets under
management.
SUMMARY:
Hearing or Notification of
Hearing: An order adjusting the dollar
amount tests specified in the definition
of ‘‘qualified client’’ will be issued
unless the Commission orders a hearing.
Interested persons may request a
hearing by writing to the Commission’s
Secretary. Hearing requests should be
received by the Commission’s Office of
the Secretary by 5:30 p.m. on June 13,
2016. Hearing requests should state the
nature of the writer’s interest, the reason
for the request, and the issues contested.
Persons who wish to be notified of a
hearing may request notification by
writing to the Commission’s Secretary.
ADDRESSES: Secretary, Securities and
Exchange Commission, 100 F Street NE.,
Washington, DC 20549–1090.
FOR FURTHER INFORMATION CONTACT:
Amanda Hollander Wagner, Senior
Counsel, Investment Company
Rulemaking Office, at (202) 551–6792,
DATES:
PO 00000
Frm 00008
Fmt 4702
Division of Investment Management,
Securities and Exchange Commission,
100 F Street NE., Washington, DC
20549–8549.
SUPPLEMENTARY INFORMATION: The
Commission intends to issue an order
under the Investment Advisers Act of
1940 (‘‘Advisers Act’’ or ‘‘Act’’).1
Sfmt 4702
Section 205(a)(1) of the Advisers Act
generally prohibits an investment
adviser from entering into, extending,
renewing, or performing any investment
advisory contract that provides for
compensation to the adviser based on a
share of capital gains on, or capital
appreciation of, the funds of a client.2
Congress prohibited these compensation
arrangements (also known as
performance compensation or
performance fees) in 1940 to protect
advisory clients from arrangements that
Congress believed might encourage
advisers to take undue risks with client
funds to increase advisory fees.3 In
1970, Congress provided an exception
from the prohibition for advisory
contracts relating to the investment of
assets in excess of $1,000,000,4 if an
appropriate ‘‘fulcrum fee’’ is used.5
Congress subsequently authorized the
Commission to exempt, by rule or order,
any advisory contract from the
performance fee prohibition if the
contract is with persons who the
1 15 U.S.C. 80b. Unless otherwise noted, all
references to statutory sections are to the
Investment Advisers Act, and all references to rules
under the Investment Advisers Act, including rule
205–3, are to Title 17, Part 275 of the Code of
Federal Regulations [17 CFR 275].
2 15 U.S.C. 80b–5(a)(1).
3 H.R. Rep. No. 2639, 76th Cong., 3d Sess. 29
(1940). Performance fees were characterized as
‘‘heads I win, tails you lose’’ arrangements in which
the adviser had everything to gain if successful and
little, if anything, to lose if not. S. Rep No. 1775,
76th Cong., 3d Sess. 22 (1940).
4 15 U.S.C. 80b–5(b)(2). Trusts, governmental
plans, collective trust funds, and separate accounts
referred to in section 3(c)(11) of the Investment
Company Act of 1940 (‘‘Investment Company Act’’)
[15 U.S.C. 80a–3(c)(11)] are not eligible for this
exception from the performance fee prohibition
under section 205(b)(2)(B) of the Advisers Act.
5 15 U.S.C. 80b–5(b). A fulcrum fee generally
involves averaging the adviser’s fee over a specified
period and increasing or decreasing the fee
proportionately with the investment performance of
the company or fund in relation to the investment
record of an appropriate index of securities prices.
See rule 205–2 under the Advisers Act; Adoption
of Rule 205–2 under the Investment Advisers Act
of 1940, As Amended, Definition of ‘‘Specified
Period’’ Over Which Asset Value of Company or
Fund Under Management is Averaged, Investment
Advisers Act Release No. 347 (Nov. 10, 1972) [37
FR 24895 (Nov. 23, 1972)].
In 1980, Congress added another exception to the
prohibition against charging performance fees, for
contracts involving business development
companies under certain conditions. See section
205(b)(3) of the Advisers Act.
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]]>Agencies
[Federal Register Volume 81, Number 100 (Tuesday, May 24, 2016)]
[Proposed Rules]
[Pages 32680-32686]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-12030]
=======================================================================
-----------------------------------------------------------------------
FEDERAL TRADE COMMISSION
16 CFR Parts 701 and 702
RIN 3084-AB24 and AB25
Rule Governing Disclosure of Written Consumer Product Warranty
Terms and Conditions; Rule Governing Pre-Sale Availability of Written
Warranty Terms
ACTION: Notice of proposed rulemaking; request for public comment.
-----------------------------------------------------------------------
SUMMARY: The Federal Trade Commission (FTC or Commission) proposes to
amend the rules on Disclosure of Written Consumer Product Warranty
Terms and Conditions (Disclosure Rule) and Pre-Sale Availability of
Written Warranty Terms (Pre-Sale Availability Rule) to give effect to
the E-Warranty Act, which allows for the use of Internet Web sites to
disseminate warranty terms to consumers in some circumstances.
