December 19, 2006

Warranty Compliance Online:

Four years after first looking into online compliance with warranty laws, we find the situation has deteriorated, with many Web merchants completely ignoring disclosure rules. And the FTC remains silent.


Four years ago when we launched Warranty Week, one of the first articles took a look at federal warranty laws and how online merchants differed in the ways they achieved compliance with those laws.

Today, as we broadcast our final newsletter of the year, and as Web merchants are no doubt celebrating this morning's deadline for placing online orders that arrive before Christmas, we thought it was time to revisit that article, and revisit some of those Web sites to see if compliance had waxed or waned since 2002.

Sadly, what we found this time was that very few online merchants have invested any time or effort in compliance. While the Web shopping sites have made it amazingly easy to buy items selling for thousands of dollars with just a few clicks of a mouse, most still resort to postal options for the distribution of warranty information.

Cutting-Edge Technology

One Web site now brags that an order placed today will be available for pickup at a local outlet within 24 minutes, or a $24 gift card is yours. But the company still asks customers to mail them a letter to request a copy of the warranty. Several others virtually ignore product warranties even as they tout the benefits of extended warranties they have for sale. These would be laughable examples of how companies invest heavily in things that make them money and provide lip service for things that cost them money, except there are laws about these things.

A toothless Federal Trade Commission has abandoned enforcement of even the meager existing federal warranty disclosure laws, which allow online merchants to offer warranty information through the mail. In a retail shop, a merchant must keep copies of all written warranties either near the product or in a loose-leaf binder behind the counter or in the back room. Therefore, a consumer can ask a question and can immediately see the written warranty while they're still in the shop. The online analog would seem to be to provide warranty information through a few extra mouse clicks, but the FTC refrained from requiring this.

But Not for Warranty

Instead, for the online sales environment, the FTC has interpreted a 1975 law to allow online merchants to mail copies of written warranties to those who request them -- something even their in-person retail outlets cannot legally do. Although the FTC suggests that online merchants provide written warranty information through "click here" links, it does not require them to do so. Instead, it allows them to achieve minimal compliance by doing something as meager as posting a page containing a mailing address where consumers can send a letter requesting a free copy of the warranty via snail mail.

Want to know how easy it is to provide complete user manuals electronically? Click Here to see the actual user manual for the Panasonic TH-42PX60U 42" Diagonal Plasma HDTV that we shopped for, and go to page 48 of the PDF file to read the terms and conditions of the USA warranty. If you don't have an Adobe PDF document reader, download one at this site first. For our Canadian readers, your product warranty terms and conditions are on page 50 of the document.

Any online retailer that doesn't choose to include such a Click Here link on their product information page is just being lazy. It's not only more efficient; it's also less expensive than paper mail. The fastest a postal request for a copy of a written warranty could be met is five days: two days for the envelope to travel in each direction, and one day to process the request. The least it will cost is $1.98: 39 cents for the stamp on the initial request, and $1.59 postage for a five-ounce return shipment at the "Book Rate." We dare say that one could click on the above link continuously for five days and it wouldn't cost anyone two dollars in terms of either bandwidth or electricity, unless you're paying by the minute for both long distance and online time on a slow dialup connection (it's a 56-page, 3.6 MB file).

Besides cost and delay, though, there are also legal considerations. Any online retailer that doesn't offer to provide a written copy of the warranty to the shopper before they make their purchase may also be violating the Federal Trade Commission's Rule on Pre-Sale Availability of Written Warranty Terms, its interpretation of the federal Magnuson-Moss Warranty Act.

Updating Laws for the Online Era

The problem is, there were no online shopping sites when that law was written in 1975, and even telephone and catalog sales options were limited thirty years ago. But the FTC did try to update its interpretation, even if it gave online merchants an easy out to achieve compliance. According to a 2003 FTC document entitled Dot Com Disclosures, "Warranties communicated through visual text on Web sites are no different than paper versions and the same rules apply. The requirement to make warranties available at the point of purchase can be accomplished easily on the Internet. For example, Internet merchants may use a clearly-labeled hyperlink such as "click here for warranty information" to lead to the full text of the warranty. Because consumers may need to refer to the warranty while comparison shopping or after the purchase, the warranty should be presented in a way that is capable of being preserved, either by downloading or printing."

