The Federal Trade Commission is taking action against motorcycle manufacturer Harley-Davidson Motor Company Group, LLC and outdoor generator manufacturer Westinghouse MWE Investments, LLC for illegally restricting customers’ right to repair their purchased products. The FTC’s complaints allege that the companies’ warranties included terms that indicated that the warranty is void if customers use independent dealers for parts or repairs. The FTC is ordering Harley-Davidson and Westinghouse to fix warranties by removing illegal terms and acknowledging the right to repair, enlighten customers, and ensure dealers compete fairly with independent third parties.
“Consumers deserve choices when it comes to repairing their products, and independent dealers deserve a chance to compete,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection. “These orders require Harley and Westinghouse to service their warranties, be honest with consumers and ensure fair competition with independent suppliers. Other companies that repress consumers’ right to redress should take notice.”
Wisconsin-based Harley-Davidson sells motorcycles worldwide, and Ohio-based MWE Investments sells Westinghouse-branded outdoor power generators and related equipment. Each company offers limited warranties to consumers who purchase its products that offer free repair or replacement if the products become defective or have other problems.
The FTC has made it a priority to protect consumers’ right to have its products repaired. The Magnuson Moss Warranty Act is one of the FTC’s tools for dealing with repair restrictions. It prohibits a company from making the warranty of a consumer product conditional on the consumer using any article or service that is identified by the brand name, unless it is provided free of charge. Following the FTC Right to Repair report Undoing the correctionthe Commission issued a Policy statement on manufacturer-imposed repair restrictions pledging to intensify investigations into restrictions on illegal repairs.
According to FTC Complaints, both companies were enforcing illegal warranty terms that voided customers’ warranties if they used anyone other than the companies and their authorized dealers to obtain parts or repairs for their products. The FTC also alleged that Harley-Davidson did not disclose all of its warranty terms in a single document, requiring consumers to contact an authorized dealership for complete details. The FTC alleges that these terms harm consumers and competition in a number of ways, including:
- Restricting consumer choices: Consumers who buy a product covered by a warranty do so to protect their own interests, not those of the manufacturer. The companies’ warranties wrongly implied that, as a condition of maintaining warranty coverage, consumers had to use the company’s part or services for any repairs.
- Cost consumers more money: By informing consumers that their warranties will be void if they choose third-party parts or repair services, companies force consumers to use potentially more expensive options provided by the manufacturer. This violates the Warranty Act, which prohibits these provisions, unless a manufacturer provides the necessary parts or service free of charge under the warranty or receives an exception from the FTC.
- Undercutting from independent resellers: The Warranty Act’s prohibition of binding protects not only consumers, but also independent repairers and aftermarket parts manufacturers. By making their warranties conditional on the use of authorized service providers and branded parts, the companies violated the right of independent repairers and manufacturers to compete on equal terms.
- reducing resilience: Consumers trust companies’ products for emergency energy and transportation. Robust competition from aftermarket manufacturers is critical to ensuring that consumers get the replacement parts they need when they need it and are not at the mercy of branded parts supply chains. Stronger and more repairable products also lead to less waste in the form of products that could be repaired.
Under the FTC Act and the Warranty Act, the FTC has the authority to take action against companies that violate consumer protection laws, including those involved in unfair or deceptive acts or practices. FTC orders in these cases:
- Prohibit other violations: Companies will be prohibited from further violations of the Warranty Act and, in the case of Harley-Davidson, the Disclosure Rule. They will also be prohibited from informing consumers that their warranties will be void if they use third party parts or services, or that they must only use branded parts or authorized service providers. If companies violate these terms, the FTC could seek civil penalties of up to $46,517 per violation in federal court.
- Recognize the right of consumers to repair: Both companies will be required to add specific language to their warranties saying, “Take your product to be served by a repair shop that is not affiliated with or an authorized reseller of [Company] I will not go void this warranty. In addition, use of third-party parts will not void this warranty.”
- Come clean with consumers: both companies must send and publish notices informing customers that their warranties will remain in effect even if they purchase replacement parts or hire independent repairers.
- Alert dealers to compete fairly: Both companies are being required to instruct authorized dealers to remove misleading display materials, train and monitor employees, and not promote branded parts and dealers to the detriment of third parties.
The vote of the Commission to issue the administrative complaints and accept the consent agreement was 5-0. President Lina M. Khan and Commissioner Rebecca Kelly Slaughter issued a statement. The FTC will publish a description of the consent agreement package in the Federal Registry shortly. The agreement will be subject to public comment for 30 days, starting today and continuing through July 22, 2022, after which the Commission will decide whether the proposed consent order will be final. Instructions for submitting comments appear in the posted notice. Once processed, comments will be posted on Regulations.gov.