DATES: Comments must be received on or before June 17, 2016.
ADDRESSES: Interested parties may file a comment online or on paper, by
following the instructions in the Request for Comment part of the
SUPPLEMENTARY INFORMATION section below. Write ``Amending Warranty
Rules Pursuant to the E-Warranty Act, Matter No. P044403'' on your
comment, and file your comment online at https://ftcpublic.commentworks.com/ftc//E-WarrantyAmendments, by following the
instructions on the web-based form. If you prefer to file your comment
on paper, write ``Amending Warranty Rules Pursuant to the E-Warranty
Act, Matter No. P044403'' on your comment and on the envelope, and mail
your comment to the following address: Federal Trade Commission, Office
of the Secretary, 600 Pennsylvania Avenue NW., Suite CC-5610 (Annex E),
Washington, DC 20580, or deliver your comment to the following address:
Federal Trade Commission, Office of the Secretary, Constitution Center,
400 7th Street SW., 5th Floor, Suite 5610 (Annex E), Washington, DC
20024.
FOR FURTHER INFORMATION CONTACT: Gary Ivens, (202) 326-2330, Attorney,
Division of Marketing Practices, Federal Trade Commission, 600
Pennsylvania Ave. NW., Washington, DC 20580.
SUPPLEMENTARY INFORMATION:
I. Summary of the Proposed Rules
A. The Disclosure Rule
The Disclosure Rule \1\ establishes disclosure requirements for
written warranties on consumer products that cost more than $15.00.\2\
In 1975, the Commission issued the Disclosure Rule as authorized by
Congress in the Magnuson-Moss Warranty Act \3\ (MMWA).
---------------------------------------------------------------------------
\1\ 16 CFR part 701.
\2\ 40 FR 60171-60172 (Dec. 31, 1975).
\3\ 15 U.S.C. 2302.
---------------------------------------------------------------------------
The Disclosure Rule 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 with respect to
state law regarding the duration of implied warranties and the
availability of consequential or incidental damages. Under the
Disclosure Rule, warranty information must be disclosed in simple,
easily understandable, and concise language in a single document.
Similarly, the warrantor must disclose any limitations on the duration
of implied warranties on the face of the warranty, as mandated by
MMWA.\4\ In promulgating the Disclosure Rule, the Commission determined
that certain material facts about product warranties
[[Page 32681]]
must be disclosed because the failure to do so would be deceptive or
misleading.
---------------------------------------------------------------------------
\4\ See 15 U.S.C. 2308(b).
---------------------------------------------------------------------------
Briefly, the Commission proposes to revise the Disclosure Rule to
specify that disclosures mandated to appear ``on the face'' of a
warranty posted on an Internet Web site or displayed electronically
must be placed in close proximity to the location where the text of the
warranty terms begins.
B. The Pre-Sale Availability Rule
The Pre-Sale Availability Rule \5\ details the methods by which
warrantors and sellers must provide warranty terms to consumers prior
to sale of the warranted item. The Commission issued the Pre-Sale
Availability Rule in response to a mandate from Congress as set forth
in the MMWA.
---------------------------------------------------------------------------
\5\ 16 CFR part 702.
---------------------------------------------------------------------------
Briefly, the Commission proposes to revise the Pre-Sale
Availability Rule to allow warrantors to post warranty terms on
Internet Web sites if they also provide a non-Internet based method for
consumers to obtain the warranty terms and satisfy certain other
conditions.
As discussed more fully below, these rule revisions are required to
comply with Congress's passage of the E-Warranty Act \6\ (E-Warranty or
the Act). The Commission invites comment on the proposed rule revisions
generally and on the specific issues outlined in Section III of this
Notice. The Commission seeks comment on the proposal through June 17,
2016.
---------------------------------------------------------------------------
\6\ E-Warranty Act, Public Law 114-51 (Sept. 24, 2015).
---------------------------------------------------------------------------
II. Background
The MMWA authorizes the Commission to prescribe rules requiring
disclosure of warranty terms and 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.\7\ In 1975, the
Commission issued both the Disclosure Rule, which establishes
disclosure requirements for written warranties, and the Pre-Sale
Availability Rule, which includes requirements for sellers and
warrantors to make the text of any warranty on a consumer product
available to the consumer prior to sale. Among other things, the Pre-
Sale Availability Rule requires most 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 Pre-Sale Availability Rule requires
warrantors to provide materials to enable sellers to comply with the
Rule's requirements. The Rule also sets out how sellers should make
warranty information available pre-sale if selling the product at
retail locations, through catalogs, mail order, or door-to-door sales.
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\7\ 15 U.S.C. 2302.
