Grants More Flexibility in Giving Copies to Customers : FTC Eases Warranty Rules for Stores

The Federal Trade Commission voted Wednesday to give merchants more flexibility in providing copies of warranties to customers, but it will still insist that the information be made available to consumers before they make a purchase.

The current rule, including four specific methods to make warranties available, “has been an unqualified failure,” said J. Howard Beales of the commission’s Bureau of Consumer Protection.

The commission voted 2 to 1 to drop the specific requirements from the rules. Instead, merchants will have to make warranties “readily available upon request prior to the sale of any consumer product costing $15 or more.”

Acting Commission Chairman Terry Calvani said he supports the change in general but voted against it because a requirement is included for posting a sign stating that warranties are available on request.

“I cannot . . . support the . . . requirement that retailers post signs stating the obvious. The rule-making evidence demonstrates that the overwhelming majority of American consumers are fully aware of the availability of product warranties,” Calvani said.

Voting for the new rule were Commissioner Patricia P. Bailey and Commissioner Mary Azcuenaga.

An effective date for the change will be established following its publication in the Federal Register.

Meanwhile, the law continues to require merchants to make copies of warranties available--on products where they are offered--in one of four specific ways. Those include displaying the warranty on or near the product, keeping copies in an easily available binder, printing the warranty on the package or posting the warranties on a sign near the product.

Generally, Beales said, the rule has resulted in large firms being forced to maintain a binder of warranties in their stores, and keeping these records up-to-date can become a burden. Beales said elimination of this requirement would save merchants an estimated 4 million man-hours annually.

He said that, although the rules took effect in the late 1970s, many smaller firms are either unaware of the details or make little effort to comply.

“The proposed rule will give retailers the flexibility to design their own mechanisms for complying with the basic intent of the rule--making warranties available to consumers,” Beales said.

He said consumers would benefit by being able to see copies of warranties before they buy a product.

“These benefits can be achieved whether retailers use hangtags, displays or simply open packages to allow potential purchasers to see the warranties prior to sale,” he said.