[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: 16CFR703.5]

[Page 538-539]
 
                     TITLE 16--COMMERCIAL PRACTICES
 
                   CHAPTER I--FEDERAL TRADE COMMISSION
 
PART 703--INFORMAL DISPUTE SETTLEMENT PROCEDURES--Table of Contents
 
Sec. 703.5  Operation of the Mechanism.

    (a) The Mechanism shall establish written operating procedures which 
shall include at least those items specified in paragraphs (b) through 
(j) of this section. Copies of the written procedures shall be made 
available to any person upon request.
    (b) Upon notification of a dispute, the Mechanism shall immediately 
inform both the warrantor and the consumer of receipt of the dispute.
    (c) The Mechanism shall investigate, gather and organize all 
information necessary for a fair and expeditious decision in each 
dispute. When any evidence gathered by or submitted to the Mechanism 
raises issues relating to the number of repair attempts, the length of 
repair periods, the possibility of unreasonable use of the product, or 
any other issues relevant in light of Title I of the Act (or rules 
thereunder), including issues relating to consequential damages, or any 
other remedy under the Act (or rules thereunder), the Mechanism shall 
investigate these issues. When information which will or may be used in 
the decision, submitted by one party, or a consultant under 
Sec. 703.4(b) of this part, or any other source tends to contradict 
facts submitted by the other party, the Mechanism shall clearly, 
accurately, and completely disclose to both parties the contradictory 
information (and its source) and shall provide both parties an 
opportunity to explain or rebut the information and to submit additional 
materials. The Mechanism shall not require any information not 
reasonably necessary to decide the dispute.
    (d) If the dispute has not been settled, the Mechanism shall, as 
expeditiously as possible but at least within 40 days of notification of 
the dispute, except as provided in paragraph (e) of this section:
    (1) Render a fair decision based on the information gathered as 
described in paragraph (c) of this section, and on any information 
submitted at an oral presentation which conforms to the requirements of 
paragraph (f) of this section (A decision shall include any remedies 
appropriate under the circumstances, including repair, replacement, 
refund, reimbursement for expenses, compensation for damages, and any 
other remedies available under the written warranty or the Act (or rules 
thereunder); and a decision shall state a specified reasonable time for 
performance);
    (2) Disclose to the warrantor its decision and the reasons therefor;
    (3) If the decision would require action on the part of the 
warrantor, determine whether, and to what extent, warrantor will abide 
by its decision; and
    (4) Disclose to the consumer its decision, the reasons therefor, 
warrantor's intended actions (if the decision would require action on 
the part of the warrantor), and the information described in paragraph 
(g) of this section. For purposes of paragraph (d) of this section a 
dispute shall be deemed settled when the Mechanism has ascertained from 
the consumer that:
    (i) The dispute has been settled to the consumer's satisfaction; and
    (ii) The settlement contains a specified reasonable time for 
performance.
    (e) The Mechanism may delay the performance of its duties under 
paragraph (d) of this section beyond the 40 day time limit:
    (1) Where the period of delay is due solely to failure of a consumer 
to provide promptly his or her name and address, brand name and model 
number of the product involved, and a statement as to the nature of the 
defect or other complaint; or
    (2) For a 7 day period in those cases where the consumer has made no 
attempt to seek redress directly from the warrantor.
    (f) The Mechanism may allow an oral presentation by a party to a 
dispute (or a party's representative) only if:
    (1) Both warrantor and consumer expressly agree to the presentation;

[[Page 539]]

    (2) Prior to agreement the Mechanism fully discloses to the consumer 
the following information:
    (i) That the presentation by either party will take place only if 
both parties so agree, but that if they agree, and one party fails to 
appear at the agreed upon time and place, the presentation by the other 
party may still be allowed;
    (ii) That the members will decide the dispute whether or not an oral 
presentation is made;
    (iii) The proposed date, time and place for the presentation; and
    (iv) A brief description of what will occur at the presentation 
including, if applicable, parties' rights to bring witnesses and/or 
counsel; and
    (3) Each party has the right to be present during the other party's 
oral presentation. Nothing contained in this paragraph (b) of this 
section shall preclude the Mechanism from allowing an oral presentation 
by one party, if the other party fails to appear at the agreed upon time 
and place, as long as all of the requirements of this paragraph have 
been satisfied.
    (g) The Mechanism shall inform the consumer, at the time of 
disclosure required in paragraph (d) of this section that:
    (1) If he or she is dissatisfied with its decision or warrantor's 
intended actions, or eventual performance, legal remedies, including use 
of small claims court, may be pursued;
    (2) The Mechanism's decision is admissible in evidence as provided 
in section 110(a)(3) of the Act; and
    (3) The consumer may obtain, at reasonable cost, copies of all 
Mechanism records relating to the consumer's dispute.
    (h) If the warrantor has agreed to perform any obligations, either 
as part of a settlement agreed to after notification to the Mechanism of 
the dispute or as a result of a decision under paragraph (d) of this 
section, the Mechanism shall ascertain from the consumer within 10 
working days of the date for performance whether performance has 
occurred.
    (i) A requirement that a consumer resort to the Mechanism prior to 
commencement of an action under section 110(d) of the Act shall be 
satisfied 40 days after notification to the Mechanism of the dispute or 
when the Mechanism completes all of its duties under paragraph (d) of 
this section, whichever occurs sooner. Except that, if the Mechanism 
delays performance of its paragraph (d) of this section duties as 
allowed by paragraph (e) of this section, the requirement that the 
consumer initially resort to the Mechanism shall not be satisfied until 
the period of delay allowed by paragraph (e) of this section has ended.
    (j) Decisions of the Mechanism shall not be legally binding on any 
person. However, the warrantor shall act in good faith, as provided in 
Sec. 703.2(g) of this part. In any civil action arising out of a 
warranty obligation and relating to a matter considered by the 
Mechanism, any decision of the Mechanism shall be admissible in 
evidence, as provided in section 110(a)(3) of the Act.