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E-Warranty amends the MMWA to allow, under certain circumstances,
the posting of warranties on warrantors' Internet Web sites as an
alternative method of complying with the Pre-Sale Availability Rule,
and to permit sellers to make warranty terms available to consumers
pre-sale via electronic means where the warrantor has chosen the online
option.\8\ E-Warranty charges the Commission with promulgating
consistent changes to the Disclosure Rule and the Pre-Sale Availability
Rule within one year of the Act's passage.\9\
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\8\ In a recent review of the warranty interpretations, rules,
and guides (16 CFR parts 700-703 and 239), which was completed
before enactment of the E-Warranty Act, the Commission declined
certain commenters' requests to allow brick-and-mortar sellers to
refer consumers to online warranty terms as a method of complying
with the Pre-Sale Availability Rule. The Commission noted that the
intent of the Rule is to make warranty information available at the
point of sale, so for the seller simply to refer the consumer to a
Web site where the warranty could be found would be insufficient.
See 80 FR 42710, 42717 (July 20, 2015).
\9\ Under the E-Warranty Act, the Commission must issue the
final amended rules by September 24, 2016. The Commission determines
that taking of oral presentations from interested parties would
interfere with its ability to amend the Disclosure Rule and the Pre-
Sale Availability Rule in a timely fashion. Accordingly, as provided
by the E-Warranty Act, the Commission waives the requirement to give
interested persons an opportunity for oral presentation. See Public
Law 114-51, sec. 3(b)(2).
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III. The Commission's Proposed Rule Changes
The Commission proposes to modify the Disclosure Rule and the Pre-
Sale Availability Rule to implement the E-Warranty Act and effectuate
its purposes. Currently, sellers are obliged to provide warranty terms
pre-sale to consumers through a variety of methods such as displaying
them in close proximity to the warranted products, or by furnishing
them upon request prior to sale and posting prominent signs to let
customers know that warranties can be examined upon request, posting
them in a catalog in close conjunction to the warranted product, or
having them available for consumers' review in a door-to-door sales
presentation. The proposed amendments will allow sellers the additional
option of using an electronic method to make warranty terms available
to consumers at the point of sale for warranted products where the
warrantor has chosen the online method of disseminating the warranty
terms.
Warrantors currently must provide retailers the warranty materials
sellers need to meet their requirements under the Pre-Sale Availability
Rule, such as providing copies of the warranty, providing warranty
stickers, tags, signs, or posters, or printing the warranty on the
product's packaging. The amendment does not alter the duties of
warrantors who do not choose to employ an online method to supply
warranty terms. The E-Warranty Act provides that warrantors who choose
the online method of disseminating warranty terms must provide
consumers the address of the Internet Web site where the specific
product's warranty terms can be reviewed and also supply a non-Internet
method, such as a phone number or mailing address, for consumers and
sellers to request the warranty terms. If a consumer or seller \10\
makes such a request, the warrantor must provide the warranty terms
promptly and free and of charge.
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\10\ Sellers are given the option of requesting the warranty
terms free of charge from the warrantor because not all sellers will
be equipped to employ an electronic option in cases where the
warrantor has chosen the online method to supply warranty terms. For
example, a small seller may not have Internet access or electronic
devices to download and display warranty terms for consumers' review
at the point of sale. Those sellers' duties to have warranty terms
available pre-sale, however, have not changed under E-Warranty. The
Commission believes that requiring warrantors to supply sellers with
warranty terms upon request so that sellers can make them available
for consumers' review at the point of sale effectuates Congress's
desire to ensure the continued availability of pre-sale warranty
terms.
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The first proposed revisions alter Sec. 701.1 to add a definition
of the term ``manufacturer'' at Sec. 701.1(g) (defining manufacturer
as ``any person engaged in the business of making a consumer
product''), add that term in the definition of ``warrantor,'' and re-
letter the paragraphs in Sec. 701.1 to account for the additional
definition. The Commission proposes these revisions in light of E-
Warranty's use of the term ``manufacturer.''
The next proposed revision adds a new Sec. 701.1(j)(3) to specify
that, in conjunction with warranty terms posted on an Internet Web site
or displayed electronically, the phrase ``on the face'' means in close
proximity to the location where the warranty terms begin. Although the
Disclosure Rule does not explicitly mention online commerce, it applies
to the sale of warranted consumer products online. Commission staff
recently updated the .Com Disclosures to provide additional guidance on
disclosure obligations in
[[Page 32682]]
the online context. As stated in the updated .Com Disclosures,
warranties communicated through visual text online are no different
from paper versions and the same rules apply.\11\ The Commission
therefore proposes to clarify this requirement for online disclosures.
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\11\ See FTC, .Com Disclosures: How to Make Effective
Disclosures in Digital Advertising (2013), at 3, fn.7, available at
https://ftc.gov/os/2013/03/130312dotcomdisclosures.pdf.