In a footnote, however, the FTC explains how online retailers can evade these meager requirements by simply informing the consumer how they can obtain free copies of the warranty by mail. But according to our own recent research, nowadays many online merchants don't even do that. And whether the FTC doesn't know or doesn't care, the effect is the same: online customers are lucky if the merchant even deigns to tell them how long the warranty lasts.

The problem is, the FTC hasn't really enforced these laws since 2002, when it went after PeoplePC in the summer, and again at the start of the holiday shopping season that year, when it sent threatening letters to 14 of the 23 online shopping sites its staff deemed were not in compliance with the pre-sale availability rule. It was right after that when Warranty Week published its compliance roundup, falling for the excuses delivered by an FTC spokeswoman as to why the 14 weren't being named.

"We name names when we bring cases," she said, and at that point no cases had been filed and no violations had been alleged. Well, here it is four years later and no cases had been filed and still no violations had been alleged.

Threatening Letters

In a November 2002 press release, the FTC said its staff "sent letters to these sites advising them to include on their websites either the full text of written warranties or a general statement that warranties could be obtained free upon request and an address where the warranty can be acquired. The letters also advised how clearly and properly labeled hyperlinks can be used to provide warranty information. Warranty information must be placed near the product description, or be located clearly and conspicuously in a separate information section on the website. It is not sufficient for sites to summarize simply the terms of a manufacturer�s warranty."

Keep in mind that a single sentence such as "to see the warranty, write us at this address" on any old Web page stuck anywhere on the Web site would have been sufficient in the eyes of the FTC to achieve compliance. So those 14 offenders didn't even have that. Some still don't.

However, we're not lawyers, and we're certainly not government lawyers, so we're not going to be the ones to decide who is and is not complying with the law. But we can read, and we can keyword search a Web site, and we know what a written warranty looks like. And we understand enough Web technology to know that any retailer that knows how do put extended warranty details onto a pop-up window or into a PDF file is being lazy when they ask a consumer to send them a letter for a copy of the written warranty.

What we've done in the text that follows is to take a closer look at the Web sites of 30 of the most popular online merchants, searching for the existence of product warranty and extended warranty information "near the product description," as the FTC suggests.

To keep it fair and simple, we shopped for a new Panasonic 42" plasma television or its equivalent, to make sure we were looking at the description of a product that definitely carries a manufacturer's warranty. In a few cases, we had to shop for a comparable brand or a slightly smaller screen size, and in one case we had to shop for a digital projector that was priced in the same range as the 42" plasma TV. In a few cases, we had to abandon shopping when it became clear that the products being sold were used, refurbished, or of questionable (grey market) origins.

Shopping for Warranty Compliance

What we did as we shopped was look for three items: 1) a summary of the warranty's duration (for both parts & labor), 2) a complete copy of the warranty's terms & conditions (or the address from which to obtain a free copy), and 3) details about extended warranties or service plans. The reason we searched for the latter was to see if, as we suspected, some merchants binged on the extended warranty details but skimped on the basic product warranty details.

To differentiate between those that went above and beyond the meager minimums required by the FTC and those that declined to comply with the law, we assigned some grades to each of the 30 Web merchants. Here are the grades and their meaning:

A -   Provides both an online summary of the warranty duration and a copy of the warranty terms and conditions.
B -   Easy access to both a warranty duration summary and an address to write for a copy of the full warranty.
C -   Hard-to-find address to write for a copy of the full warranty, and a meager summary of the warranty duration.
D -   Provides an online summary of the warranty duration but no address to write for a copy of the full warranty.
F -   Does not provide any product warranty information online.

Sears.com was the only online merchant to receive an A, because incredibly it was the only online merchant to take full advantage of the Web and email as a conduit for the distribution of warranty information. The difference between a B and a C was minimal: basically, it was a function of how easy the information was to find on the Web site. A grade of D was assigned to those who did not offer to provide a free copy of the warranty's terms & conditions, but who at least acknowledged that there was a warranty. A grade of F was assigned to those who did not use the word warranty at all.

