[House Report 114-243]
[From the U.S. Government Publishing Office]


114th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    114-243

======================================================================



 
                         E-WARRANTY ACT OF 2015

                                _______
                                

 September 8, 2015.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

  Mr. Upton, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 3154]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 3154) to allow manufacturers to meet warranty 
and labeling requirements for consumer products by displaying 
the terms of warranties on Internet websites, and for other 
purposes, having considered the same, report favorably thereon 
without amendment and recommend that the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Hearings.........................................................     3
Committee Consideration..........................................     3
Committee Votes..................................................     3
Committee Oversight Findings.....................................     3
Statement of General Performance Goals and Objectives............     3
New Budget Authority, Entitlement Authority, and Tax Expenditures     3
Earmark, Limited Tax Benefits, and Limited Tariff Benefits.......     3
Committee Cost Estimate..........................................     3
Congressional Budget Office Estimate.............................     4
Federal Mandates Statement.......................................     4
Duplication of Federal Programs..................................     5
Disclosure of Directed Rule Makings..............................     5
Advisory Committee Statement.....................................     5
Applicability to Legislative Branch..............................     5
Section-by-Section Analysis of the Legislation...................     5
Changes in Existing Law Made by the Bill, as Reported............     6

                          Purpose and Summary

    The purpose of H.R. 3154, E-Warranty Act of 2015, is to 
modernize the rules that manufacturers and sellers must follow 
to meet their warranty content and disclosure obligations by 
allowing online posting of such information in certain 
circumstances. The E-Warranty Act of 2015 would require the 
Federal Trade Commission (FTC) to update its rules to comply 
with the bill.

                  Background and Need for Legislation

    Currently, manufacturers of consumer products must provide 
written warranty information to consumers where the consumer 
products are purchased. Under the Magnuson-Moss Warranty-
Federal Trade Commission Improvement Act (15 U.S.C. 2301 et 
seq.), the FTC has rulemaking and enforcement authority over 
the content and availability of warranty disclosures at the 
point of sale where manufacturers choose to provide warranties. 
Today, the FTC does not permit manufacturers or sellers to meet 
their obligations by posting warranty information on their 
websites.
    In 1975, the FTC adopted its Disclosure of Written Consumer 
Product Warranty Terms and Conditions Rule (16 C.F.R. Part 701) 
(Disclosure Rule) and Pre-Sale Availability Rule (16 C.F.R. 
Part 702) for products costing the consumer more than $15. 
Although there have been significant technological advancements 
since 1975, the FTC has not updated these provisions to reflect 
modern methods of communication.
    The Disclosure Rule requires that warranty disclosures must 
be clearly and conspicuously disclosed in a single document in 
simple and readily understood language with nine elements 
including: the identity of the party to whom the written 
warranty is extended (e.g. original consumer purchaser); a 
description of the product covered by and where necessary for 
clarification, excluded from the warranty; the warranty 
duration; and a step-by-step explanation of the procedure that 
the consumer should follow in order to obtain performance of 
any warranty obligation.
    The Pre-Sale Availability Rule outlines the duties of both 
warrantors and sellers. Sellers are required to make the text 
of the warranty readily available for examination by the 
prospective buyer by displaying it in close proximity to the 
product or providing it upon request subject to certain 
disclosure requirements. Warrantors are required to provide the 
written warranty materials necessary for sellers to comply with 
the Rule. The Pre-Sale Availability Rule also includes 
particularized requirements for catalog sales, mail order 
sales, and door-to-door sales.
    Under the plain language of the current rules, 
manufacturers may not satisfy the warranty requirements by 
making applicable warranty information available only online. 
The FTC has interpreted the Pre-Sale Availability Rule to allow 
for manufacturers to provide electronic versions of consumer 
product warranties at the point of sale, written warranties 
that are included on CDs, DVDs, or on the internal drives of 
warranted products would qualify as being ``provided with'' or 
as ``accompanying'' the products, in compliance with the Pre-
Sale Availability Rule.
    H.R. 3154 would require the FTC to update the warranty 
rules to allow manufacturers to fulfill their obligations by 
making warranty information available online or through other 
electronic means while ensuring that consumers' and prospective 
consumers remain able to obtain copies of warranties at the 
point of sale without placing additional burdens on sellers.

                                Hearings

    The Committee on Energy and Commerce has not held hearings 
on the legislation.

                        Committee Consideration

    On July 23, 2015, the Subcommittee on Commerce, 
Manufacturing, and Trade met in open markup session and 
forwarded H.R. 3154 to the full Committee, without amendment, 
by a voice vote. On July 29, 2015, the full Committee on Energy 
and Commerce met in open markup session and ordered H.R. 3154 
reported to the House, without amendment, by a voice vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. 
There were no record votes taken in connection with ordering 
H.R. 3154 reported.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee has not held hearings 
on this legislation.