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The next proposed revision is to Sec. 702.1(d) to include the
manufacturer in the definition of ``warrantor.'' The Commission
proposes this revision to comport with E-Warranty's use of the term
``manufacturer.'' The next revision adds a new Sec. 702.1(g) to define
a ``manufacturer'' (in the same manner as the proposed revision of
Sec. 701.1(g)) as ``any person engaged in the business of making a
consumer product.''
The next proposed revisions are to Sec. 702.3(a) to provide that
sellers can provide warranty terms pre-sale through electronic means if
the warrantor of the product has chosen the online option. If a seller
uses an electronic means, that seller must still make the warranty text
readily available for consumers' examination prior to sale.
The proposed changes to Sec. 702.3(b)(1)(i) would remove
superfluous instances of the term ``and/or'' and ``and'' in that
paragraph, as the prefatory language already notes that the warrantor
must use one or more of the methods described in that paragraph to
provide sellers with the prescribed warranty materials.
The next proposed revision adds a new Sec. 702.3(b)(2) to reflect
that, as an alternative method of compliance with the Pre-Sale
Availability Rule, a warrantor may refer consumers to an accessible
digital copy of the warranty by providing to the consumer the Internet
address where the specific product's warranty has been posted in a
clear and conspicuous manner. To employ this option, the warrantor,
among other duties, must supply in the product manual, or on the
product or product packaging, the Internet address where the consumer
can review and obtain the specific product's warranty terms, as well as
the phone number, postal mailing address, or other reasonable non-
Internet based means for the consumer to request a free copy of the
warranty terms.
Proposed Sec. 702.3(b)(2)(iv) requires the warrantor utilizing the
online option to provide sufficient information with the consumer
product or on the Internet Web site so that the consumer can readily
locate the specific product's warranty terms. The Commission believes
that this requirement comports with Congress's directive that online
warranties be available to consumers ``in a clear and conspicuous
manner.'' \12\ Similarly, if a consumer or seller requests via phone,
mail, or other reasonable non-Internet-based means, that the warrantor
provide a hard copy of the warranty, proposed Sec. 702.3(b)(2)(ii)
requires the warrantor to provide it promptly and free of charge, which
comports with existing pre-sale requirements for catalog and mail order
sales.
---------------------------------------------------------------------------
\12\ See 15 U.S.C. 2302(b)(4)(A)(i).
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The next proposed revision alters Sec. 702.3(c)(2)(i)(B) to
reflect that the mail-order or catalog seller must provide the address
of the Internet Web site of the warrantor where the warranty terms can
be reviewed (if such Internet Web site exists), as well as either a
phone number or address that the consumer can use to request a free
copy of the warranty, and notes that the copy may be provided
electronically if the product's warrantor has used the online option.
Finally, the next proposed revision alters Sec. 702.3(d)(2) to
reflect that the door-to-door seller may supply the warranty through an
electronic option if the product's warrantor has employed the online
method.
IV. Regulatory Flexibility Act
The Regulatory Flexibility Act \13\ (RFA) requires each agency
either to provide an Initial Regulatory Flexibility Analysis (IRFA)
with a proposed rule, or certify that the proposed rule will not have a
significant economic impact on a substantial number of small
entities.\14\ The FTC does not expect that the rule revisions
necessitated by E-Warranty will have a significant economic impact on
small sellers and warrantors. As discussed above, the proposed
revisions will relieve those warrantors who choose the online method
from providing warranty materials to certain sellers. Affected sellers,
however, should be able easily to obtain the warranties and provide
them to consumers for review at the point of sale, either by obtaining
the warranties from the warrantor's Web site or by requesting a hard
copy from the warrantor. Also, the proposed amendment allows sellers of
goods whose warrantors have employed the online method the ability to
provide pre-sale warranty terms electronically. Thus, if the proposal
is adopted, a small seller that is in compliance with current law would
need to take only minimal additional action to remain compliant.
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\13\ 5 U.S.C. 603.
\14\ 5 U.S.C. 605.
---------------------------------------------------------------------------
The small warrantor that does not choose the Internet option to
supply warranty terms can remain compliant simply by continuing with
its existing practices. The small warrantor that has been including the
entire warranty with the warranted product and supplying warranty
materials so that sellers can meet Pre-Sale Availability Rule
obligations will have a smaller compliance burden under the proposal by
being able to provide the warranty terms solely on an Internet Web
site. That small warrantor, however, will likely incur costs to
establish a phone number, address, or other non-Internet based method
that consumers and sellers can use to request a free hard copy of
warranty terms.
With respect to the amendments to the Disclosure Rule, a small
entity that is in compliance with current law need not take any
different or additional action if the proposal is adopted, as the
proposed revisions merely explain how the ``on the face of the
warranty'' requirement applies to online warranty terms.
