Federal Trade Commission regulations aimed at strengthening consumer protection under warranties are in reality forcing many businesses to drop full warranties in favor of limited ones, according to the U.S. Chamber of Commerce.
In a statement made before the FTC yesterday, COC attorney Barry A. Friedman said recently proposed FTC restrictions on full warranties would prove so costly and burdensome that manufacturers, retailers and other warrantors already are offering limited warranties instead of more beneficial full warranties. The limited warranties are not as stringently regulated by the FTC.
"Rather than offering benefits to the consumer," Freidman said, "the new rules are another nail in the coffin of the full warranty."
Full warranties are the type that specify a duration of time the product's performance will be guaranteed. They also impose certain standards of conduct on the manufacturers.
"Our fear is that the warranty area is over-regulated," Friedman said, citing recent remarks by FTC chairman Michael Pertschuk expressing his concern with excessive regulation.
Friedman attacked several specific proposals made by the FTC.
"The commission proposes that the warrantor, in all instances, bear the cost of returning the products to a warranty service point," Friedman said. He called that regulation "unacceptable," because it would lead to excessive costs being passed on to the consumer.
If consumers ship a product back, when in some cases it would be equally convenient to return the goods on a carry-in basis, the increased costs due to the shipping fees will have to be passed on, he said.
The rule also allows the consumer to take out "excessive insurance," and ship "by the most expensive means," when not necessary. "All of this," Friedman said, "would have to be paid for by the warrantor."
Friedman criticized another proposal that would require any product weighing over 35 pounds to be serviced in home, or be picked up by the warrantor.
Calling that restriction and related regulations concerning built-in equipment "complicated and arbitrary," Friedman recommended a "reasonableness" test in applying these requirements.
"The national chamber's members want to continue to offer full warranties which they view as valuable from a selling point of view and as beneficial to consumers," Friedman said in his filing. "However, they will not continue to do so if the cost imposed on the warrantor is prohibitive.
"If this rule is adopted, many warrantors will shift to limited warranties. The consumer will lose out."