         Statement of General Performance Goals and Objectives

    The goal of H.R. 3154 is to allow manufacturers of consumer 
products to fulfill their warranty disclosure and labeling 
obligations through online or other electronic means in certain 
circumstances without limiting consumers' access to the 
warranty information.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
3154 would result in no new or increased budget authority, 
entitlement authority, or tax expenditures or revenues.

       Earmark, Limited Tax Benefits, and Limited Tariff Benefits

    In compliance with clause 9(e), 9(f), and 9(g) of rule XXI 
of the Rules of the House of Representatives, the Committee 
finds that H.R. 3154 contains no earmarks, limited tax 
benefits, or limited tariff benefits.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, August 19, 2015.
Hon. Fred Upton,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3154, the E-
Warranty Act of 2015.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Susan Willie.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

H.R. 3154--E-Warranty Act of 2015

    Under current law, manufacturers of consumer products must 
provide written warranty information to consumers at the place 
where those goods are purchased. H.R. 3154 would allow those 
manufacturers to make such warranty information available on 
the Internet and remain in compliance with the law. The bill 
would require the Federal Trade Commission (FTC) to revise 
rules to reflect the new notification standards.
    Based on information from the FTC, CBO estimates that 
implementing the rulemaking requirement in H.R. 3154 would not 
have a significant effect on discretionary costs. Enacting H.R. 
3154 would not affect direct spending or revenues; therefore, 
pay-as-you-go procedures do not apply.
    H.R. 3154 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.
    On June 10, 2015, CBO transmitted a cost estimate for S. 
1359, the E-Warranty Act of 2015, as ordered reported by the 
Senate Committee on Commerce, Science, and Transportation on 
May 20, 2015. The two pieces of legislation are similar and the 
estimated budgetary effects are the same.
    The CBO staff contact for this estimate is Susan Willie. 
The estimate was approved by H. Samuel Papenfuss, Deputy 
Assistant Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                    Duplication of Federal Programs

    No provision of H.R. 3154 establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

                  Disclosure of Directed Rule Makings

    The Committee estimates that enacting H.R. 3154 
specifically directs to be completed 1 rule making within the 
meaning of 5 U.S.C. 551.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    Section 1 provides that the Act may be cited as the ``E-
Warranty Act of 2015.''

Section 2. Findings

    This section includes Congressional findings that (1) 
manufacturers and consumers prefer to have the option to 
provide or receive warranty information online; (2) modernizing 
warrant notification rules is necessary to allow the United 
States to compete globally in manufacturing, trade, and the 
development of consumer products connected to the Internet; and 
(3) expanding consumer access to relevant consumer information 
in an environmentally friendly way and providing manufacturers 
flexibility to meet labeling and warranty requirements would be 
achieved by allowing an electronic warrant option.

Section 3. Electronic display of terms of written warranty for consumer 
        products

    This section would amend existing warranty disclosure 
provisions of the Magnuson-Moss Warranty Act to allow a seller 
to make written warranty terms available in an accessible 
digital format on the Internet website of the manufacturer of 
the consumer product and providing the consumer, or prospective 
consumer, with information about how to obtain and review the 
warranty terms by indicating on the product, the product 
packaging, or in the product manual the Internet website of the 
manufacturer where the warranty terms can be obtained and 
viewed and the phone number, postal mailing address, or other 
reasonable non-Internet based means of contacting the 
manufacturer to obtain and review the warranty terms.
    This section requires that, in the case where the terms of 
any written warranty must be disclosed to the consumer prior to 
the sale of the product at a retail location, by catalog, or 
through door-to-door sales, the option to provide the terms in 
an accessible digital format shall only apply if the seller 
makes the terms of the warranty available, through electronic 
or other means, at the location of the sale to the consumer.
    This section requires the Federal Trade Commission to 
revise the relevant rules to comply with the Act within one 
year of enactment. The Commission may waive the requirement of 
section 109(a) of the Magnuson-Mass Warranty-Federal Trade 
Commission Improvement Act (15 U.S.C. 2302(b)) to give 
interested persons an opportunity for oral presentation if the 
Commission determines that giving interested persons such 
opportunity would interfere with the ability of the Commission 
to revise the rules in a timely manner.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italics and existing law in which no change is 
proposed is shown in roman):

    MAGNUSON-MOSS WARRANTY--FEDERAL TRADE COMMISSION IMPROVEMENT ACT




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                          warranty provisions