Here are the notes on what we found:



Sears
Sears Holding Corp.
http://www.sears.com/

The main product page contains no warranty information, but it does include links to extended warranty offers. A supplemental "product spec" page details the warranty duration. A separate page that can be found in the customer service/product inquiries section asks the question, "Would you like more warranty information?" A Web form on that page asks the consumer for their name, email address and model number. Click submit, and within the hour, the merchant responds with a plain text email that contains a copy of the written warranty and all its terms and conditions.

Grade: A






Best Buy Co. Inc.
http://www.bestbuy.com/

The parts and labor warranty duration is summarized on the main product page, mixed in with product specs. A link to a "call or write" page to obtain full warranty terms and conditions is provided. No product manual is available online. Extended warranties are offered on the main product page.

Grade: B



Crutchfield Corp.
http://www.crutchfield.com/

The parts and labor warranty duration is summarized on the main product page, mixed in with product specs. There is a link on the main product page to a pop-up window detailing service plan offers. There is a link to a page containing an address to send a letter to request a copy of the manufacturer's warranty. No product manual is available online.

Grade: B



Dell Inc.
http://www.dell.com/

Dell doesn't sell the Panasonic model, so we shopped for a Dell 42" plasma screen instead. The main product page summarized the warranty duration. Footnotes at the bottom of that page include an address to send a letter to request a copy of the manufacturer's warranty, a summary of the company's onsite exchange service, and a link to page containing information about extended warranties. There is a link to a pop-up window that details Dell's warranty and return policies in general. No product manual is available online.

Grade: B



Staples Inc.
http://www.staples.com/

The merchant didn't stock Panasonic plasma sets, so we shopped for a Polaroid 37" model instead. The main product page included a summary of the warranty duration. A hyperlink for "warranty information" that was located at the bottom of the page provided a postal address where consumers can send a letter requesting free copies of all written warranties.

Grade: B



Tweeter Home Entertainment Group
http://www.tweeter.com/

The product's "key specs" page summarizes the warranty duration only. A "contact us" Web form within the customer service section of the Web site asks consumers who want to learn how to obtain a copy of a warranty to send the company an email, and promises a reply within two business days.

Grade: B






CompUSA.com
http://www.compusa.com/

The main product page does not mention either a product warranty or an extended warranty. A supplemental specifications page called "Take a Product Tour" explains that in-home warranty service is available. An "Add-Ons" page describes two- and four-year extended warranty offers. There is a page detailing the availability of warranty service centers, and another that provides an address in Dallas to write to for copies of the full text of all written warranties. No product manual is available online.

Grade: C



Fry's Electronics Inc.
http://www.frys.com/

The home page includes a link to a general "Please write us for warranty information" page. The main product page for the Panasonic TV also includes a link to this page, entitled "warranty info." There is no information about the duration of the warranty. No product manual is available online.

Grade: C



J&R Electronics Inc.
http://www.jr.com/

The main product page includes a link to a "Request a copy of the manufacturer's warranty" pop-up window. The merchant also offers extended warranties from the main product page. There is no information online about the warranty duration. No product manual is available online.

Grade: C



OfficeMax Inc.
http://www.officemax.com/

The merchant did not sell large flat screen TVs, so we shopped for an Optoma projector instead. The main product page listed the warranty duration only. It did not include any links to extended warranty offers. A pop-up window for returns and exchanges does not mention warranty. Customers can request a copy of a product's written warranty by either mailing a letter or filling out an online Web form. The Web form can be found by entering the word "warranty" into the Web site's internal search engine. No product manual is available online.

Grade: C



Ritz Camera
Ritz Interactive Inc.
http://www.ritzcamera.com/electronics.htm

The main product page included no warranty information. A separate page reachable through a return and exchange policies page includes an address to obtain free copies of written warranties. A search on the word warranty returned just one match, for a digital camera. No product manual is available online.

Grade: C



WalMart.com
Wal-Mart Stores Inc.
http://www.walmart.com/

The main product page includes a link for "warranty information" which connects to a page containing a summary of the duration of the product warranty and both a phone number and Web address for Panasonic. But the Web page is simply a general "contact us" Web form for all comments and questions, not a link to a product manual or warranty card. A search of the merchant's Web site using its internal search engine and the keyword "warranty" returned 126 matches, of which all were links to pages about extended service plans.

