The Magnuson-Moss Warranty Act: What Is It?
The federal Magnuson-Moss Warranty Act, 15 U.S.C. § 2301, et seq. (“MMWA”) is a federal statute that regulates implied warranties, express warranties, and service contracts on consumer goods. These warranties must be written — the protection of the MMWA does not extend to oral warranties. The purpose of this act is to prevent sellers from engaging in deceptive warranty practices and to provide legal protection to consumers that purchase warrantied goods. Examples of such products include, but are not limited to, air conditioners, cars, vans, dishwashers, ATV’s, HVACs, refrigerators, motorcycles, RV’s, mobile homes, campers, trucks, washing machines, dryer units, stoves, desktop computers, laptops, scanners, printers, cell phones, and video game systems.
For consumers that purchase vehicles, the Magnuson-Moss Warranty Act is considered by many to be the federal ‘lemon law’ statute, because of its provisions that protect consumers who acquire defective vehicles, though it is not technically a lemon law statute.
The federal MMWA is usually broader than most individual state lemon laws, and it is not the same as those laws. Consumers who may not qualify for protection under their respective state’s lemon law(s) may have the opportunity to claim damages under the MMWA. In many states, the state’s lemon law(s) only apply to new vehicles, leased vehicles, or used vehicles that are still covered by the manufacturer’s original warranty. Under the MMWA, as long as a vehicle is sold or leased with a warranty, the purchaser may be able to pursue legal action. Thus, MMWA protection can extend to used vehicles as well as new or leased ones. Additionally, while state lemon laws are often limited to passenger vehicles, the MMWA covers a larger selection of vehicles including motorcycles, motorhomes, boats, and ATVs. In essence, any vehicle may be covered by the law as long as it is subject to a warranty.
The MMWA requires sellers to clearly disclose the terms of a good’s warranty before the sale. Sellers must designate whether they are providing a “full” or a “limited” warranty. However, with vehicles, all are sold with limited warranties. Thus, the seller must provide a complete description of a warranty’s coverage. They should disclose which parts of the vehicle are covered by the warranty as well as how long the warranty lasts for. Other disclosure provisions that a seller should provide to a consumer include the performance obligations of the warrantor in the event that the good turns out to be defective; an explanation of the consumer’s duties or the procedure that a consumer must follow if they discover a defect; and information on any informal dispute settlement procedures that the warrantor may offer.
The MMWA also extends protection to consumers through implied warranties. The most common form is the implied warranty of merchantability which in common law is a guarantee to the consumer of a good that the good that they purchased is fit to be used for the good’s ordinary purposes. A good would violate the implied warranty of merchantability if it cannot accomplish the purpose that it was built for. Under the MMWA, if a seller offers a written warranty, they are prohibited from disclaiming or modifying an implied warranty. For consumers, this means that individuals that purchase goods will always be covered by the basic protection of the implied warranty of merchantability. There is one caveat to this rule — for limited warranties, sellers have the right to shorten the duration of an implied warranty to adhere to the duration of the limited warranty.
If a consumer discovers that their vehicle has a defect or if the vehicle does not conform to the provided warranty, the consumer should resort to their warranty to see the next steps they should take. In most cases, consumers should notify the seller of the defect and bring the vehicle back to the seller or the manufacturer for repair. Consumers should retain copies of repair orders, receipts, and paperwork from each repair attempt. Keeping track of their vehicle’s work history will be of benefit to consumers if they decide to file suit against a seller. While state lemon laws generally are focused on the repair attempts in regard to a single defect that substantially affects the market value of the vehicle and/or safety of the vehicle, the MMWA applies to repair attempts for any non-conformity. If a consumer’s vehicle cannot be fixed after a reasonable number of repair attempts, it is likely that the warranty has been breached. If this is the case, the consumer would be entitled to damages, and will have the right to take legal action against the seller.
How can a consumer sue?
Before a consumer can file a lawsuit against a seller, they must check to see if an arbitration requirement is included in their written warranty. The MMWA requires consumers to first participate in a seller’s arbitration procedure if such a procedure is disclosed in the warranty. Arbitration decisions are not binding for consumers so if a consumer is dissatisfied with an arbitration result, they can sue for the opportunity to collect greater remedies.
If a consumer wishes to take legal action against a seller, they can do so by proving that the seller breached a written warranty, service contract, or implied warranty. For a breach of written warranty or service contract, the consumer must be able to show that a valid warranty exists, that the vehicle was brought to a shop for repair during the warranty period, and that the vehicle could not be fixed after a reasonable number of repair attempts. In the case of a written warranty, as long as the vehicle’s defects occurred during the warranty period, the consumer is able to bring suit against the seller even after the warranty period has already expired. For a breach of the implied warranty of merchantability, the consumer must prove that the vehicle is unable to be used for its ordinary purposes.
What damages are consumers entitled to?
The MMWA usually limits its remedies to monetary damages. This means that consumers likely will not be able to receive a replacement vehicle, or a repurchase of their vehicle, but that they will be able to receive a refund of monetary funds that they have paid and retain possession of the original defective vehicle. If a consumer files a successful action under the MMWA, they are entitled to a refund amount equal to the difference between the original purchase price of the vehicle and the price that they would have paid if they had known that the vehicle was defective. Consumers may also be able to recover reimbursements for costs and expenses related to the repair of the defect(s). In addition to damages, because of the MMWA’s fee-shifting provision, successful consumers are able to collect their reasonable attorney’s fees and costs as well.