Warranties: Continued Readability Problems After the 1975 Magnuson-Moss Warranty Act

A major thrust of the Magnuson-Moss Warranty Federal Trade Commission Improvement Act (MMWA) passed by Congress in 1975 is to make warranties “easy to read and understand.” This study examines readability levels for 121 warranties in ten categories of consumer durables. The warranties analyzed are found to require readability levels beyond what most Americans have attained. Limited warranties require significantly higher readability levels than full warranties. Results suggest the MMWA, since passage in 1975, may have increased the number of limited warranties and the difficulty of reading level.     

Home Warranties: An Analysis of an Emerging Development in Consumer Protection

Although warranty coverage on consumer products is a universally accepted form of protection, the extension of similar coverage to buyers of new and used homes is a developing practice. Home warranties serve a dual purpose: they reduce a homebuyer's risk of substantial financial loss, and protect the builder, seller or real estate vendor from legal liability should undisclosed material defects occur after a sale. In an effort to examine consumer reactions to home warranties, a mail survey was conducted of recent purchasers residing in four central counties of New York State. It was found that two-thirds of the 571 single-family homeowners who responded were aware of warranties on new housing and 97 percent were in favor of such coverage. Only 22 percent were aware of warranties for resale homes and 56 percent favored such coverage. Unexpected defects costing more than $100 were experienced by 55 percent of the sample. However, only 27 percent of the sample had defects which were warrantable under most current warranty programs.     

Extended Warranties: Consumer and Manufacturer Perceptions

Extended warranties are becoming increasingly popular, both among consumers and manufacturers. In this study, consumer and manufacturer perceptions of why extended warranties are bought and sold are evaluated and compared. The results indicate that consumers seem to view extended warranties as a way of reducing perceived risk. Manufacturers reveal that they market extended warranties both to generate revenue and to provide service to customers. Marketing management and public policy implications are examined and research directions identified.     

New patterns of consumer protection under warranty law: Lessons from the U.S. magnuson-moss warranty act

Warranty law appears to be a relevant instrument for granting protection to consumers against product disappointment. However, empirical studies concerning some warranty markets both in the United States and in West-European countries show that there continues to be no bargaining on warranties between sellers and buyers, that the most serious risks are all allocated to the user of the product, and that consumers are generally not granted an actual opportunity of challenging a breach of warranty and getting adequate compensation for losses sustained. The Magnuson-Moss Warranty-Federal Trade Commission Improvement Act which was enacted in the United States in 1975 constitutes a first comprehensive and consumer-oriented reform of traditional warranty law. It foresees new patterns of consumer protection under warranty statutes, combining warranty substance regulation with warranty information, administration, and litigation procedures. This paper first describes the Act's major provisions; it also points out some of its deficiencies. Although criticisms are formulated against the Act's ideology or basic assumptions, it is the author's opinion that it represents a decisive step towards legislative and administrative participation in the formulation of warranties. The Act undoubtedly suggests some, though not identical, avenues of reform that legislators and authorities of European countries and confederations should now propose in order to increase consumer protection against defective or unsatisfying products.     

Consumer Law and Policy in Ghana

This paper presents a picture of the landscape of consumer law and policy in Ghana and reviews the scope of protection of consumer interests with specific regard to product safety and liability, consumer sales, and telecommunication services. It assesses the legislative and policy framework on consumer contracts, product safety, and unfair commercial practices; discusses the role of national agencies in enforcing safety standards; and highlights some critical consumer issues in telecommunications service delivery. The paper examines the regulatory framework on other consumer issues such as advertising, labelling, and marketing of consumer products; terms and conditions of consumer contracts; and after sales services including the enforcement of guarantees, warranties, refund, and return policies. The paper also discusses the extent of external influence on the development of consumer law and policy in Ghana and reviews the level of interaction with other legal systems and supranational bodies in the three focal areas. The contribution also explores areas of Ghana’s consumer protection framework which could benefit from guidance from the EU transnational model on consumer protection and makes recommendations for the enhancement of the emerging legislative and policy regime on consumer protection in Ghana.     

Appliance Warranties as a Market Signal?

Appliance warranties can be considered to provide a market signal of appliance reliability. However, the cost to consumers of obtaining enough information to interpret the signal causes the dispersion of warranty provisions to be limited. The more complicated the laws surrounding warranties, the greater the cost to consumers of warranty information. This makes warranties less effective as a market signal and reduces the variation in warranty provisions. Upon examination, appliance warranties for refrigerators, air conditioners, ranges, clothes washing machines, and television sets were found, consistent with this view, to vary relatively little.     

