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[Senate Report 114-77]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 142
114th Congress  }                                        {       Report
                                 SENATE
 1st Session    }                                        {       114-77                                       
                                                                 
_______________________________________________________________________

                                     
                                                    
                         E-WARRANTY ACT OF 2015

                               __________

                              R E P O R T

                                 of the

           COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                                   on

                                S. 1359

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                  July 7, 2015.--Ordered to be printed
                  
                                    ______

                         U.S. GOVERNMENT PUBLISHING OFFICE 

49-010                         WASHINGTON : 2015                  
                  
                  
                  
                  
                  
                  
                  
       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
                    one hundred fourteenth congress
                             first session

                   JOHN THUNE, South Dakota, Chairman
 ROGER F. WICKER, Mississippi         BILL NELSON, Florida
 ROY BLUNT, Missouri                  MARIA CANTWELL, Washington
 MARCO RUBIO, Florida                 CLAIRE McCASKILL, Missouri
 KELLY AYOTTE, New Hampshire          AMY KLOBUCHAR, Minnesota
 TED CRUZ, Texas                      RICHARD BLUMENTHAL, Connecticut
 DEB FISCHER, Nebraska                BRIAN SCHATZ, Hawaii
 JERRY MORAN, Kansas                  ED MARKEY, Massachusetts
 DAN SULLIVAN, Alaska                 CORY BOOKER, New Jersey
 RON JOHNSON, Wisconsin               TOM UDALL, New Mexico
 DEAN HELLER, Nevada                  JOE MANCHIN, West Virginia
 CORY GARDNER, Colorado               GARY PETERS, Michigan
 STEVE DAINES, Montana
                    David Schwietert, Staff Director
                   Nick Rossi, Deputy Staff Director
                    Rebecca Seidel, General Counsel
                 Kim Lipsky, Democratic Staff Director
           Christopher Day, Democratic Deputy Staff Director
                 Clint Odom, Democratic General Counsel
                 
                 
                 
                 
                 
                 
                                                       Calendar No. 142
114th Congress   }                                       {      Report
                                 SENATE
 1st Session     }                                       {      114-77

======================================================================

 
                         E-WARRANTY ACT OF 2015

                                _______
                                

                  July 7, 2015.--Ordered to be printed

                                _______
                                

Mr. Thune, from the Committee on Commerce, Science, and Transportation, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 1359]

    The Committee on Commerce, Science, and Transportation, to 
which was referred the bill (S. 1359) to allow manufacturers to 
meet warranty and labeling requirements for consumer products 
by displaying the terms of warranties on Internet websites, 
having considered the same, reports favorably thereon without 
amendment and recommends that the bill do pass.

                          Purpose of the Bill

    The purpose of S. 1359, the E-Warranty Act of 2015, is to 
modernize the warranty notice rules by allowing manufacturers 
to meet their warranty and applicable labeling requirements by 
making warranty information available online.

                          Background and Needs

    The Federal Trade Commission (FTC) currently enforces rules 
governing the content and availability of product warranties. 
While there are no requirements that manufacturers provide 
warranties for their products, if manufacturers choose to 
provide warranties, the Magnuson-Moss Warranty-Federal Trade 
Commission Improvement Act (15 U.S.C. 2301 et seq.) (Magnuson-
Moss Warranty Act) and the FTC warranty rules require sellers 
and warrantors to disclose specific terms and to make the terms 
available to consumers prior to sale (see parts 701 and 702 of 
title 16, Code of Federal Regulations).
    The FTC adopted its Disclosure of Written Consumer Product 
Warranty Terms and Conditions Rule (16 C.F.R. Part 701) 
(Disclosure Rule) and Pre-Sale Availability Rule (16 C.F.R. 
Part 702) in 1975. Since the 1970s, significant changes in 
technology and information dissemination have occurred. 
However, the FTC has not updated these provisions to reflect 
modern methods of communication.
    The Disclosure Rule contains specific requirements for 
written warranties for consumer products costing more than $15, 
including that the warranty clearly and conspicuously disclose 
in a single document in simple and readily understood language, 
certain information such as the identity of the party to whom 
the written warranty is extended, and a clear description and 
identification of the products covered by the warranty.
    The Pre-Sale Availability Rule states that for consumer 
products with written warranties and costing more than $15, 
sellers are required to make the text of the warranties readily 
available for inspection by prospective buyers. This can happen 
by displaying them in close proximity to the products or 
furnishing them upon request prior to sale. If sellers choose 
the latter, they must also place signs reasonably calculated to 
elicit the prospective buyers attention in the store or 
department, advising them of the availability of the warranties 
upon request. The rule further specifies that, for these 
consumer products, manufacturers must provide sellers with 
written warranty materials necessary for sellers to comply with 
the rule's requirements.
    Manufacturers may meet the Pre-Sale Availability Rule 
requirements by providing the materials to the retailers in a 
number of ways: providing copies of the warranties to be placed 
in a binder; providing warranty stickers, tags, signs, or 
posters; or printing warranties on the product's packaging.
    Under the current rules, manufacturers may not satisfy the 
warranty requirements by making applicable warranty information 
available only online. The FTC has interpreted the Pre-Sale 
Availability Rule to allow for manufacturers to provide 
electronic versions of consumer product warranties at the point 
of sale, written warranties that are included on CDs, DVDs, or 
on the internal drives of warranted products would qualify as 
being ``provided with'' or as ``accompanying'' the products, in 
compliance with the Pre-Sale Availability Rule. A plain reading 
of the rule contains no mention of electronic warranties 
satisfying its requirements.
    S. 1359, the E-Warranty Act of 2015, would modernize the 
warranty notice rules by allowing manufacturers to meet 
applicable warranty requirements by posting warranty 
information on their websites. It also would ensure that 
consumers and prospective consumers remain able to obtain 
copies of warranties at the point of sale. This accommodation 
would preserve the ability of consumers who do not have access 
to the Internet to receive warranty information.

