[Code of Federal Regulations]
[Title 16, Volume 1]
[Revised as of January 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 16CFR700.6]

[Page 529]
 
                     TITLE 16--COMMERCIAL PRACTICES
 
                   CHAPTER I--FEDERAL TRADE COMMISSION
 
PART 700--INTERPRETATIONS OF MAGNUSON-MOSS WARRANTY ACT--Table of Contents
 
Sec. 700.6  Designation of warranties.

    (a) Section 103 of the Act provides that written warranties on 
consumer products manufactured after July 4, 1975, and actually costing 
the consumer more than $10, excluding tax, must be designated either 
``Full (statement of duration) Warranty'' or ``Limited Warranty''. 
Warrantors may include a statement of duration in a limited warranty 
designation. The designation or designations should appear clearly and 
conspicuously as a caption, or prominent title, clearly separated from 
the text of the warranty. The full (statement of duration) warranty and 
limited warranty are the exclusive designations permitted under the Act, 
unless a specific exception is created by rule.
    (b) Section 104(b)(4) states that ``the duties under subsection (a) 
(of section 104) extend from the warrantor to each person who is a 
consumer with respect to the consumer product.'' Section 101(3) defines 
a consumer as ``a buyer (other than for purposes of resale) of any 
consumer product, any person to whom such product is transferred during 
the duration of an implied or written warranty (or service contract) 
applicable to the product. * * *.'' Therefore, a full warranty may not 
expressly restrict the warranty rights of a transferee during its stated 
duration. However, where the duration of a full warranty is defined 
solely in terms of first purchaser ownership there can be no violation 
of section 104(b)(4), since the duration of the warranty expires, by 
definition, at the time of transfer. No rights of a subsequent 
transferee are cut off as there is no transfer of ownership ``during the 
duration of (any) warranty.'' Thus, these provisions do not preclude the 
offering of a full warranty with its duration determined exclusively by 
the period during which the first purchaser owns the product, or uses it 
in conjunction with another product. For example, an automotive battery 
or muffler warranty may be designated as ``full warranty for as long as 
you own your car.'' Because this type of warranty leads the consumer to 
believe that proof of purchase is not needed so long as he or she owns 
the product a duty to furnish documentary proof may not be reasonably 
imposed on the consumer under this type of warranty. The burden is on 
the warrantor to prove that a particular claimant under this type of 
warranty is not the original purchaser or owner of the product. 
Warrantors or their designated agents may, however, ask consumers to 
state or affirm that they are the first purchaser of the product.