In July of 2019, the Federal Trade Commission (FTC) held a workshop to review concerns from consumers and advocacy groups over a troubling trend – the tactics of original equipment manufacturers (OEM) that limit or prevent independent repairs to consumer goods.
The goods in question spanned industries, from electronics, like cell phones, to automobile repairs. These tactics make it so that only authorized repair facilities have the knowledge and equipment to make repairs to devices, cars, and trucks. OEMs claimed that the restrictions were the result of their desire to prevent injuries or improper repairs to consumer goods.
In May of 2021, the FTC submitted its report to Congress, titled Nixing the Fix: An FTC Report to Congress on Repair Restrictions.
Their findings? “Based on a review of comments submitted and materials presented during the Workshop, there is scant evidence to support manufacturers’ justifications for repair restrictions.” Moreover, the FTC noted that the changes advocated, like the Automotive Body Parts Association (ABPA), are well supported by comments and testimony at the Workshop.
So, what does the report say? What does this mean for you, the car owner? And what’s next?
Nixing the Fix
At the Workshop held by the FTC in 2019, comments were heard and evidence presented from both sides of the issue.
OEMs listed several concerns when defending their repair restrictions. These concerns included:
- Protection of intellectual property
- Liability and reputational harm
- Design choice and consumer demand driving the repairability of devices
- Quality of service
On the other side of the discussion were right to repair advocates. Their arguments against repair restrictions included:
- Length of time for repairs
- Price of repairs, including labor and parts
- Environmental and electronic waste
- Harm to small businesses and employment, including disproportionate harm to people of color and lower-income communities
Tactics Automotive OEMs are Using
While not the only industry represented by OEMs at the Workshop, auto manufacturer tactics were specifically referenced in the report. These tactics being used by car OEMs are intended to limit competition and drive consumers to authorized repair shops. This hurts both consumers, who would pay higher prices for insurance premiums and parts and service without competition, as well as small business owners, who didn’t have access to specific data and information that could help with vehicle repairs.
The FTC looked at several tactics the auto OEMs use to encourage repair restrictions as part of the report.
Restriction of Parts, Manuals, and Tools
Within the automotive industry, some OEMs, like Volvo and Tesla, restrict key replacement parts only to their authorized repair networks. Others do not release manuals on how to fix some repairable parts.
Additionally, with the rapid increase in electronics within our vehicles, specialized software and diagnostic tools are often needed to understand issues and make repairs. Some OEMs limit access to these tools, preventing shops from being able to easily diagnosis problems that authorized repair shops can identify easily.
Telematics are available in many modern vehicles. These programs monitor and transmit the status and health of the vehicle back to the OEMs. This information is only available to the vehicle manufacturers, giving them exclusive insights into the operation and diagnostics of the vehicle.
As the ABPA pointed out in their comments to the commission, “car companies are trying to create a product monopoly by leveraging new technological advantages gained through telematics from the cars and software partnerships with large industry players to eliminate parts competition. The result is higher parts pricing – leading to increase(s) in repair costs….”
Application of Design Patents and Enforcement of Trademarks
OEMs have been using design patents and claims of trademark infringement to restrict the alternative part marketplace.
Design patents have been used increasingly in recent years to claim intellectual property rights on non-functional repair parts, like bumpers and fenders. These claims prevent aftermarket manufacturers – also known as alternative parts manufacturers – from producing replacement parts for years after a part is first produced and reducing competition for these aesthetic auto parts.
Automotive OEMs are also using trademarks and design patents to disrupt supply chains for alternative parts, also with the intent of limiting competition. These claims are made to customs officials at point of entry, holding up collision repair parts being imported with false or spurious claims.
What’s most important to understand is that the claims made by the OEMs to the FTC were not found to be supported by any empirical evidence. In other words, while right to repair advocates offered up mounds of proof for their side of the discussion, the OEMs were not able to produce convincing evidence that backed up their claims.
The next step is for the FTC and legislators to take action.
As part of the report, the FTC outlined a number of next steps that they can take, as well as suggested actions that Congress and the FTC can take together. Additionally, the report suggests that industry self-regulation can play a role, too.
The FTC intends to review and act on enforcement of the Magnuson-Moss Warranty Act (MMWA), which prevents OEMs from using disclaimers on warranties to mislead consumers and that, according to the Autocare Association’s website, “prohibits tying arrangements that condition coverage under a written warranty on the consumer’s use of an article or service identified by brand, trade, or corporate name unless that article or service is provided without charge to the consumer.”
There is also some discussion in the report about new rules that would declare some types of repair restrictions illegal. This could be through the authority of the FTC, but may also include provisions like those found in some states’ Right to Repair legislation, specifically that found in Rhode Island, Indiana, and California. Regulatory restrictions are also under consideration.
Whatever path toward enforcement the FTC and Congress choose to take, one thing is clear – OEMs have reached the end of the road in using unfair and dishonest tactics that prevent you, the consumer, from repairing your devices and automobiles in the way you see fit.