Lemon Laws: Intent,Experience, and a Pro-Consumer Model

Under deregulation, public policies regarding consumer rights and product warranties have shifted. This paper reviews the rationale for lemon laws, state legislation intended to help consumers resolve new car performance, and repair problems. It then compares consumers’ redress under these laws to redress under other remedies. Experience with Vermont's legislation, one of the most aggressive lemon laws, is reviewed and analyzed in detail as the basis for formulating public policy recommendations in this area.     

Consumer perceptions of extended warranties

The vast majority of US consumers purchase extended warranties when buying appliances and home electronics. Retailers promote extended warranties since they have high profit margins. Consumers buy extended warranties because they seek “peace of mind and freedom from financial outlays if their purchase needs repairs”. This study examines consumers’ perceptions of the terms of an extended warranty, specifically the length of the warranty contract using a mall-intercept method to identify 101 consumers who have purchased an appliance or home electronics product in the past 2 years. The study finds that a large majority of consumers misconstrue the retailer's “4-year” extended warranty as providing four additional years of coverage beyond the manufacturer's warranty when, in fact, the “4-year” extended warranty includes the manufacturer's warranty and is, therefore, only providing 3 years of “extended” warranty protection. Marketing implications are discussed.     

The Protective Dimension of Product Warranty Policies and Practices

In consumer good markets, wide variations occur in warranty policies and practices between products, firms and industries. In this paper, those warranty policies designed to provide self-protection for the seller are examined. The protective facet of warranties carefully delimits the responsibility of the manufacturer for post-sale product performance and quality and hence stabilizes the firm's future costs and profits. The author has striven to conceptualize the association which may exist between a firm's products and markets and the policy objectives of its warranty. Several hypotheses concerning the conditions under which the warranty may be viewed by the seller as a tool of self-protection are suggested; these hypotheses are tested through an analysis of survey data collected from industry executives.     

The impact of consumer decision‐making styles on consumer confusion in Mauritius: An empirical analysis

This article investigates the effects of consumer decision‐making styles on consumer confusion and harm. While consumer confusion has been well documented in the literature, this investigation attempts to bridge our understanding on its relationship with consumer decision‐making styles. Empirical data was collected from a field survey where 400 consumers selected at 20 supermarkets in Mauritius were asked to respond to a questionnaire measuring three variables under study: consumer confusion, consumer decision‐making styles, and situational factors. Findings from the MANOVA parametric test showed that there is a significant difference between consumer decision‐making styles and consumer confusion. Even when covariate situational factors were controlled through the parametric test MANCOVA, results still showed a significant difference between consumer decision‐making styles and consumer confusion. More specifically, ANCOVA tests showed that the findings were specifically significant for three types of confusion: product confusion, packaging confusion, and product complexity. The study tends to confirm that a consumer's style of decision making does impact on consumer confusion.     

Bringing complexity and convergence governance to consumer policy

Consumer policy is already being shaped by a combination of governance models. This position paper argues that complexity‐oriented convergence models are a timely addition. Modern day consumer policy is characterized as interactive and integrative, replete with shifting boundaries and coalitions and evolving roles for each of state, market and society. This paper focused on governance in the consumer policy arena, arguing that this process needs to acknowledge and reconcile complexity. After describing the basic tenets of complexity theory, two characteristics of contemporary tri‐sector interaction (i.e., sector blurring and sector distortion) were discussed. These boundary characteristics necessitate the need for approaches that can accommodate complexity during consumer policy governance. Three examples of the latter were profiled: sector convergence, network governance and cross‐sector governance. These conceptualizations accommodate the dynamics, complexity and emergence of contemporary consumer policy governance.     

Perceived Product Sizes in Visually Complex Environments

Although prior scholarship has demonstrated important effects of visual complexity on product perceptions, the relationship between the visual complexity of a product’s environment and that product’s perceived size remains unexplored. Because size is such an important product characteristic in many consumer contexts, the lack of exploration of this relationship leaves a significant gap in the literature on size perceptions, especially in relation to the retailing domain. The present investigation seeks to document the relationship between environmental visual complexity and the perceived size of a product. Namely, five studies show that high visual complexity decreases consumer size perceptions of a focal product through a serial mediation process in which high complexity pulls consumer attention away from the focal product. This shifted attention decreases processing fluency and leads consumers to perceptually minimize size to avoid information overload in the processing of a display. Even after ruling out potential influences of referent information (study 5) and alternative explanations of affective processing and perceived depth (study 4), these effects hold. The findings have implications for both theory and practice, shedding light on the relationship between size perceptions of a focal object and its environment.     

