UNITED STATES OF AMERICA

FEDERAL TRADE COMMISSION

WASHINGTON, D.C. 20580

Division of Marketing Practices

November 6, 2009

Stephen F. Ruffino 

Gibney Anthony & Flaherty LLP

665 Fifth Avenue

New York, NY 10022

Dear Mr. Ruffino: 

This letter responds to your request for a staff advisory opinion regarding compliance

with the Magnuson-Moss Warranty Act (“Act”), 15 U.S.C. §§ 2301-2312, and the Commission’s

rules promulgated under that Act. You seek guidance on the Act’s application to your client’s

one-year “Service Warranty.” According to your letter, your client provides this service

warranty after a consumer has purchased one of your client’s consumer products and

subsequently has had that product serviced through one of your client’s dealers or service

centers. Specifically, you ask whether this service warranty is a “written warranty” as that term

is defined in the Act. Based on the information you provide in your letter, and after considering

the purposes of the Act, it is the staff’s opinion that the service warranty you describe is not a

“written warranty” under the Act or the Commission’s rules. 

Your Client’s Course of Conduct and Proposal

In your letter you indicate that your client imports and distributes a line of high-end

consumer products. In connection with the sale of these products, your client offers from the

date of sale a Full Two-Year Warranty. This Full Two-Year Warranty provides that in the event

of a malfunction arising within the warranty period, your client will remedy any defects at no

cost to the consumer. 

After the expiration of the Full Two-Year Warranty period, consumers may choose to

purchase additional maintenance and service for the product in what you refer to as “Factory

Service.” This Factory Service requires that the consumer take the product to an authorized

dealer or service center for service. You indicate that this service can often entail a full overhaul

of the product. 

After the completion of this service, your client issues a one-year “Service Warranty” on

the serviced product, pursuant to which your client promises to remedy any defects at no cost to

the consumer for one year from the date of service. You indicate that there is no additional cost

for this Service Warranty. 
Mr. Stephen F. Ruffino

November 6, 2009

Page 2

1

 The term “consumer product” means “any tangible personal property which is

distributed in commerce and which is normally used for personal, family, or household purposes

(including any such property intended to be attached to or installed in any real property without

regard to whether it is so attached or installed).” 15 U.S.C. § 2301(1). 

2 See 16 C.F.R. §§ 701.1(c); 702.1(c); 703.1(c). As acknowledged in your letter, your

client’s Full Two-Year Warranty is a “written warranty” under the Act and Commission rules. 

Your client intends to revise its Service Warranty, but would like more flexibility in

drafting the text of the document. Therefore, you seek guidance on whether this Service

Warranty, which accompanies the serviced consumer product, is a “written warranty” as defined

in the Act.

The Warranty Act and Rules

The Act and Commission rules impose duties on warrantors that make written warranties

on consumer products.1

 Under the Act, a “written warranty” is defined as either:

(A) any written affirmation of fact or written promise made in connection with the

sale of a consumer product by a supplier to a buyer which relates to the nature of the

material or workmanship and affirms or promises that such material or workmanship

is defect free or will meet a specified level of performance over a specified period

of time, or

(B) any undertaking in writing in connection with the sale by a supplier of a

consumer product to refund, repair, replace, or take other remedial action with

respect to such product in the event that such product fails to meet the specifications

set forth in the undertaking, 

which written affirmation, promise, or undertaking becomes part of the basis of the

bargain between a supplier and a buyer for purposes other than resale of such

product. 

15 U.S.C. § 2301(6) (emphasis added). The Commission rules incorporate this definition of a

written warranty.2

The Act and rules specifically distinguish between a written warranty and a “service

contract.” A service contract is defined as a “contract in writing to perform, over a fixed period

of time or for a specified duration, services relating to the maintenance or repair (or both) of a

consumer product.” 15 U.S.C. § 2301(8). The Commission rules expand on the distinction

between a service contract and a written warranty, providing that a written warranty “must be

‘part of the basis of the bargain,’ ” meaning that it “must be conveyed at the time of sale of the

consumer product and the consumer must not give any consideration beyond the purchase of the

consumer product in order to benefit from the agreement.” 16 C.F.R. § 700.11(b).
Mr. Stephen F. Ruffino

November 6, 2009

Page 3

3

 Moreover, the staff’s conclusion that your client’s service warranty is not a written

warranty is not altered by 16 C.F.R. § 700.1(h), which addresses warranties on replacement

parts. Specifically, Rule 700.1(h) provides that “warranties on replacement parts and

components used to repair consumer products are covered; warranties on services are not.” Rule

700.1(h) is intended to address “aftermarket” replacement products that are purchased by

consumers, and merely indicates that where a written warranty covers both parts and services, it

is covered by the Act. See Curtis R. Reitz, Consumer Product Warranties Under Federal and

State Laws § 13.06 (2d ed. 1987). This provision, however, does not impact the meaning of a

“written warranty” under the Act, nor does it alter the “basis of the bargain” test.

Discussion

After considering the plain language of the Act and the purposes of the statute, it is the

staff’s opinion that the service warranty you describe would not be a “written warranty” under

the Act. 

First, the plain language of the Act provides that a “written warranty” must be part of the

basis of the bargain and must be made “in connection with the sale” of a consumer product. 15

U.S.C. § 2301(6). Your client’s “service warranty,” however, is provided to consumers after

they have purchased the consumer product and therefore forms no part of the basis of the

bargain. 

Second, the purposes of the Act would not be furthered by a determination that your

client’s service warranty is a written warranty under the Act. In passing the Act, it was

Congress’s intent that consumers receive clear and complete information about warranty

coverage prior to sale; that consumers understand fully what to expect in the event of a consumer

product failure or malfunction; and that manufacturers compete on the basis of warranty

coverage. 15 U.S.C. § 2302(a). It is the staff’s opinion that these purposes have little

application in the context of your client’s service warranty. 

You indicate in your letter that your client’s Full Two-Year Warranty fully complies with

the Act. Accordingly, consumers have presumably received complete information about

warranty coverage prior to sale and understand what to expect in the event of product failure or

malfunction. Therefore, the first two purposes of the Act are served by the provision of the Full

Two-Year Warranty. A determination that your client’s service warranty is a written warranty 

would do little to further these purposes because the consumer has already received information

regarding warranty coverage and would have been able to use that information in making a

purchasing decision. Similarly, a determination that the service warranty is not a written

warranty would not impact competition on the basis of warranty coverage because the consumer

has already purchased the consumer product.3
Mr. Stephen F. Ruffino

November 6, 2009

Page 4

Conclusion

Based on the plain text of the Act, which requires that a “written warranty” form part of

the basis of the bargain of the original sale, and because designating your client’s service

warranty a “written warranty” would do little to advance the purposes of the Act, it is the staff’s

opinion that the service warranty you describe would not be a written warranty under the Act. 

The opinions and conclusions expressed in the foregoing discussion are those of

Commission staff only and are not attributable to, nor binding on, the Commission itself

or any individual Commissioner. I hope this discussion is helpful to you. If you have any further

questions, please do not hesitate to contact me at (202) 326-2505.

Sincerely, 

Allyson Himelfarb

Investigator/Magnuson-Moss

Program Coordinator