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Microsoft, Nintendo, and Sony warned by FTC about potentially illegal product warranties

Microsoft, Nintendo, and Sony warned by FTC about potentially illegal product warranties

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Six major companies including Microsoft, Nintendo, and Sony have received letters from the US Federal Trade Commission warning that some of their product warranties may be in violation of federal law. HTC, Asus, and Hyundai also received warnings. You can read all six over at Motherboard.

The FTC said that it sent warnings to six “major companies” last month, but it didn’t disclose which ones. Now, thanks to a Freedom of Information Act request filed by Motherboard, we know which companies received them.

All six companies are in hot water for limiting their warranties in ways that, the FTC believes, may be illegal. The limitations mostly revolve around requiring customers to only use a product with authorized parts or accessories and to only repair a product with authorized parts or services. In some cases, they also include stickers that supposedly void the warranty if removed. The FTC says none of those conditions are allowed.

Only Hyundai appears to have made a change so far

The six letters are largely the same, aside from where they specify each company’s potential wrongdoing. They explain that the companies may be in violation of the FTC Act and the Warranty Act, which include rules on warranty disclosure and prevent companies from conditioning warranties on the use of specific parts and services.

For instance, the FTC highlights a line from Microsoft that says, “Microsoft is not responsible and this warranty does not apply if your Xbox One or accessory is ... repaired by anyone other than Microsoft.” Nintendo has a line saying a warranty will be void if it is used with “products not sold or licensed by Nintendo.” Sony says the PS4’s warranty is void if a sticker has been “altered, defaced, or removed.”

None of these companies are in legal trouble just yet. For now, the FTC is sending out these letters in the hopes of getting them to voluntarily come into compliance with its interpretation of the law so that legal action isn’t necessary. But it’s only given the companies 30 days to change their practices. “This letter places you on notice that violations of Warranty and FTC Acts may result in legal action,” the letters say.

FTC investigators plan to review the companies’ policies again once that time has elapsed — which, at this point, is just a week away. It appears that only Hyundai has made changes so far. The automaker pulled a notice on its website on why it’s “important to insist on Hyundai Genuine Parts,” and other warranty information includes notes that owners “may elect to use non-genuine parts.”

Microsoft, Nintendo, Sony, HTC, and Asus still include the language quoted by the FTC in warranty information on their websites.

More broadly, the FTC is likely trying to make an example of these companies to remind others in the industry that these types of limitations aren’t appropriate. There have long been complaints by consumers about limitations around repairs; and while this won’t fix the bigger-picture issue that parts simply often aren’t available, it could at least make third parties more viable alternatives.