Grade: C






Buy.com Inc.
http://www.buy.com/

Buy.com didn't stock the 42" model so we shopped for a 50" Panasonic model instead. There's a link on the main product page to information about the merchant's return policy, but no warranty info. The merchant offers extended warranties from the main product page. Interestingly, Panasonic was running a "free five-year extended warranty" promotion through this merchant, and the claim form noted there was already a one-year warranty on the product. But that was the only mention on the entire Web site of the existence of a manufacturer's warranty. The internal search engine returned numerous results for the word "warranty," but all were product pages featuring extended warranty offers. No product manual is available online.

Grade: D



BuyDig.com
http://www.buydig.com/

The main product page notes that the unit carries a "USA Warranty." The supplemental product description page details the parts and labor warranty durations only. There's a link to information about the merchant's return policy, but no warranty info. There is no link to a "call or write" page to obtain full warranty terms and conditions. The merchant offers extended warranties from the main product page. A search for "warranty" returned no results. No product manual is available online.

Grade: D



Circuit City Stores Inc.
http://www.circuitcity.com/

The main product page does not mention the product warranty, but it does link to an extended warranty offer. A supplemental specifications page summarizes the parts and labor warranty durations. An accessories page notes that the box will contain an owner's manual and a "basic warranty." There is no link to a "call or write" page to obtain full warranty terms and conditions, but there is a page that compares manufacturer's warranties to extended warranties in general. Use of the site's internal search engine to find information on "warranty" brings the user back to this page. No product manual is available online.

Grade: D



Costco Wholesale Corp.
http://www.costco.com/

The merchant didn't stock the 42" Panasonic model, so we shopped for a 50" model instead. The main product page does not mention either a product warranty or an extended warranty. An optional installation service page listed a phone number to call "if you have questions on the service and/or warranty." Use of the internal search engine to find information on "warranty" resulted in links to nine product pages, seven of which were Dell branded products and two of which were Okidata extended warranty offers. No product manual is available online.

Grade: D



eBay Inc.
http://www.ebay.com/

We searched for new Panasonic 42" plasma HDTV models, and found 60 matches. We selected the first five that featured our model, the TH-42PX60U. Two of the five sellers included a summary of the manufacturer's parts and labor warranty durations. A third noted that the product had a "full manufacturer's warranty." The other two made no mention of a warranty of any kind. Use of the term warranty in the internal search engine resulted in 13,506 matches, most of which seemed to be products for sale that included the word warranty in the title. There was no warranty information link available on the help page. No product manual is available online.

Grade: D



H.H. Gregg Appliances Inc.
http://www.hhgregg.com/

The main product page contains no warranty or extended warranty information. A "specs" page summarizes the parts and labor warranty durations. A pop-up window on the product page explains the merchant's returns and exchanges policy. A repair service page contains no warranty information. There is no "call or write us for free copies of the warranty" page. No product manual is available online.

Grade: D



MSN Shopping
Microsoft Corp.
http://shopping.msn.com/

The "TV Shop" had a slightly different Panasonic model listed than the one we wanted. The main product details page included a summary of the warranty duration. But the actual sellers were the 38 merchants listed on the "compare prices" page, including many of those listed here. So strictly speaking, this Web site was not actually selling the televisions.

Grade: D



Office Depot Inc.
http://www.officedepot.com/

The merchant did not offer Panasonic plasma TVs, so we shopped for a 42" Philips model instead. The main product page did not include any warranty information. A "product details" page stated that the warranty was "1-year." That was the only mention of a warranty. There is no "call or write us for free copies of the warranty" page. Use of the term warranty in the internal search engine resulted in 37 matches, most of which seemed to be extended warranty offers. A refunds and exchanges page stated that "Some returns or exchange requests that don't qualify under Office Depot's return policy may qualify for service or repair under the appropriate manufacturer's warranty," but it did not say how customers could obtain a copy of any such warranty. No product manual is available online.

Grade: D



Overstock.com Inc.
http://www.overstock.com/

The company did not sell Panasonic plasma sets, so we shopped for a 42" Toshiba model instead. The main product page said the warranty was "90 Days - Manufacturer." A return policy page included no information about warranties. A "Help Center" link leads to a page about extended warranties. Use of the word warranty in the site's internal search engine led to a page about extended warranties. No product manual is available online.

