What is a Warranty?

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Definition:

A warranty is a promise that a product seller or manufacturer makes to repair or replace a defective product.

🤔 Understanding warranties

When you make a purchase, it’s reasonable to worry about what happens if the product breaks or is defective. To help ease these concerns, product sellers and manufacturers may offer a warranty, or a promise to the buyer that they’ll repair or replace defective products. Warranties typically cover a particular amount of time — For example, you might get a warranty that’s good for one year when you buy a new piece of electronic equipment. A company may refuse to honor the warranty if you neglect to meet certain conditions, like performing basic product maintenance, or if you alter or use the product improperly.

Example

Suppose that Sharon is buying a new smart TV for her home. The TV comes with a one-year warranty from the manufacturer. The seller (in this case the retail store selling the product) offers an additional extended warranty, which would cover Sharon’s purchase for five years in exchange for a small cost. Knowing how fickle technology can be, Sharon decides to buy the extended warranty to minimize the chances of having to buy a new one down the road. Two years later, Sharon’s TV suddenly stops working. The manufacturer’s warranty has expired, so Sharon takes the TV to the store where she bought it. Because she bought the extended warranty, the store agrees to replace her broken TV with a new one.

Takeaway

A warranty is like an insurance policy, but for a product purchase instead of an emergency...

When you buy a new car or home, you usually buy an insurance policy to protect you in case anything happens to it. In exchange for your premium, the insurance company agrees to cover any financial losses under certain circumstances. Similarly, a warranty helps shield you from potential losses when making a purchase. This peace of mind may be particularly helpful when a consumer buys something expensive.

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What is a warranty?

Through a warranty, a product seller or manufacturer promises a buyer that their product will work as advertised. Some warranties are implied, meaning state law requires sellers to replace malfunctioning products regardless of a written warranty. In other cases, sellers may have an explicit list of the types of damage they’ll cover and under what circumstances. Many products come with free warranties, but sellers and manufacturers may also offer extended warranties for an extra charge.

How does a warranty work?

Generally speaking, when a company sells a product, it’s promising buyers that the product will work in a certain way. If the purchased product arrives damaged or doesn’t work as advertised, in theory, the warrantor (aka the company that made the promise) will repair or replace the product or refund your money. But some warranties may operate differently than others, depending on the situation and the type of warranty. For example, some warranties are spelled out by the manufacturer or seller, while others are implied by state law. Some warranties may only be valid for a specified number of years, or under certain conditions.

What are the types of warranties?

  • Implied: A seller or manufacturer of a product may not necessarily communicate a warranty to the buyer, but it may still be implied under state law. Most states have implied warranties that cover just about every product. An implied warranty simply means that a product must actually do what the seller says it does. Otherwise, the seller has to provide a remedy (usually by replacing or repairing the product).
  • Express: An express warranty is one that a product seller writes into a sales contract. While the federal Magnuson-Moss Warranty Act regulates express warranties, sellers aren’t required to have them. Companies must designate any express warranties as either full or limited.
  • Full: To qualify as a full warranty, a seller has to provide the warranty service free of charge for anyone that owns the product. The seller can try to repair the product, but if that doesn’t work, it must either replace the product or offer a full refund — The buyer usually gets to decide which one. Finally, sellers can’t require buyers to perform any particular product maintenance or other duties for the warranty to apply.
  • Limited: A limited warranty is an express warranty that doesn’t meet the requirements of a full warranty. For products that cost $10 or more, the law requires the seller to state whether the warranty is full or limited. If a seller offers a warranty that only applies if you properly maintain the product, it’s considered a limited warranty (because it doesn’t meet the requirements to be a full warranty).
  • Lifetime: A lifetime warranty is a type of promise that many product sellers use, but there are different interpretations of what “lifetime” means. For some products, a lifetime warranty may last as long as the buyer is alive, but it could also mean something else. For example, the lifetime warranty on a car battery might only last for as long as you own the car. Whatever the case, federal law requires that the seller must disclose what its lifetime warranty covers.
  • Extended: A seller might offer an extended warranty to prolong the life of a product warranty or list what the warranty covers. Extended warranties usually come at an added cost.

