FTC Threatens Nintendo, Sony, And Microsoft With Legal Action Over Warranty Policies

The Federal Trade Commission has been busy in the gaming realm for the last couple of years, from getting reviewers to add disclosures to written and video content, to going after the big console manufacturers and VR makers for their warranty policies.

Motherboard is reporting that after getting their hands on letters from the FTC regarding the warranty policies of major gaming hardware manufacturers thanks to a Freedom of Information Act request, they discovered that the FTC censured Sony, Nintendo, Microsoft and HTC over their warranties.

The specific issue is that many hardware warranties claim that consumers are prohibited from getting their hardware repaired from third-party shops, repairmen or outlets. Sony, for instance has a sticker on the PS4 stating that the warranty for the console is voided if the sticker is removed, which typically has to happen if you want to open the console to repair it. Only Sony's technicians are supposedly allowed to touch the PlayStation 4 hardware.

Microsoft, Nintendo, Hyundai, HTC and Asus were also all guilty of utilizing these kind of illegal warranty policies in order to force gamers to only send the hardware to the manufacturer for repair instead of allowing someone else to repair the console or device.

The Federal Trade Commission stated that these sorts of policies are illegal because anything that costs over $5 should not have a repair restriction put upon it when a warranty is offered. This has actually been the case for the last 43 years, since the Magnuson-Moss Warranty Act passed back in 1975, making it illegal for companies to deny customers the right to have any device that cost over $5 to be repaired by a third-party, or else the warranty would be voided.

The FTC also warned Sony, HTC, and Asus that adding stickers claiming that removing the warranty-void-if-removed seals are actually illegal as well.

FTC director of marketing practices, Lois Greisman, originally sent the letters out on April 9th, 2018. The significance of this is that Greisman gave the six electronics manufacturers 30 days to correct the issues regarding the warranty policies for their devices.

If the six companies do not fix the warranty issues then the Federal Trade Commission will seek to take legal action against them. The thing is, none of the six companies would really have a case in court to defend their practices given that what each company is doing regarding the warranty seals and denying consumers the right to get devices repaired by third-parties is blatantly illegal.

The real test will be how each company responds to this request, and whether the warranty policies will be updated by May 9th or if the FTC's hand will be forced to take legal action against Sony, Microsoft, Nintendo, Hyundai, Asus and HTC.

I imagine right now none of the companies want to be in a position where their momentum is jeopardized, especially Sony and Nintendo. At the moment, HTC is still trying to gain a foothold in the VR market, and Microsoft is banking on a big E3 to elevate its market momentum. Getting caught up in a lawsuit over consumer rights is likely something each of the six will want to avoid at all costs.