                         Summary of Provisions

    The E-Warranty Act of 2015 would allow manufacturers and 
sellers to satisfy applicable warranty obligations by posting 
warranties online, while retaining consumers' rights to obtain 
paper copies at the point of sale or by other means. The FTC 
would have one year to revise its rules to be in compliance 
with the provisions of the bill.

                          Legislative History

    On May 14, 2015, Senator Fischer introduced S. 1359, the E-
Warranty Act of 2015. The bill is cosponsored by Senator 
Nelson. On May 20, 2015, in an open Executive Session, the 
Committee considered the bill. The Committee, by voice vote, 
ordered S. 1359 to be reported favorably without amendment.

                            Estimated Costs

    In accordance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate and section 403 of the 
Congressional Budget Act of 1974, the Committee provides the 
following cost estimate, prepared by the Congressional Budget 
Office:

S. 1359--E-Warranty Act of 2015

    Under current law, manufacturers of consumer products must 
provide written warranty information to consumers at the place 
where those goods are purchased. S. 1359 would allow those 
manufacturers to make such warranty information available on 
the Internet and remain in compliance with the law. The bill 
would require the Federal Trade Commission (FTC) to revise 
rules to reflect the new notification standards.
    Based on information from the FTC, CBO estimates that 
implementing the rulemaking requirement in S. 1359 would not 
have a significant effect on discretionary costs. Enacting S. 
1359 would not affect direct spending or revenues; therefore, 
pay-as-you-go procedures do not apply.
    S. 1359 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.
    The CBO staff contact for this estimate is Susan Willie. 
The estimate was approved by Theresa Gullo, Assistant Director 
for Budget Analysis.

                           Regulatory Impact

    In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee provides the 
following evaluation of the regulatory impact of the 
legislation, as reported:

                       number of persons covered

    S. 1359, as reported, would not impose any new regulatory 
requirements on businesses.

                            economic impact

    Enactment of this legislation is not expected to have an 
adverse impact on the Nation's economy.

                                privacy

    S. 1359 would not have an adverse impact on the personal 
privacy of individuals.

                               paperwork

    S. 1359 would not measurably increase paperwork 
requirements for most businesses.

                   Congressionally Directed Spending

    In compliance with paragraph 4(b) of rule XLIV of the 
Standing Rules of the Senate, the Committee provides that no 
provisions contained in the bill, as reported, meet the 
definition of congressionally directed spending items under the 
rule.

                      Section-by-Section Analysis

Section 1. Short title

    This section would establish the bill's short title as the 
``E-Warranty Act of 2015.''

Section 2. Findings

    This section would include findings that: (1) businesses 
and consumers prefer to have the option of receiving warranty 
information online; (2) modernizing warranty notification rules 
enhances the United States' global competitiveness; and (3) 
electronic warranties expand consumer access to information in 
an environmentally-friendly way.