Accordingly, this document serves as notice to the Small Business
Administration of the FTC's certification of ``no effect.'' To ensure
the accuracy of this certification, however, the Commission requests
comment on whether the proposed rule will have a significant impact on
a substantial number of small entities, including specific information
on the number of entities that would be covered by the proposed rule,
the number of these companies that are small entities, and the average
annual burden for each entity. Although the Commission certifies under
the RFA that the rule proposed in this notice would not, if
promulgated, have a significant impact on a substantial number of small
entities, the Commission has determined, nonetheless, that it is
appropriate to publish an IRFA in order to inquire into the impact of
the proposed rule on small entities. Therefore, the Commission has
prepared the following analysis:
A. Reasons for the Proposed Rule Revisions
As outlined in Section II, above, the Commission is proposing to
amend the Disclosure Rule and Pre-Sale Availability Rule in connection
with Congress's passage of E-Warranty. E-Warranty allows, under certain
circumstances, the posting of warranties on manufacturers' Web sites as
an alternative method of complying with the Pre-Sale Availability Rule,
and
[[Page 32683]]
certain sellers' use of an electronic method to supply pre-sale
warranty terms.
B. Statement of Objectives and Legal Basis
The objective of the proposed amendments is to provide warrantors
an online method of complying with the Disclosure Rule and the Pre-Sale
Availability Rule, allow certain sellers to use an electronic method to
provide pre-sale warranty terms to consumers, and to define what ``on
the face'' of an online warranty means in the Disclosure Rule. The
legal authority for this NPRM is the E-Warranty Act and the MMWA.
C. Description of Small Entities to Which the Rules Will Apply
The small entities to which the Disclosure Rule applies are
warrantors. The small entities to which the Pre-Sale Availability Rule
applies are warrantors and sellers of warranted consumer products
costing more than fifteen dollars. The Disclosure Rule and the Pre-Sale
Availability Rule currently define a ``warrantor'' as ``any supplier or
other person who gives or offers to give a written warranty.'' The Pre-
Sale Availability Rule defines a ``seller'' as ``any person who sells
or offers for sale for purposes other than resale or use in the
ordinary course of the buyer's business any consumer product.'' The
proposed changes add ``manufacturers'' to both Rules' definitions of
``warrantor.'' Sellers include retailers, catalog and mail order
sellers, and door-to-door sellers.
In 2014, the Commission estimated that there were 13,395 small
manufacturers (warrantors) and 452,553 small retailers (sellers)
impacted by the Rules.\15\
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\15\ See 79 FR 8185 (Feb. 11, 2014), which relates to the Pre-
Sale Availability Rule, but should also apply to the Disclosure
Rule.
---------------------------------------------------------------------------
D. Description of the Projected Reporting, Recordkeeping, and Other
Compliance Requirements
The proposed amendments to the Disclosure Rule do not impose any
new reporting, recordkeeping, or other compliance requirements, because
the proposed amendments merely explain how the existing ``on the face
of the warranty'' requirement applies to online and electronic warranty
terms.
The Pre-Sale Availability Rule imposes disclosure obligations on
sellers and warrantors of warranted consumer goods actually costing
more than fifteen dollars. Specifically, sellers must make warranty
terms available prior to sale. Under the proposed revision, if the
warrantor has chosen the online option, sellers may incur minimal
additional costs if they need to request the warranty terms from the
warrantor to provide them to consumers, but sellers will also have
additional flexibility to make pre-sale warranty terms available to
consumers electronically. Warrantors must provide sellers with warranty
materials for sellers' use at the point of sale, or, under the proposed
revision, provide the address of the warrantor's Internet Web site
where consumers can review and obtain warranty terms in the product
manual or on the product or product packaging, and the warrantor's
contact information for the consumer to obtain the warranty terms via a
non-Internet method.
Neither the existing Pre-Sale Availability Rule nor the proposed
amendments require sellers or warrantors to retain more records than
may be necessary to provide consumers the warranty terms. The small
entities potentially covered by these proposed amendments will include
all such entities subject to the Rules, including suppliers,
manufacturers and others who warrant consumer goods costing more than
fifteen dollars and retailers, catalog and mail-order sellers, and
door-to-door sellers who offer the warranted products. The professional
skills necessary for compliance with the Rules as modified by the
proposed amendments would include (1) warrantors' office and
administrative support staff to receive consumers' and sellers'
requests for warranty terms using a non-Internet based method and (2)
sellers' office and administrative support staff to request warranty
terms for pre-sale availability to consumers for warranted goods where
the warrantor has elected only the Internet option.
The Commission invites comment on the proposed amendments' impact
on small sellers who might cease to receive point-of-sale warranty
materials from those warrantors who choose to employ the online method
to supply warranty terms.
E. Duplication, Overlap, or Conflict With Other Federal Rules
The Commission has not identified any other federal statutes,
rules, or policies that would duplicate, overlap, or conflict with the
proposed amendments. The Commission invites comment and information on
this issue.