What is the difference between a warranty and a guarantee?

A product seller might offer their buyers a warranty (usually in the form of a written agreement) to promise a replacement or refund if a product malfunctions or arrives damaged. In many cases, warranties must be in writing to be legally enforceable. But some companies use phrasing such as “satisfaction guarantee” or “money-back guarantee” as part of their advertising. This type of advertising promise is a guarantee, while a warranty is more of a contractual agreement.

Guarantees are often verbal rather than written, but still enforceable. Warranties usually have limits, while money-back guarantees often don’t. If a company uses this language in its advertising without disclosing its limitations, federal law requires that it must give a full refund to any customer who asks for one.

How long do warranties last?

There’s no hard and fast rule about how long warranties should last. Warranty periods can vary widely from one product to another. For example, you might buy a smart phone with a one-year limited warranty. You might buy an extended warranty for a car that lasts for many years. Even the duration of lifetime warranties varies widely, since some refer to the lifetime of the buyer, while others refer to the lifetime of the product in question.

There are some laws regulating the duration of warranties. If a product has an implied warranty, many states require that the seller honor that warranty for at least four years. It works a bit differently for sellers that use an express warranty. For example, if a seller has a limited warranty, state law might also limit the duration of its implied warranty. Under the federal warranty law, if a seller claims to have a full warranty, then there can be no time-limit attached to the implied warranty.

What does a warranty cover?

What a warranty covers depends primarily on the type of warranty you have. For example, implied warranties (which many states require) cover any situation where a product doesn’t work as it’s supposed to. That said, implied warranties don’t cover wear and tear or damage caused by the customer — That’s considered a failure to maintain or properly use the product.

State laws generally don’t require sellers to specify what their express warranties cover. However, federal law (aka the Magnuson-Moss Warranty Act of 1975) does require that sellers or manufacturers provide their buyers with written information about what the warranty covers. Warranties will also often explicitly list what’s not covered.

How does the manufacturer’s warranty law work?

Passed in 1975, the federal Magnuson-Moss Warranty Act sets the guidelines that manufacturers and sellers must follow when offering product warranties. The law doesn’t require manufacturers or sellers to offer warranties, but if they do, the law stipulates certain rules they must follow.

Most of the law’s provisions, such as the requirement for implied warranties, are specifically directed at sellers and merchants. That said, the law doesn’t require sellers to honor an implied warranty on a product that already has a manufacturer’s warranty. Regardless of who provides the warranty, they must follow the relevant federal and state warranty laws.

What are some reasons a warranty could be denied?

A warranty doesn’t always guarantee that a seller or manufacturer will replace your product or provide a refund if something goes wrong. Sellers can put certain terms in place that limit warranty coverage.

For example, a seller might require that the buyer provide proof of purchase before agreeing to honor a warranty. This might mean asking for documentation to show the date of the purchase, or to prove that the person claiming the warranty is the original buyer. Sellers and manufacturers might also require the buyer to perform certain maintenance on a product. For example, a tire company might provide a warranty on tires up to a particular number of miles, but only if you have your tires rotated regularly.

A seller or manufacturer might deny a warranty claim if the buyer didn’t use the product according to the manufacturer’s instructions. Let’s say you buy a smartphone and the manufacturer warranty includes specific instructions not to immerse the phone in water. But your phone turns out to have water damage (say, because you went swimming with your phone in your pocket). In that case, the manufacturer might deny your warranty request.

What should you do if a warranty isn’t honored?

There may be sellers that refuse to honor a warranty even when the law requires that they do. In this case, there are a few possible options to consider. It may be helpful to first review the product warranty thoroughly. A buyer might try to resolve the issue directly with the seller or manufacturer, by visiting the store where they bought the product, or by contacting their customer service department. If the retailer isn’t helpful, the buyer might try the product manufacturer.

Some state consumer protection agencies may be able to help mediate a warranty issue, or contact the company on the buyer’s behalf. In some cases, a buyer might decide to resolve the issue through civil court.

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