How Warranties Work: 1. What is a Warranty?

How Warranties Work:  1.  What is a Warranty?

The Problem with Warranties

Suppose Oswald buys his flooring from a retailer (like us), who offers it with a manufacturer’s (where we get it) warranty. He hires installers, who provide guarantees. His floor is installed, and then he sees a big problem with it – there are bigger gaps than there should be between the planks. Oswald speaks to the installers, and they say that they install flooring all the time in the same manner with no problems, so the flooring was badly manufactured. Then Oswald contacts the manufacturers, and they say that their flooring is fine, that products from the same run have been installed elsewhere with no problems, and they blame the installers for improper installation.

Waranty Comic

What is supposed to be protecting Oswald right now is called the warranty, in his case at least two different ones. That there are two may seem like a problem in this case, but it doesn’t have to be. In the U.S., warranties are mostly really great things, especially since 1975, but not everybody understands how they work, or when they apply to this guy vs. that guy. I’m going to go over them, kind of at length, but in a way that I think could help for the rest of your shopping life - not just with flooring, but with cars, paint, blu-ray players and bananas. Yes, even bananas.

What Are Warranties, Exactly, and Where Do They Come From?

A Wanamaker's Guarantee Tag

John Wanamaker, famous for pioneering the department store in Philadelphia in 1877, has a number of other firsts to his credit. He opened a restaurant in his store in 1876, had electric lights by 1878, in-store elevators in 1889, and is credited with inventing, among other shopping concepts, the “White Sale.” Unusual in his time, his employees were treated with respect, and were offered on site recreational facilities, free medical care, paid vacations, profit sharing plans and pensions.

For decades, none of these were standard (some still aren’t). Another first was that he guaranteed – in print – the quality of the things he sold. Three years before converting his business into the department store of fame, he published the first store advertisements to ever be copyrighted. They cited facts and made promises, including money back guarantees. What surprised people was that he kept his word, and when he did, that earned him trust that never went away. His business took off like a rocket.

Wanamaker's headline

That promise we can call the first warranty.

Definition of a Warranty

A warranty could also be called a guarantee. Basically, it’s a contract between the seller and the purchaser of some product, committing the seller to the promise that the product will work properly, and if it fails to do so, that it will be replaced or repaired, or the buyer will be given either credit or a refund. That much you probably already knew.

What you may not have considered is that a warranty can do as much to protect the seller as it does the buyer. By listing what is covered, for the most part everything else is therefore agreed to be not covered. Also, there is no law requiring how long a warranty must last, or even that any written warranty at all must be provided. No one really has to do it, though even this doesn’t mean that the seller is free of all responsibility for the quality of the products sold.

There is a law governing how a warranty is to be handled if one is provided. It was passed in 1975, and is called…

The Magnuson-Moss Warranty Act

California Representative John E. Moss Washington Senator Warren G. Magnuson Utah Senator Frank Moss

It turns out that not everybody had the ethics of Mr. Wanamaker, so on January 4, 1975 congress and President Gerald Ford decided to improve market competition as well as the quality of information available to customers (primarily to prevent deception on the part of sellers) by codifying into law some requirements for any written warranty, should one be offered. Here is what any written warranty must do.

1. It must be available to the customer before the purchase is made, and it must clearly explain, in language that is simple to understand, the full terms of the guarantee. No language may be used which could mislead a reasonable person. The seller has full responsibility for making the wording clear. It is not the customer’s job to decode it.

Warranty in hand photo by trenttsd

2. It must have the names and addresses of those responsible for backing up the guarantee, the people you go to when your thing breaks.

3. It must state exactly who may benefit from the warranty. For instance, some warranties are only in effect for the original purchaser of a product. If that person sells or gives it to someone else, the warranty expires because the original seller can’t control the condition it's in when it is re-sold, or what is said about it at the time of the resale. The reseller may make promises the product can’t keep, you see, so we don’t get to expect Michelin to stand behind tires we buy off of Craig’s List.

4. It must make clear exactly what the customer must do, and what costs she may bear, to keep the warranty in force. This would include general maintenance, explained step by step, as well as things like “Warranty void if Mogwai is fed after midnight” or “if customer rolls the Fabergé egg down a dry, rocky hill in the desert” (this is where the warranty protects the seller from, you know, the generally careless). Warranty void image by By jonssonNow, the seller may designate people, or types of people (like "Certified Apple Technicians"), to be authorized to perform any of the obligations they list, including repair or even maintenance. They may not turn the warranty into an underhanded sales agreement by insisting that in order to keep it valid you must use their brand of cleaners, or their own services. Only if they can prove to the Federal Trade Commission that really, they alone can make or do these things properly, then in such a case the FTC may waive this restriction.

5. The warranty must list the exact products or parts it covers, and any characteristics, properties or parts that it does not cover. It must also state the duration of the warranty, and exactly what will be done in the event the product fails to meet the warranty’s guarantees.

6. It must list any exceptions and exclusions affecting the warranty, and give at the very least a brief description of the legal remedies available to the customer.  

Not covered by this law. The Magnuson-Moss law does not cover any oral agreements, so spoken guarantees are not bound by this particular law, only the written ones. It also does not cover services. Only consumer goods are covered.

If you want to go straight to the source, the law itself can be found here: U.S. Government Printing Office

It’s only a couple of pages long, and most of it is surprisingly clear. It didn’t come up very easily in my searches, so I wanted you to have it handy here. You can also find Wikipedia articles and other pages about the law by Googling “Magnuson-Moss” or “15 USC § 2301” (that's the law’s number), but the link above takes you right to the source.

The full series:

pt.1: What is a Warranty

pt.2: Basic Types - Express & Implied Warranties

pt.3: Basic Types – Full, Extended and Limited Warranties

pt.4: Warranty Caveats (the “bewares”)

pt.5: Who is Responsible?

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David has written and made videos about flooring products and installation since 2011 at Floors To Your Home (.com), where he is also the PPC Manager, a Researcher, a Website & Marketing Strategy Team member, Videographer, Social Strategist, Photographer and all around Resource Jito. In my spare time I shoot and edit video, put together a podcast, explore film history, and mix music (as in ‘play with Beatles multi-tracks’). Connect with  W. David Lichty


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