F. Significant Alternatives to the Proposed Amendments
As noted above at footnote 8, in a recent rule review of the Pre-
Sale Availability Rule, the Commission declined commenters' requests to
allow offline sellers to comply with the Rule by advising buyers of the
availability of the warranty at a particular Web site. The Commission
noted that, because the intent of the Rule is to make warranty
information available at the point of sale, a seller could not comply
with its Pre-Sale Availability Rule obligations simply by referring the
consumer to a Web site where the warranty could be found. The proposed
revisions allow sellers to provide warranty terms electronically, but
only in cases where the warrantor has chosen the online option.\16\ The
proposed revisions comport with Congress's desire to allow warrantors
the option of providing warranty terms online, as long as warrantors
offer a non-Internet based method for consumers to obtain the warranty
terms, as well as with Congress's mandate that the online method not
supplant the seller's duty to provide warranty terms at the point of
sale.
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\16\ FTC staff noted in an opinion letter in 2009, however, that
neither the MMWA nor its related rules prescribe making the warranty
terms available only on paper. Letter from Allyson Himelfarb to
Thomas Hughes (February 17, 2009), available at https://www.ftc.gov/sites/default/files/documents/advisory_opinions/opinion-09-1/opinion0901_0.pdf.
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The Commission has not proposed any specific small entity
exemption, differing timetables, or other significant alternatives, as
the proposed amendments are narrowly tailored to permit E-Warranty's
stated objectives of allowing warrantors to post warranty terms on
Internet Web sites, certain sellers to use an electronic method to
provide warranty terms pre-sale to consumers, and the ancillary purpose
of clarifying that ``on the face of the warranty'' in the Web site or
electronic context means ``in close proximity'' to the location where
the warranty text begins. The Commission does not believe a special
exemption for small entities or significant compliance alternatives are
necessary or appropriate to minimize the compliance burden on small
entities while achieving the intended purposes of E-Warranty.
The Commission believes its proposed revisions will be minimally
burdensome for small businesses and that they comply with Congress's
mandate to allow warrantors to post warranty terms on an Internet Web
site and certain sellers to employ a pre-sale electronic option, while
ensuring pre-sale availability of warranty terms at the point of sale.
The Commission, however, invites comment on regulatory alternatives
that the Commission has not expressly considered for complying
[[Page 32684]]
with the proposed rule that might reduce compliance burdens on small
entities while still achieving E-Warranty's objectives.
V. Paperwork Reduction Act
Under the Paperwork Reduction Act of 1995 (PRA),\17\ Federal
agencies are generally required to seek Office of Management and Budget
(OMB) approval for information collection requirements prior to
implementation. Under the PRA, the Commission may not conduct or
sponsor, and, notwithstanding any other provision of law, a person is
not required to respond to an information collection, unless the
information displays a valid control number assigned by OMB.
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\17\ 44 U.S.C. 3501-3520.
---------------------------------------------------------------------------
This proposal would amend 16 CFR parts 701 and 702. The collection
of information related to the Disclosure Rule has been previously
reviewed and approved by OMB in accordance with the PRA and assigned
OMB Control Number 3084-0111.\18\ The collection of information related
to the Pre-Sale Availability Rule has been previously reviewed and
approved by OMB in accordance with the PRA and assigned OMB Control
Number 3084-0112.\19\
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\18\ See 78 FR 70046 (Nov. 22, 2013).
\19\ See 79 FR 8185 (Feb. 11, 2014).
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As explained below, the proposed amendments only slightly modify or
add to information collection requirements that were previously
approved by OMB. Under this proposal, a warrantor will be permitted,
but not required, to use an online method for supplying warranty terms.
The Commission does not believe that this proposed rule would impose
any new or substantively revised collections of information as defined
by the PRA.
Under the most recent proposed clearance for the Pre-Sale
Availability Rule,\20\ the Commission estimated the total annual hours
burden to be 2,446,610. This figure represented a 20% reduction from
the 2010 estimate based in large part on the growth of online sales and
the online posting of warranty terms related to those sales. The
Commission estimated the hours burden at 2,315,608 for retailers and
131,002 for manufacturers. The Commission estimated the total annual
labor cost in 2014 to be $51,379,000 (rounded to the nearest thousand).
---------------------------------------------------------------------------
\20\ See 78 FR 68446 (Nov. 14, 2013).
