The Federal Trade Commission is taking action against motorcycle manufacturer Harley-Davidson and Westinghouse outdoor generator maker MWE Investments for illegally restricting customers’ right to repair their purchased products. The FTC has charged that the companies’ warranties included terms that conveyed that the warranties would be void if customers used independent dealers for parts or repairs. The FTC has ordered that Harley-Davidson and MWE Investments to take several corrective actions including removing illegal terms and recognizing the right to repair in their warranties, making corrective notices to their respective customers, and instituting new policies to ensure that dealers compete fairly with independent third-parties for parts and repair work.
In recent months, the FTC has prioritized its protection of consumers’ right to repair their products. Right-to-repair was part of a sweeping executive order that President Joe Biden signed last summer. The FTC’s primary tool for addressing right-to-repair issues is the Magnuson-Moss Warranty Act (MMWA), which prohibits companies from conditioning warranty coverage on a consumer’s use of any article or service identified by brand name unless it is provided for free.
Harley-Davidson is one of the most recognized motorcycle brands worldwide. MWE Investments sells Westinghouse-brand outdoor power generators and related equipment. The products of both companies come with limited warranties that provide for no-cost repair or replacement in the event the products are defective or suffer from other issues.
According to the FTC’s complaints, the terms of both companies’ warranties violated the MMWA by voiding customers’ warranties if they used anyone other than the companies and their authorized dealers to get parts or repairs for their products. The FTC also alleged that Harley-Davidson failed to fully disclose all of the terms of its warranty in a single document, requiring consumers to contact an authorized dealership for full details. The FTC’s complaints outlined how these terms allegedly harm consumers and competition, including by:
- Restricting consumer choice regarding who performed service and repair work.
- Increasing costs to consumers by requiring them to use potentially more expensive OEM options.
- Depriving independent dealers and manufacturers of aftermarket parts of the ability to compete on a level playing field.
- Reducing resiliency by leaving consumers at the mercy of branded part supply chains and increasing waste in the form of products that could otherwise be fixed.
The FTC ordered Harley-Davidson and MWE Investments to:
- Commit no further violations of the MMWA, and in Harley-Davidson’s case, the Rule Governing Disclosure of Written Consumer Product Warranty Terms and Conditions, 16 C.F.R. § 701. This also includes being prohibited from telling consumers that their warranties will be void if they use third-party services or parts, or that they should only use branded parts or authorized service providers. Violations could lead to civil penalties of up to $46,517 per violation in federal court.
- Recognize consumers’ right to repair by adding specific language to their warranties saying, “Taking your product to be serviced by a repair shop that is not affiliated with or an authorized dealer of [Company] will not void this warranty. Also, using third-party parts will not void this warranty.”
- Notify customers that their warranties will remain in effect even if they buy aftermarket parts or patronize independent repair shops.
- Take steps to direct authorized dealers to remove deceptive display materials, train and monitor their employees, and not promote branded parts and dealers over third parties.
If you’re facing an FTC investigation or action or a business or class-action lawsuit, or the possibility of one, Lubin Austermuehle’s experienced Chicago consumer fraud and business fraud defense lawyers assist businesses that are the target of investigation by the Illinois Attorney General or the FTC or have been accused of fraud navigate these investigations and defend lawsuits or actions. Our Chicago business lawyers have more than thirty-five years of experience helping business clients defend against complex business fraud and breach of fiduciary duty cases. Our Chicago business, commercial, and class-action litigation lawyers represent individuals, family businesses and enterprises of all sizes in a variety of legal disputes, including disputes among partners and shareholders as well as lawsuits between businesses and consumer rights, auto fraud, and wage claim individual and class action cases. In every case, our goal is to resolve disputes as quickly and successfully as possible, helping business clients protect their investments and get back to business as usual. From offices in Elmhurst and Wilmette, we serve clients throughout the Chicagoland area and Illinois. You can contact us online here or call us on our locally at 630-333-0333.