Section 3. Electronic display of terms of written warranty for consumer 
        products

    This section would amend section 102(b) of the Magnuson-
Moss Warranty Act, (15 U.S.C. 2302(b)), so that a manufacturer 
would have the option of meeting the warranty notification 
requirements by posting its warranty information in an 
accessible digital format on the manufacturer's website and by 
making that warranty information available at the point of sale 
upon request. Manufacturers choosing to make their warranties 
available online would be required to provide consumers and 
prospective consumers with information on how to obtain and 
review their warranties. They could do so by indicating on the 
products themselves, their packaging, or in the product 
manuals, the Internet websites where the warranties can be 
viewed, and the phone numbers, mailing addresses or another 
reasonable non-Internet means that consumers may use to contact 
manufacturers to obtain copies of the warranties. The E-
Warranty Act would not change the rules regarding the content 
of the warranty information.
    This section also would require the FTC to revise its rules 
to comply with the requirements of the Act within 1 year of the 
date of enactment. Additionally, it would give the FTC the 
option of waiving the requirement of section 109(a) of the 
Magnuson-Moss Warranty Act, (15 U.S.C. 2309(a)), which requires 
the agency to give interested persons the opportunity for oral 
presentation, if it determines that giving interested persons 
that opportunity would interfere with the FTC's ability to 
revise the rules in a timely manner. Interested persons would 
still be permitted to submit written comments.

                        Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
material is printed in italic, existing law in which no change 
is proposed is shown in roman):

    MAGNUSON-MOSS WARRANTY--FEDERAL TRADE COMMISSION IMPROVEMENT ACT

                        [15 U.S.C. 2301 et seq.]

SEC. 102. RULES GOVERNING CONTENTS OF WARRANTIES.

[15 U.S.C. 2302]

           *       *       *       *       *       *       *

    (b) Availability of Terms to Consumer; Manner and Form for 
Presentation and Display of Information; Duration; Extension of 
Period for Written Warranty or Service Contract.--
          (1)(A) The Commission shall prescribe rules requiring 
        that the terms of any written warranty on a consumer 
        product be made available to the consumer (or 
        prospective consumer) prior to the sale of the product 
        to him.
          (B) The Commission may prescribe rules for 
        determining the manner and form in which information 
        with respect to any written warranty of a consumer 
        product shall be clearly and conspicuously presented or 
        displayed so as not to mislead the reasonable, average 
        consumer, when such information is contained in 
        advertising, labeling, point-of-sale material, or other 
        representations in writing.
          (2) Nothing in this title (other than paragraph (3) 
        of this subsection) shall be deemed to authorize the 
        Commission to prescribe the duration of written 
        warranties given or to require that a consumer product 
        or any of its components be warranted.
          (3) The Commission may prescribe rules for extending 
        the period of time a written warranty or service 
        contract is in effect to correspond with any period of 
        time in excess of a reasonable period (not less than 10 
        days) during which the consumer is deprived of the use 
        of such consumer product by reason of failure of the 
        product to conform with the written warranty or by 
        reason of the failure of the warrantor (or service 
        contractor) to carry out such warranty (or service 
        contract) within the period specified in the warranty 
        (or service contract).
          (4)(A) Except as provided in subparagraph (B), the 
        rules prescribed under this subsection shall allow for 
        the satisfaction of all requirements concerning the 
        availability of terms of a written warranty on a 
        consumer product under this subsection by--
                  (i) making available such terms in an 
                accessible digital format on the Internet 
                website of the manufacturer of the consumer 
                product in a clear and conspicuous manner; and
                  (ii) providing to the consumer (or 
                prospective consumer) information with respect 
                to how to obtain and review such terms by 
                indicating on the product or product packaging 
                or in the product manual--
                          (I) the Internet website of the 
                        manufacturer where such terms can be 
                        obtained and reviewed; and
                          (II) the phone number of the 
                        manufacturer, the postal mailing 
                        address of the manufacturer, or another 
                        reasonable non-Internet based means of 
                        contacting the manufacturer to obtain 
                        and review such terms.
          (B) With respect to any requirement that the terms of 
        any written warranty on a consumer product be made 
        available to the consumer (or prospective consumer) 
        prior to sale of the product, in a case in which a 
        consumer product is offered for sale in a retail 
        location, by catalog, or through door-to-door sales, 
        subparagraph (A) shall only apply if the seller makes 
        available at the location of the sale to the consumer 
        purchasing the consumer product the terms of the 
        warranty on the consumer product before the purchase.

           *       *       *       *       *       *       *

                                  [all]
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