If you buy an item that comes with a written warranty, and that item is defective, you can file a lawsuit against the warrantor (the person or company that made the warranty). But first you need to “exhaust” your warranty remedies. This means that you must have tried, without success, to take advantage of your remedies, which might include getting a replacement, repair, or refund.

Also, under the Magnuson-Moss Warranty Act—the federal law that governs consumer product warranties—the person or company making the warranty can include a provision (a clause) that requires you to try to resolve the dispute informally, like through mediation, before you go to court.

What’s Mediation?

Mediation involves a neutral third person (the mediator) who meets with you and the party that made the warranty to help you reach a mutually acceptable resolution to the dispute. Using an informal dispute resolution process like mediation works best when the parties want another person to decide the outcome of their dispute—but don’t want the formality, time, and cost of a trial.

Mediation is successful (it ends the dispute) when both parties agree to the solution or settlement. The mediator does not have the power to impose a judgment. If the parties can’t agree, they can escalate the dispute to court (or use arbitration). Arbitration is slightly less formal than going to court, but it’s more expensive than mediation and importantly, the arbitrator might have the power to impose a resolution, even when one side opposes it. Whether the disappointed loser can then take the case to court will depend on the wording of the arbitration clause in the warranty agreement, and on any limitations imposed by law.

You Have to Comply With the Warranty Requirements

The warranty might require you to try to resolve the matter through a private company-based program or a neutral third party, like the Better Business Bureau (BBB), a private, nonprofit organization that helps settle disputes that involve products.

If the warranty requires an informal dispute settlement procedure, that process must comply with certain requirements. The Federal Trade Commission (FTC) “Rule on Informal Dispute Settlement Procedures” lays out these requirements. (When passing the Magnuson-Moss Warranty Act, Congress directed the FTC to create rules covering certain requirements of the Act.)

Requirements Under the FTC Rule

Under the FTC Rule, the dispute settlement process must:

• be adequately funded and staffed
• not charge a fee
• have written procedures (and follow them)
• inform both parties when it receives notice about the dispute
• give each party a chance to present its case, submit supporting materials, and to dispute points made by the other party (the process can be oral rather than written, but only if both parties agree)
• investigate, gather, and organize all information needed to resolve the dispute fairly and quickly
• settle the dispute independently, without influence from any of the parties involved
• make the decision and give supporting reasons to the parties within 40 days
• issue a non-binding decision (either party can file a lawsuit later if unhappy with the result), and
• keep a complete record about the dispute.

Where to Complain

If you have a complaint about a company’s informal dispute resolution process, you can file an online complaint at the FTC website. The FTC won’t work out your particular complaint, but it might use the information to help detect patterns of noncompliance with its requirements.

Also, the FTC offers tips for getting your money back if you’re disappointed with a product you bought.

Filing a Suit

If you decide to file a lawsuit, you can handle the action yourself in small claims court or, if your warranty issue is complicated or there's a lot of money involved, you might want to hire a lawyer to file the suit for you. Most lawsuits under the Act go through state court because of strict federal jurisdictional requirements—you need to claim at least $50,000 in economic damages to get into federal court. However, cases involving larger amounts and multiple consumers sometimes go to federal court as class action suits.

In addition to federal law, each state has a commercial code, which includes similar laws regulating retail sales and warranty protections for consumers. Some states have enacted separate consumer protection and warranty laws that go beyond the Magnuson-Moss Act and these commercial codes.

Talk to a Lawyer

If you’re thinking about filing a breach of warranty suit, consider contacting a consumer protection lawyer who deals with warranties to help you with the case.