Grade: D



Radio Shack Corp.
http://www.radioshack.com/

The merchant did not offer Panasonic plasma TVs, so we shopped for a 42" Philips model instead. The main product page and a supplemental "features" page summarized the warranty duration. A page called "Product Warranties" details the merchant's own 90-day warranties, which are effective when it sells a product with either no manufacturer's warranty or one with a duration shorter than 90 days. This page also states that "A copy of a specific warranty, where one is offered by a warrantor, will be made available for inspection before sale, upon specific request by our Catalog Number." But it provides no mailing address or phone number to make such a request. No product manual is available online.

Grade: D



Sam's Club
Wal-Mart Stores Inc.
http://www.samsclub.com/

The main product page contains no warranty information, but does include several service agreement links. An "additional info" page details the warranty duration. A search on the word warranty brings up a page about service agreements. A link to "terms and conditions" is also about those service agreements. There is no page that provides an address to write to for free copies of written warranties. No product manual is available online.

Grade: D



Ultimate Electronics
http://ultimateelectronics.com/

The product specifications page summarizes the warranty duration only. There was no information on extended warranties on that page. A search of the Web site using the search term "warranty" returned no matches. There is no page that provides an address to write to for free copies of written warranties. No product manual is available online.

Grade: D



Vann's Inc.
http://www.vanns.com/

The main product page contained no information on either warranties or service contracts, but a supplemental details page summarized the warranty duration. A box at the bottom of the page advertises a refurbished unit available "as is" at a significant discount. A return policy page contains no warranty information. Use of the Web site's internal search engine yields three links to service contracts available for Meade telescopes.

Grade: D






Amazon.com Inc.
http://amazon.com/

There is no warranty information on the main product page, but there are links to extended warranty offers. No product manual is offered. No warranty terms & conditions document is offered. There is no offer to provide copies of written warranties to consumers.

Grade: F



BJ's Wholesale Club Inc.
http://www.bjs.com/

BJ's doesn't sell the Panasonic 42" model, so we shopped for a Toshiba 37" model instead. There is a link to detailed information about the merchant's return policy, but no warranty info. The internal search engine returned no results for the word "warranty." No product manual is available. No warranty terms & conditions document is available. There is no link to a "write for a copy of the warranty" page.

Grade: F



Kmart
Sears Holding Corp.
http://www.kmart.com/

The main product page contains no warranty information. There is no information about the warranty duration. There is no "call or write us for free copies of the warranty" page. Use of the term warranty in the internal search engine resulted in 152 matches, most of which seemed to be products for sale that included the word warranty in the title. No product manual is available online.

Grade: F



Shopzilla Inc.
Shopzilla.com
http://www.shopzilla.com/

Shopzilla is merely an online comparison shopping service, so it isn't a merchant in its own right. Instead, it compares prices for the consumer, including the prices of 40 different online merchants selling the Panasonic TH-42PX60U. Its own product details page includes no warranty information.

Grade: F



Target Corp.
http://www.target.com/

The main product page contained no warranty information, but it did include links to numerous extended warranty offers. There was no warranty information on any supplemental pages. A returns page asked for an order number, implying it was intended for post-sale use only. There was no warranty information available pre-sale. Use of the site's internal search engine with the word warranty returned 37 matches, including one for a music CD entitled "Out of Warranty." A link promising "warranty information" was instead a page detailing the merchant's extended service plans.

Grade: F



Ironies abound in these rankings. How could Sears get an A and Kmart get an F when both are now owned by the same holding company? How could Dell be under investigation by one government agency for its warranty practices when it meets and exceeds the warranty requirements of another government agency? And why has Wal-Mart achieved compliance when Sam's Club hasn't? Oops, we said we wouldn't try to do the work of government lawyers...

With this newsletter, we close out 2006 and begin to get ready for an exciting new year. Because of the way the calendar falls this year, we're going to take a break for both Dec. 26 and Jan. 2, returning with a fresh newsletter on Jan. 9. To our 4,200 email readers and countless others who read us on the Web, we wish you the best of holidays and a happy, healthy, and prosperous new year.


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