Wednesday, December 8, 2021

US FTC States Repair Restrictions Imposed by Manufacturers Impact Consumer Rights, Small Businesses

US Federal Trade Commission (FTC) has submitted a report examining consumer protection and antitrust issues relating to manufacturers’ repair restrictions, especially in the mobile phone and car industry. These repair restrictions include using adhesives that make it difficult to replace parts, making diagnostic software unavailable, and limiting the availability of spare parts. These repair restrictions hurt small businesses as well as impact consumer rights under the Magnuson-Moss Warranty Act. It also states the actions that the FTC can take in some cases of anti-repair practices.

The US FTC report submitted to Congress mentions that it has become increasingly hard to repair and maintain many consumer products. They often require specialized tools, access to proprietary diagnostic software, or have parts that are difficult to obtain. This not only makes it near impossible for consumers to repair their phones or other devices but also limits a small repair shop’s ability to fix the issue with the device. These anti-repair practices by manufacturers, especially in the mobile phone and car industry, infringe on the Magnuson-Moss Warranty Act, which governs consumer product warranties.

The report also mentions that many black-owned small businesses are in the repair and maintenance industries. These anti-repair practices can disproportionately affect small businesses owned by people of color. Citing research, the report states lower-income Americans are more likely to be smartphone-dependent, and these communities are adversely affected by repair restrictions on smartphones.

Manufacturers often use adhesives in parts of the phone or laptop manufacturers like Microsoft stick batteries and display panels that make them difficult to replace. Some manufacturers make their diagnostic software unavailable so the customer and, at times, even repair shops cannot understand the problem and are forced to take the device to the manufacturer. In some cases, manufacturers of mobile phones and cars limit the availability of spare parts, which causes the consumer to order parts directly from the manufacturers leading to longer wait times or higher costs.

Manufacturers claim, as per the report, that these repair restrictions are put in place to protect intellectual property rights and prevent injuries. They also claim that these restrictions prevent reputational harm caused by a lousy repair from a small repair shop, making them liable. To counter these points, FTC noted that manufacturers may be exacerbating the safety concerns by “not making parts and manuals available to individuals and independent repair shops, and not including information in these manuals about the dangers of particular repairs.”

FTC says in some cases where repair restriction causes substantial injury (monetary harm or unwarranted health and safety risks) that is not outweighed by benefits to consumers or competition, a manufacturer’s use of a repair restriction could be considered a violation under Section 5 of the FTC Act. In some cases, it can be regarded as a violation of antitrust law. FTC could also “declare certain types of repair restrictions illegal.

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