---------------------------------------------------------------------------
The Commission estimated the total annual capital or other non-
labor costs to be de minimis, because the vast majority of retailers
and warrantors already have developed systems to provide the
information required by the Pre-Sale Availability Rule. Compliance by
retailers typically entails keeping warranties on file, in binders or
otherwise, and posting an inexpensive sign indicating warranty
availability. Warrantor compliance under the proposed revisions entails
providing retailers with a copy of the warranties included with their
product or providing with the warranted good the address of the
warrantor's Internet Web site where the consumer can review and obtain
such terms, along with the contact information where the consumer may
use a non-Internet based method to obtain a free copy of the warranty
terms. Sellers of warranted goods for which the warrantor has chosen
the online option may, unless the warrantor provides the seller a hard
copy of the warranty terms to make such terms, incur a slightly
increased burden because the seller will have to ensure it provides
consumers a method of reviewing the warranty terms at the point of
sale, prior to sale. That burden, however, should be minimal, given
that the warrantor will have to make the warranty terms available on an
Internet Web site, and given the proposed provision requiring the
warrantor to supply a hard copy of the warranty terms, promptly and
free of charge, in response to a seller's request. The Commission
believes that, in light of the proposed amendment, the annual capital
or other non-labor costs will continue to be de minimis.
Invitation To Comment
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before June 17, 2016.
Write ``Amending Warranty Rules Pursuant to the E-Warranty Act, Matter
No. P044403'' 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 Commission Web site, at
https://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion,
the Commission tries to remove individuals' 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, such as 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, including medical records or other individually
identifiable health information. In addition, do not include any
``[t]rade secret or any commercial or financial information which . . .
is privileged or confidential,'' as discussed 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).\21\ 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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\21\ 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 comments online. To make sure that the Commission considers your
online comment, you must file it at https://ftcpublic.commentworks.com/ftc//E-WarrantyAmendments 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 ``Amending Warranty Rules
Pursuant to the E-Warranty Act, Matter No. P044403'' on your comment
and on the envelope, and mail your comment to the following address:
Federal Trade Commission, Office of the Secretary, 600 Pennsylvania
Avenue NW., Suite CC-5610 (Annex E), Washington, DC 20580, or deliver
your comment to the following address: Federal Trade Commission, Office
of the Secretary, Constitution Center, 400 7th Street SW., 5th Floor,
Suite 5610 (Annex E), Washington, DC 20024. 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
[[Page 32685]]
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 June 17, 2016. For
information on the Commission's privacy policy, including routine uses
permitted by the Privacy Act, see https://www.ftc.gov/ftc/privacy.shtm.
List of Subjects in 16 CFR Parts 701 and 702
Trade practices, Warranties.
For the reasons set forth in the preamble, the Commission proposes
to amend 16 CFR part 701 as follows:
PART 701--DISCLOSURE OF WRITTEN CONSUMER PRODUCT WARRANTY TERMS AND
CONDITIONS
0
1. The authority citation for this part continues to read as follows:
Authority: 15 U.S.C. 2302 and 2309.
0
2. Amend Sec. 701.1 by redesignating paragraphs (g) through (i) as
paragraphs (h) through (j), adding new paragraph (g), and revising
redesignated paragraph (j) to read as follows:
Sec. 701.1 Definitions.
* * * * *
(g) Manufacturer means any person engaged in the business of making
a consumer product.
* * * * *
(j) On the face of the warranty means:
(1) Where the warranty is a single sheet with printing on both
sides of the sheet or where the warranty is comprised of more than one
sheet, the page on which the warranty text begins;
(2) Where the warranty is included as part of a larger document,
such as a use and care manual, the page in such document on which the
warranty text begins;
(3) Where the warranty is on an Internet Web site or displayed
electronically, in close proximity to the location where the warranty
text begins.
PART 702--PRE-SALE AVAILABILITY OF WRITTEN WARRANTY TERMS
0
3. The authority citation for part 702 continues to read as follows:
Authority: 15 U.S.C. 2302 and 2309.
0
4. Amend Sec. 702.1 by revising paragraph (d) and adding paragraph (g)
to read as follows:
Sec. 702.1 Definitions.
* * * * *
(d) Warrantor means any supplier, manufacturer, or other person who
gives or offers to give a written warranty.
* * * * *
(g) Manufacturer means any person engaged in the business of making
a consumer product.
0
5. Revise Sec. 702.3 to read as follows:
Sec. 702.3 Pre-sale availability of written warranty terms.
The following requirements apply to consumer products actually
costing the consumer more than $15.00:
(a) Duties of seller. Except as provided in paragraphs (c) and (d)
of this section, the seller of a consumer product with a written
warranty shall make a text of the warranty readily available for
examination by the prospective buyer by:
(1) Displaying it in close proximity to the warranted product
(including through electronic or other means, if the warrantor has
elected the option described in paragraph (b)(2) of this section), or
(2) Furnishing it upon request prior to sale (including through
electronic or other means, if the warrantor has elected the option
described in paragraph (b)(2) of this section) and placing signs
reasonably calculated to elicit the prospective buyer's attention in
prominent locations in the store or department advising such
prospective buyers of the availability of warranties upon request.