  Sec. 102. (a) In order to improve the adequacy of information 
available to consumers, prevent deception, and improve 
competition in the marketing of consumer products, any 
warrantor warranting a consumer product to a consumer by means 
of a written warranty shall, to the extent required by rules of 
the Commission, fully and conspicuously disclose in simple and 
readily understood language the terms and conditions of such 
warranty. Such rules may require inclusion in the written 
warranty of any of the following items among others:
          (1) The clear identification of the names and 
        addresses of the warrantors.
          (2) The identity of the party or parties to whom the 
        warranty is extended.
          (3) The products or parts covered.
          (4) A statement of what the warrantor will do in the 
        event of a defect, malfunction, or failure to conform 
        with such written warranty--at whose expense--and for 
        what period of time.
          (5) A statement of what the consumer must do and 
        expenses he must bear.
          (6) Exceptions and exclusions from the terms of the 
        warranty.
          (7) The step-by-step procedure which the consumer 
        should take in order to obtain performance of any 
        obligation under the warranty, including the 
        identification of any person or class of persons 
        authorized to perform the obligations set forth in the 
        warranty.
          (8) Information respecting the availability of any 
        informal dispute settlement procedure offered by the 
        warrantor and a recital, where the warranty so 
        provides, that the purchaser may be required to resort 
        to such procedure before pursuing any legal remedies in 
        the courts.
          (9) A brief, general description of the legal 
        remedies available to the consumer.
          (10) The time at which the warrantor will perform any 
        obligations under the warranty.
          (11) The period of time within which, after notice of 
        a defect, malfunction, or failure to conform with the 
        warranty, the warrantor will perform any obligations 
        under the warranty.
          (12) The characteristics or properties of the 
        products, or parts thereof, that are not covered by the 
        warranty.
          (13) The elements of the warranty in words or phrases 
        which would not mislead a reasonable, average consumer 
        as to the nature or scope of the warranty.
  (b)(1)(A) The Commission shall prescribe rules requiring that 
the terms of any written warranty on a consumer product be made 
available to the consumer (or prospective consumer) prior to 
the sale of the product to him.
  (B) The Commission may prescribe rules for determining the 
manner and form in which information with respect to any 
written warranty of a consumer product shall be clearly and 
conspicuously presented or displayed so as not to mislead the 
reasonable, average consumer, when such information is 
contained in advertising, labeling, point-of-sale material, or 
other representations in writing.
  (2) Nothing in this title (other than paragraph (3) of this 
subsection) shall be deemed to authorize the Commission to 
prescribe the duration of written warranties given or to 
require that a consumer product or any of its components be 
warranted.
  (3) The Commission may prescribe rules for extending the 
period of time a written warranty or service contract is in 
effect to correspond with any period of time in excess of a 
reasonable period (not less than 10 days) during which the 
consumer is deprived of the use of such consumer product by 
reason of failure of the product to conform with the written 
warranty or by reason of the failure of the warrantor (or 
service contract) to carry out such warranty (or service 
contract) within the period specified in the warranty (or 
service contract).
  (4)(A) Except as provided in subparagraph (B), the rules 
prescribed under this subsection shall allow for the 
satisfaction of all requirements concerning the availability of 
terms of a written warranty on a consumer product under this 
subsection by--
                  (i) making available such terms in an 
                accessible digital format on the Internet 
                website of the manufacturer of the consumer 
                product in a clear and conspicuous manner; and
                  (ii) providing to the consumer (or 
                prospective consumer) information with respect 
                to how to obtain and review such terms by 
                indicating on the product or product packaging 
                or in the product manual--
                          (I) the Internet website of the 
                        manufacturer where such terms can be 
                        obtained and reviewed; and
                          (II) the phone number of the 
                        manufacturer, the postal mailing 
                        address of the manufacturer, or another 
                        reasonable non-Internet based means of 
                        contacting the manufacturer to obtain 
                        and review such terms.
          (B) With respect to any requirement that the terms of 
        any written warranty for a consumer product be made 
        available to the consumer (or prospective consumer) 
        prior to sale of the product, in a case in which a 
        consumer product is offered for sale in a retail 
        location, by catalog, or through door-to-door sales, 
        subparagraph (A) shall only apply if the seller makes 
        available, through electronic or other means, at the 
        location of the sale to the consumer purchasing the 
        consumer product the terms of the warranty for the 
        consumer product before the purchase.
  (c) No warrantor of a consumer product may condition his 
written or implied warranty of such product on the consumer's 
using, in connection with such product, any article or service 
(other than article or service provided without charge under 
the terms of the warranty) which is identified by brand, trade, 
or corporate name; except that the prohibition of this 
subsection may be waived by the Commission if--
          (1) the warrantor satisfies the Commission that the 
        warranted product will function properly only if the 
        article or service so identified is used in connection 
        with the warranted product, and
          (2) the Commission finds that such a waiver is in the 
        public interest.
The Commission shall identify in the Federal Register, and 
permit public comment on, all applications for waiver of the 
prohibition of this subsection, and shall publish in the 
Federal Register its disposition of any such application, 
including the reasons therefor.
  (d) The Commission may by rule devise detailed substantive 
warranty provisions which warrantors may incorporate by 
reference in their warranties.
  (e) The provisions of this section apply only to warranties 
which pertain to consumer products actually costing the 
consumer more than $5.

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