Warranty: What you need to know as a consumer or business owner

It’s many consumers’ worst nightmare: You’ve just bought a product only to find out it’s defective. Luckily, you’re not without recourse. Different types of warranty are in place to protect the customer in this situation. Whether you’re a consumer curious about your rights or a business owner trying to figure out your obligations, we tell you everything you need to know about warranty. Keep reading to find out about what warranty is, how it works, and what the different types are.

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What is warranty?

Warranty is a guarantee from a manufacturer or retailer about the quality, condition, or performance of a product. It’s meant to protect consumers in the case that they buy defective products or products that don’t work like they’re supposed to. If a product doesn’t work and the terms of the warranty are met, the customer is entitled to a free repair, full replacement of the product, or a refund.

The main law governing warranty on the federal level is the Magnuson-Moss Act. Retailers are not required to offer written warranties, but if they do, they have to comply with this law. The law specifies what needs to be included in a written warranty, including the parts covered, the length of the warranty, what the warranty doesn’t cover, and whether the consumer will be entitled to a repair, refund, or replacement. The warranty document must be written in plain language, so that it’s easily understandable for laypeople.

Warranties can form an important element of customer retention. Without any type of warranty or guarantee, customers might feel that it’s too risky to purchase your products, especially if they fall on the more expensive side. Or if customers discover defects, they might simply switch to the competition, instead of having the problem repaired. Offering warranty can go a long way towards buildingtrust with customers.

Types of warranty

There are a few different types of consumer warranties:

Express warranty

Express warranty is a written (or spoken) statement that a product will meet certain specific conditions. If the product doesn’t meet those conditions, the manufacturer or retailer will have to replace it or repair it. The words “warranty” or “guarantee” don’t have to appear for an express warranty to be valid.

For example, if it’s printed on a battery package that the battery will last a certain number of hours, that’s enough to invoke a warranty. There are two different sub-types of express warranty: full warranty, which doesn’t have any time limit; and limited warranty, which is only valid for a specified period of time.

Implied warranty

Implied warranty is an implicit guarantee that a product will work as designed and as promised. So if you buy a telephone only to find out that the call feature doesn’t work, you can have the phone replaced or repaired. Or if you tell a salesperson that you are looking for knives that cut through metal and they sell you a set of knives for this purpose, then you can return the knives if they don’t cut through metal. Some states allow retailers to invalidate implied warranty by stating that the product is “sold as is”.

Extended warranty

Extended warranty is extra warranty purchased by the consumer from the retailer. It covers the repair of products beyond implied and express warranties offered by the manufacturer, acting essentially as a kind of insurance. Extended warranty is often offered for products like cars, appliances, and electronics.

Warranty vs. guarantee

The difference between a warranty and a guarantee is mostly semantic. A warranty is a legal promise, whereas a guarantee is a more general promise made to the customer. In practice, they work more or less the same, since retailers and manufacturers are required to uphold the promises they make about their products.

Note

Warranties and guarantees are relevant for defective products. If you want to return a fully functioning item, you should look at the company’s return policy.

When it comes to e-commerce and online retail, warranties are an important part of creating a legally compliant online store. You should be sure to clearly explain the terms of warranty on your website, so that customers are aware of them when they make a purchase and enter a sales contract.

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How does warranty work?

If you’re a consumer who wants to take advantage of any of the types of warranty discussed above, there are some things you should take into consideration.

A number of cases are typically not covered by warranty. Anything that comes back to the actions of the consumer rather than a defect in the product itself likely won’t be covered. For example, if you drop your phone in water and then it stops working, the retailer or manufacturer is unlikely to repair it for you. A common term in written warranties is that no modifications can be made to the product. So if you decide to buy a car and customize it with special parts, this might invalidate your warranty. Especially when it comes to written warranties, the manufacturer can decide to leave out certain parts of the product from coverage.

If you’re buying a used product, you should think about what kind of warranty you’d like to have. Implied warranty extends to used goods sold at second-hand stores. When it comes to manufacturers’ warranties, claims are sometimes denied if they’re not made by the original owner.

If you’re a business owner, the main takeaway is that you should be careful about what you write on your product packaging and on product pages. Even if you don’t offer written warranty, you will have to live up to the promises you make about your products.

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