(b) Duties of the warrantor. (1) A warrantor who gives a written
warranty warranting to a consumer a consumer product actually costing
the consumer more than $15.00 shall:
(i) Provide sellers with warranty materials necessary for such
sellers to comply with the requirements set forth in paragraph (a) of
this section, by the use of one or more by the following means:
(A) Providing a copy of the written warranty with every warranted
consumer product;
(B) Providing a tag, sign, sticker, label, decal or other
attachment to the product, which contains the full text of the written
warranty;
(C) Printing on or otherwise attaching the text of the written
warranty to the package, carton, or other container if that package,
carton or other container is normally used for display purposes. If the
warrantor elects this option a copy of the written warranty must also
accompany the warranted product; or
(D) Providing a notice, sign, or poster disclosing the text of a
consumer product warranty. If the warrantor elects this option, a copy
of the written warranty must also accompany each warranted product.
(ii) Provide catalog, mail order, and door-to-door sellers with
copies of written warranties necessary for such sellers to comply with
the requirements set forth in paragraphs (c) and (d) of this section.
(2) As an alternative method of compliance with paragraph (b)(1) of
this section, a warrantor may provide the warranty terms in an
accessible digital format on the warrantor's Internet Web site. If the
warrantor elects this option, the warrantor must:
(i) Provide information to the consumer that will inform the
consumer how to obtain warranty terms by indicating, in a clear and
conspicuous manner, in the product manual or on the product or product
packaging:
(A) The Internet Web site of the warrantor where such warranty
terms can be reviewed; and
(B) The phone number, the postal mailing address of the warrantor,
or other reasonable non-Internet based means for the consumer to
request a copy of the warranty terms;
(ii) Provide a hard copy of the warranty terms promptly and free of
charge upon request by a consumer or seller made pursuant to paragraph
(b)(2)(i)(B) of this section;
(iii) Ensure that warranty terms are posted in a clear and
conspicuous manner and remain accessible to the consumer on the
Internet Web site of the warrantor; and
(iv) Provide information with the consumer product or on the
Internet Web site of the warrantor sufficient to allow the consumer to
readily identify on such Internet Web sites the warranty terms that
apply to the specific product purchased by the consumer.
(3) Paragraph (a)(1) of this section shall not be applicable with
respect to statements of general policy on emblems, seals or insignias
issued by third parties promising replacement or refund if a consumer
product is defective, which statements contain no representation or
assurance of the quality or performance characteristics of the product;
provided that
(i) The disclosures required by Sec. 701.3(a)(1) through (9) of
this part are published by such third parties in each issue of a
publication with a general circulation, and
(ii) Such disclosures are provided free of charge to any consumer
upon written request.
(c) Catalog and mail order sales. (1) For purposes of this
paragraph:
(i) Catalog or mail order sales means any offer for sale, or any
solicitation for an order for a consumer product with a written
warranty, which includes instructions for ordering the product which do
not require a personal visit to the seller's establishment.
[[Page 32686]]
(ii) Close conjunction means on the page containing the description
of the warranted product, or on the page facing that page.
(2) Any seller who offers for sale to consumers consumer products
with written warranties by means of a catalog or mail order
solicitation shall:
(i) Clearly and conspicuously disclose in such catalog or
solicitation in close conjunction to the description of warranted
product, or in an information section of the catalog or solicitation
clearly referenced, including a page number, in close conjunction to
the description of the warranted product, either:
(A) The full text of the written warranty; or
(B) The address of the Internet Web site of the warrantor where
such warranty terms can be reviewed (if such Internet Web site exists),
as well as that the written warranty can be obtained free upon specific
request, and the address or phone number where such warranty can be
requested. If this option is elected, such seller shall promptly
provide a copy of any written warranty requested by the consumer (and
may provide such copy through electronic or other means, if the
warrantor has elected the option described in paragraph (b)(2) of this
section).
(ii) [Reserved].
(d) Door-to-door sales. (1) For purposes of this paragraph:
(i) Door-to-door sale means a sale of consumer products in which
the seller or his representative personally solicits the sale,
including those in response to or following an invitation by a buyer,
and the buyer's agreement to offer to purchase is made at a place other
than the place of business of the seller.
(ii) Prospective buyer means an individual solicited by a door-to-
door seller to buy a consumer product who indicates sufficient interest
in that consumer product or maintains sufficient contact with the
seller for the seller reasonably to conclude that the person solicited
is considering purchasing the product.
(2) Any seller who offers for sale to consumers consumer products
with written warranties by means of door-to-door sales shall, prior to
the consummation of the sale, disclose the fact that the sales
representative has copies of the warranties for the warranted products
being offered for sale, which may be inspected by the prospective buyer
at any time during the sales presentation. Such disclosure shall be
made orally and shall be included in any written materials shown to
prospective buyers. If the warrantor has elected the option described
in paragraph (b)(2) of this section, the sales representative may
provide a copy of the warranty through electronic or other means.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2016-12030 Filed 5-23-16; 8:45 am]
BILLING CODE 6750-01-P
