One Class's Field Test of the Magnuson-Moss Disclosure Rules

§ 702.3(a) of the Magnuson-Moss Warranty regulations requires that sellers:

of a consumer product with a written warranty shall make a text of the warranty readily available for examination by the prospective buyer by:

(1) Displaying it in close proximity to the warranted product, or

(2) Furnishing it upon request prior to sale and placing signs reasonably calculated to elicit the prospective buyer's attention in prominent locations in the store or department advising such prospective buyers of the availability of warranties upon request.

The goal of the provision is obviously to enable consumers to shop for better warranty coverage if they are so inclined.  Our casebook suggests a field test of this provision in Problem 2-25, page 215: students are invited to visit local retailers selling appliances and determine compliance with the reg.  One professor who required students to conduct the field test was kind enough to share the student papers with me.  Most of the results would probably have disappointed  the drafters of Magnuson-Moss.  Though a salesperson at one store did offer to pull all the warranties out of the boxes (apparently making the student feel guilty) and another actually did so, others were less helpful.

Several of the salespeople responded by offering the terms of an extended warranty (which clearly doesn't comply with the reg) or by suggesting that the students check the warranties online (which is a closer question but in my view doesn't satisfy the reg either unless the store enables the customer to find the warranty on the web at the store).  My own personal favorite paper was written by a student who first encountered a salesperson who said all the warranties were the same and thought that the requirement was satisfied by the extended warranty brochure which, for comparison's purposes, included a summary of a typical manufacturer's warranty.  The student then asked for the manager.  After some back-and-forth, the manager asked another salesperson to get a warranty for a different product by the same manufacturer, saying that it was the same thing.  The manager's check of the manufacturer's web site found a general description of its warranty, but also elicited the news that the manufacturer provides in-home service for one year, something the manager hadn't known (so much for all warranties being the same).   Meanwhile, the salesperson had returned with the manual for the wrong product, which in any event did not contain the warranty.  Eventually, the manager became convinced that the student was a secret shopper checking up on him.  He disappeared into the back for at least ten minutes, and finally returned with the warranty for the correct product.  He also brought the student into the staff break room where he showed the student a plaque he had won for scoring a ten on a previous visit from a secret shopper.

Some other entertaining tidbits: one salesperson suggested that if a student was so interested in reading a warranty, she should just buy a TV.  Another pointed to a small card displaying the price and a description of the warranty as "one year parts and labor."  The card also stated that additional terms of the warranty were available upon request.  The clerk insisted that all of the information was available on the card and refused to give any other information.  Still another clerk said that getting the warranty would require ninety minutes because it had to be found on the web and printed out.

I suspect that if consumers genuinely cared about warranty terms, sellers would be more accustomed to such queries and would be better able to provide the warranties.  So maybe the field exercise tells us as much about consumers as it does about sellers.  If consumers don't care enough to ask for the warranties, is any purpose served by requiring sellers to have them on hand (which, in any event, often seems not to occur, if these experiences are representative)?

Comments

[Carl]

Interesting story, and one that I wouldn't have ever seen if I wasn't studying for your Consumer Protection final right now. This class has so many practical uses, I'm not sure what I'll do when its over!