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

A warranty is a promise by a manufacturer or a seller to stand behind its products. The purpose of the Magnuson-Moss Warranty Federal Trade Commission Improvement Act (MMWA)--passed by Congress in 1975--is to help consumers before the purchase to comparison shop and get the best warranty and after the sale to require companies to keep their warranty promises. A major thrust of the act was to assist consumers in the purchase decision by making warranties "easy to read and understand. They must be written in ordinary language, not 'legalese'" (Federal Trade Commission not dated, 1). For sellers of products costing more than $15 that have a written warranty, the MMWA specifies that the warranty must be "full" or "limited" and available for customer review before the sale. A full warranty means that there are no or minimal charges for repair or replacement of the product during the warranty duration. A limited warranty specifically limits seller obligations and places more financial responsibility on the consumer (Wish, Steely, and Tritten 1978). From the manufacturer's perspective, a warranty may serve as a contractual limitation on what the manufacturer is required to do when the product fails within a specified time. For a consumer, a full warranty may require less reading while a limited warranty may require more reading (i.e., consumers must examine the warranty for the manufacturer's restrictions or exclusions for product repair or replacement). Research has shown that warranties do have a role in consumers' purchase decisions. Wilkes and Wilcox (1981) found that respondents perceived the product with a limited warranty to be less desirable than the product with the full warranty. Other studies found that a product with a superior warranty is associated with greater quality (Olson and Jacoby 1972) and less risk (Bearden and Shimp 1982; Perry and Perry 1976). Wiener (1985) studied appliance and auto warranties and found that consumers perceived warranties as a signal of product reliability. Prior to the Warranty Act, warranty wording was more appropriate for lawyers than consumers and the "fine print" was deceptive (Wilkes and Wilcox 1976). Early post-act research using readability measures indicated warranties continued to be difficult to comprehend (Shuptrine and Moore 1980) and warranties remained complex from the consumer's point of view (Consumer Reports 1984). The purpose of this study is to examine the readability and understandability of recent warranties for a sample of durable products. In addition, the mean educational levels required to read and understand full and limited warranties are compared. Have manufacturers and sellers responded to the consumer's desire for warranties written in easy-to-understand terms as MMWA requires? MEASURES Two measures of readability were selected to examine warranties. These two measures were the Flesch Count and the Fog Index.(1) The Minnesota Interactive Readability Approximation Program (MNIRAP), a microcomputer program, was used to run the two measures of readability (MNIRAP 1977). MNIRAP can determine readability levels (first grade to professional) by seven different methods. The Fog Index and the Flesch Count were chosen as the readability measures to examine warranties based on ease of use, reliability, and significant convergent validity results from research (Lehman et al. 1982; Shuptrine and Lichtenstein 1985; Shuptrine and Moore 1980). Spearman rank correlation coefficients using the Fog Index and the Flesch Count measures were significant at the .05 level or less in two studies on warranties and textbook readability (Shuptrine and Lichtenstein 1985; Shuptrine and Moore 1980). The authors sought to confirm the convergent validity of the two measures found in the Shuptrine and Lichtenstein (1985) study and make approximate comparisons with the Shuptrine and Moore (1980) findings. Also, the Fog and Flesch measures were found to be better measures than the Dale-Chall Method and the Smog Grading Method when evaluating written material that may go beyond the sixteenth grade level (Shuptrine and Lichtenstein 1985). …