Reed Smith Client Alerts

In May 2021, the Federal Trade Commission (FTC) published a report about “anti-competitive repair restrictions” in the United States. The report examined how the FTC could expand consumers’ repair options. Earlier this month, President Biden signed an executive order urging the FTC to start enforcing existing laws around the so-called "Right to Repair" under the Magnuson Moss Warranty Act (MMWA). On July 21, 2021, the FTC responded by unanimously adopting a policy statement that is aimed at stepping up enforcement of existing laws around the “Right to Repair.”

The new policy statement, which is not authoritative law, announces that the laws that inhibit manufacturers from imposing restrictions on self-help repairs or repairs by parties unaffiliated with the original manufacturer of the product will be enforced more aggressively. Although these laws, primarily the MMWA and section 5 of the Federal Trade Commission Act, (FTC Act) have not been enforced vigorously to date, enforcement now will be a priority.

Specifically, the policy statement states that the FTC is going to encourage submission of complaints from the public and presumably from consumer rights advocacy groups. The FTC intends to increase enforcement activity and it will also closely monitor private litigation with an eye toward investigating companies that appear to be engaged in a pattern of unlawful behavior with regard to restrictions on repairs. The FTC will explore rulemaking options as well. The policy statement makes clear that the FTC will scrutinize repair restrictions under both consumer protection and antitrust principles.

With enforcement resources targeted at this particular area, and an independent agency appearing to be following orders from the White House, it would be prudent to take a fresh look at one’s warranty and repair policies and procedures now. What restrictions does your company place on the end user’s ability to replace parts or make repairs?

This increase in enforcement will apply to an enormous range of products. The MMWA applies to tangible personal property that is normally used for personal, family, or household purposes, i.e., a “consumer product.” For example, computer components meant for ordinary consumers are clearly within the scope of the MMWA. Even computer software has been held to be within the scope of the MMWA’s definition of a “consumer product.” Any ambiguity as to whether a product is covered will be resolved in favor of the consumer. The FTC staff has stated that if a product is used for both personal and commercial purposes, it comes within the scope of the MMWA. See 16 C.F.R. Sec. 700.1(a) (2019).