Complexity economics,wicked problems and consumer education

Complexity economics is a promising theory for consumer education that aspires to be focused on global justice and sustainability in a profoundly complex consumer marketplace. This paper first discusses the basic tenets of complexity theory, the foundations of complexity economics, followed by an overview of normal vs. post‐normal science, including tame and wicked problems. The third part of the paper positions consumer education within normal science, explicating the assumptions of conventional neoliberal economic theory. The final part discusses the assumptions of complexity economics and how it challenges traditional economic theory. A case is made for augmenting 21st century consumer education with complexity economics, anticipating a companion paper with pedagogical details.     

Simplicity is not key: Understanding firm-generated social media images and consumer liking

Social media platforms are becoming increasingly important marketing channels, and recently these channels are becoming dominated by content that is not textual, but visual in nature. In this paper, we explore the relationship between the visual complexity of firm-generated imagery (FGI) and consumer liking on social media. We use previously validated image mining methods, to automatically extract interpretable visual complexity measures from images. We construct a set of six interpretable measures that are categorized as either (1) feature complexity measures (i.e., unstructured pixel-level variation; color, luminance, and edges) or (2) design complexity measures (i.e., structured design-level variation; number of objects, irregularity of object arrangement, and asymmetry of object arrangement). These measures and their interpretability are validated using a human subject experiment. Subsequently, we relate these visual complexity measures to the number of likes. The results show an inverted u-shape between feature complexity and consumer liking and a regular u-shape relationship between design complexity and consumer liking. In addition, we demonstrate that using the six individual measures that constitute feature- and design complexity provides a more nuanced view of the relationship between the unique aspects of visual complexity and consumer liking of FGI on social media than observed in previous studies that used a more aggregated measure. Overall, the automated framework presented in this paper opens up a wide range of possibilities for studying the role of visual complexity in online content.     

Consumer ethical beliefs and personality traits: An exploratory analysis

The present study examines the relationships between consumers' ethical beliefs and personality traits. Based on a survey of 295 undergraduate business students, the authors found that individuals with high needs for autonomy, innovation, and aggression, as well as individuals with a high propensity for taking risks tend to have “less ethical” beliefs concerning possible consumer actions. Individuals with a high need for social desirability and individuals with a strong problem solving coping style tend to have “more ethical” beliefs concerning possible consumer actions. The needs for achievement, affiliation, complexity and an emotion solving coping style were not significantly correlated with consumer ethical beliefs.     

Low socioeconomic class and consumer complexity expectations for new product technology

This research improves the field's understanding of subsistence consumers by investigating how low socioeconomic class relates to expectations of complexity from new products. The study tests a model of the relationship between consumer socioeconomic class, self-esteem, self-assessed capabilities, and knowledge about product domains, and the influence of self-esteem, self-assessed capabilities, and product domain knowledge on consumer expectations of complexity when facing a new product technology. A sample of 266 Colombian consumers representing different socio-economic classes is used to test the model using structural equation modeling. The results show that self-esteem, self-assessed capabilities, and product domain knowledge are predictive of expectations of complexity, with low self-esteem, low capabilities, and low product knowledge leading to higher complexity expectations. Socioeconomic status relates closely to self-esteem, self-assessed capabilities, and product domain knowledge and can be used as a surrogate for the individual-level constructs.     

Der österreichische Entwurf eines Konsumentenschutzgesetzes

The report gives information about origins, aims, and contents of the Austrian bill for a Consumer Protection Act which has been submitted to the National Council (Nationalrat) of the Austrian Parliament and will be heard in the Justice Committee (Justizausschuß). The bill aims at a far-reaching protection for the consumer in the field of contract law, excluding, however, product liability and certain specific contracts (such as travelling and correspondence courses). The main points of the bill are as follows:

1. The consumer will be protected in instances of doorstep contracts by granting a cooling-off period of one week. Certain clauses in contracts to the detriment of the consumer will be void, for instance, clauses which limit the validity of oral representations, and clauses in standard form contracts which the consumer did not have reason to expect (überraschende Klauseln). The judge will be accorded the right to lower penalties stipulated in contracts. The right of the consumer to get the contract annulled will be strenghtened in cases oflaesio enormis (i.e., where the stipulated price exceeds the true value by more than one half).
2. The consumer will be protected against unfair contents in standard form contracts. The bill foresees two legal means of protection. (a) A general clause to be introduced into the Austrian Civil Code (Art. 879 § 3) will void all stipulations in standard form contracts, which unfairly deprive the consumer of his rights, and which have not freely and reasonably been consented to by the consumer because they were contained in standard forms of the other party or because this party exploited its superiority when putting them into the contract. In addition, the bill voids specific clauses, not only in standard form contracts but also in individual contracts (e.g., exemption clauses with regard to warranties or breach of contract). (b) The bill institutes a collective action which enables certain associations (workers' chambers — Arbeiterkammern, chambers of commerce — Wirtschaftskammern, trade unions, the Association for Consumer Information — der Verein für Konsumenteninformation) to bring action against anybody using illegal standard form contracts.
3. The bill contains provision for forbidding certain unreasonable clauses regarding, e. g., bills of exchange, the use of wage claims as security, and jurisdiction clauses.
4. The bill will incorporate the Instalment Sales Act (Ratengesetz) into the new Consumer Protection Act, thereby extending its sphere of application to most transactions between businessmen and consumers.

     

The hidden agenda: emotions in grocery shopping

In this paper, we demonstrate the complexity of consumer decision-making within the supermarket and use videographic techniques to gain greater insight into this. We propose that grocery shopping, often perceived as a routine behavior, can in fact, become quite complex. The broad pattern emerging from our study was that the less time the participant spent looking at the shelves, the less emotion displayed. Where there was longer time spent, there was also increasing physical interaction with the product and a greater display of mostly negative emotion. We suggest that this presents a conundrum for retailers. Does the lack of emotion indicate little or no commitment to the store and/or brand? Or are they so loyal there is no need for consumer engagement? This exploration suggests that further insight can be gained if the emphasis is on how the consumer interacts with their brands rather than assuming that all grocery decisions are predictive.     

Consumers׳ perception of the complexity of selected household purchase decisions

This study provides evidence of consumers׳ perception of the complexity of a variety of product/service decisions in terms of a complexity continuum and indicates how such categorisation is influenced by specific demographic characteristics, specifically gender, age and education level that are predominant in terms of consumer socialisation. A survey which was conducted in a major city and involved 461 respondents. The multiple section structured questionnaire were completed by willing spouses/partners of participating households. Complexity values were calculated in terms of a specific anchoring product, namely major household appliances. It became evident that the most expensive purchases that households ever make, namely purchasing a home and a car, which were perceived to be the most complex by all while grocery purchase was on the least complex divide of the continuum. Also on the more complex divide of the continuum were service related decisions such as insurance. Particularly noteworthy is the confirmation of significant differences in perceived complexity within product categories that are perceived to be the most- and the least complex by all. This confirms the vulnerability of certain segments of the consumer society and the need for concerted effort to communicate with them in appropriate media and on a level that would enhance informed consumer decision-making. Underlying reasons probably relate to consumers׳ risk perception and affordability issues that could be explored in future research. Interestingly the findings of the gender comparison shifted the focus to different product categories than those elicited in the age-, income and level of education comparisons. Findings therefore confirm the relevance of demographic characteristics in media communication and consumer facilitation as well as in research. Retailers and marketers should therefore be cognisant of the characteristics of their target markets and be very selective and cautious when identifying communication media.     

Country matters: Executives weigh in on the causes and counter measures of counterfeit trade

In this article, we present the findings of a study examining the exploding problem of counterfeit trade via the opinions of U.S. executives as compared to their counterparts from Australia, New Zealand, South Africa, and Tahiti. Their responses provide insight as to how companies in different countries are attacking piracy and consumer complicity with counterfeit products. Per our study, executives in Australia, Tahiti, and the U.S. had similar perspectives: they viewed the seller as the main driver of counterfeit trade for reasons of profit. These executives perceived the demand for counterfeits as being driven by desirable product attributes and the ease of obtaining them. Likewise, they cited two anti-counterfeiting actions—site licenses and reduced price/rebates—as being able to reduce the demand for illicit products. In contrast, South African executives observed the main reason for piracy as weak enforcement of intellectual property (IP) and the lure of exorbitant profits, with little value in any anti-counterfeiting actions other than special packaging. These executives put forth that South African consumers are complicit due to limited education and low disposable income, and the ready availability of counterfeits. Executives from New Zealand were the most optimistic, believing that piracy and complicity can be reduced by many anti-counterfeiting actions, including special packaging, reducing price, emphasizing product benefits/warranties, stressing the harmful effects of using fake products, offering site licenses, and listing of authorized sellers.