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The truth about "non-authorized" retailers and honoring a warranty

Discussion in 'AV Receivers' started by MikeWe, Jul 21, 2003.

  1. MikeWe

    MikeWe Agent

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    I have read thread after thread regarding the issue of non-authorized dealers and whether the warranty will be honored by the manufacturer. I have read the websites of Pioneer Elite and Denon that claim they will not honor a receiver warranty if you purchase an item from a non-authorized dealer.

    I am starting to really doubt that this is true, or even legal, at least as it applies to receivers. How can a manufacturer disavow a warranty for its product if you buy the product new and it comes with a serial number and warranty card?

    One story I have heard is that Denon and Pioneer (for example) sell their receivers only to authorized dealers, who buy more quantity to get a lower price from the manufacturer. They then turn around and sell near cost to non-authorized dealers, who then are able to sell at a great discount. Isn't this analogous to someone buying it new from Pioneer and then turning around and reselling at a discount? I mean, at some point it came from an authorized dealer, namely Pioneer. What happens after that should not matter if the product is sold new and not refurbished.

    In almost every state there are implied warranties of merchantability and fitness for a particular purpose, meaning the product is supposed to work as advertised. If you purchase an item from a retailer claiming the product is new, and it breaks, you should have recourse against the retailer and manufacturer under these implied warranties, regardless of their attempts to disavow them.

    Is this just a scare tactic by manufacturers to keep prices high? If the manufacturer wanted to stop certain stores from selling their products, couldn't they? Moreover, many of these resellers blatantly boast about how the manufacturers warranty applies. Doesn't the manufacturer have an obligation to stop these representations if false?

    My question is, has anyone ever purchased a receiver from a "non-authorized" yet reputable dealer, had their product malfunction, and then have the manufacturer disavow the warranty and refuse to fix the product? If so, what was the outcome?

    Why would the repair center even care if the dealer were authorized or not, don't they receive payment from Pioneer? Are they going to turn away business because the seller was not authorized?

    I have talked to so called non-authorized dealers who tell me that if the product is sold new with warranty card and serial number it simply is not true that the manufacturer can disavow the warranty. Obviously it is in their self interest to state this to be true, but after thinking about it it seems to make more sense.

    I am obviously very interested in this topic as it means a considerable savings to the consumer. Any thought or experiences would be appreciated.
     
  2. Brad Wood

    Brad Wood Stunt Coordinator

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    Mike,
    Manufacturers CAN and SHOULD be able to restrict warranty only to units purchased from authorized re-sellers. Your argument that the mfg. gets paid anyway is technically true, however the mfg. has an interest in keeping a network of high quality, knowledgeable and happy re-sellers. In any manufacturer's dealer network, there are always a few bad apples who move loads of product at 5-10 over cost to shady re-sellers in the interest of making a buck. Those shady re-sellers then sell at deep discounts, and upset the rest of the legitimate dealer network who have spent considerable time and money meeting the stocking requirements of the mfg, training their staff and marketing the product through the media. By patronizing those shady dealers, we will eventually create a situation where dealers refuse to carry a product because they can't make any money. When reputable dealers refuse to carry it, the manufacturer has less money to come out with new quality products, and they eventually reach the lowest common denominator. When that happens, everyone loses.

    Now I'm not against capitalism, and I'm not against saving a buck or two. I try to utilize my contacts in the industry to buy at cost or gently over whenever possible. But when I can't, I buy at a reputable authorized dealer. Un-authorized re-sellers should be able to sell anywhere they want if they can get their hands on the product, but they should NOT expect the same benefits and mfg. support that an authorized dealer receives when they haven't done their due dilligence to support the mfg.

    My $.02
     
  3. MikeWe

    MikeWe Agent

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    Brad,

    Interesting thoughts, thanks for responding. I agree with some of your points, particularly as they relate to shady resellers, things like buying from oversees and removing serial numbers. To me, there is no question that doing so should void the warranty.

    I do make a distinction between shady resellers and non-shady resellers. It makes no sense to me that if you buy a product from a retailer in store it has the warranty but if you buy over the internet it doesn't? There are many non-shady retailers that have been in business a long time that are non-authorized for whatever reason.

    I guess the way I look at it is the manufacturer has the ultimate responsibility to the end user rather than the reseller, and that is the person who should be kept happy first and foremost. In my mind, the dealer is the one part of the transaction that is not absolutely necessary.

    Not that they don't add value, but there certainly are models for purchasing direct from the manufacturer. Obviously, the subjective nature of home audio cries out for the service a dealer provides, but for those willing to buy sight unseen, shouldn't the manufacturer stand behind its products? Unless the product is defective, you will never need the warranty. If it is defective, who should pay the price, the manufacturer or the purchaser?

    There are other ways for consumers to differentiate retailers, aside from authorized/non-authorized. Crutchfield has great return policies but only sells ar msrp. OneCall is much, much cheaper than Crutchfield but you can't return products liberally. Presumably Crutchfield's customer service policies cost much more and ultimately so does the product. The price differential between Crutchfield and OneCall should not, in my mind, make a difference to the manufacturer in terms of honoring a warranty. Either way, the manufacturer made a sale.

    Leaving aside the issue of whether manufacturers should be able to restrict the warranty, I still question the legality of doing so for new units with warranty cards and serial numbers.

    Mike
     
  4. JamieS

    JamieS Stunt Coordinator

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    I have to agree there is something fishy here.

    Let's say that you buy a DVD player from dealer A who is "authourized" on July 21.

    The dealer stops carring that brand loses his authorized dealer staus. Your buddy walks in on July 22 and buys the same DVD player but his is now from a NON authorized dealer? He buys the same player from the same dealer but NOW he has no warranty??

    Yes it is an extreme example but it proves the point.

    The COST of a warranty is built in to the cost of the product when it leaves the factory. It like insurance and some actuary says you produce X units and y % will fail over 3 years you need to add Z per unit to cover the cost of service to the cost price of the product.

    It should not make any difference who sells it because the COST of the warranty has already been covered. It seems like a scam to me.

    Denon makes identical models to be sold at sears (with a differnt model #) that have 1 year vs 2 year warranty. This is reflected in the COST price of the unit and can be passed on to the consumer.

    Where are the unauthorized dealers getting the product. Either from the manufacturer in which case the warranty should apply or the Model sold should have a reduced or no warranty RIGHT from the manaufacturer or the units are sold by an authorized supplier to unauthorized one. If this is the case the manufacturer should STOP selling to them or hounor the warranty that has already been included in the cost.

    Am I wrong here?
     
  5. Lewis Besze

    Lewis Besze Producer

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  6. Kevin C Brown

    Kevin C Brown Producer

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    I am always looking forward to the following situation, because I also believe that manufacturers who do *not* uphold a warranty on a piece of equipment not purchased from an authorized dealer is hogwash:

    I buy a legitimate piece of equipment from an unauthorized dealer. It breaks. The manufacturer refuses to honor the warranty. I go to small claims court. I will win, I guarentee it.

    In the small but non-negligable cases where I've bought from an unauthorized dealer, I actually know that both of the following are true: the person himself who sold it to me *did* buy from an authorized dealer, he's just a reseller who because he's dealing in volume can get a better price than I can, and that person himself gives me a warranty. Usually 30 days. Although to be safe, I make dang sure the box is in good condition before I accept it from UPS. [​IMG] Outside of the 30 days, I would personally relish the chance to go up against a manufacturer with my dated sales receipt...
     
  7. Nick V

    Nick V Second Unit

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    A lot of the time, you can go to your local authorized repair shop, and show them a receipt (whether it be from an authorized re-seller or not) and they'll fix it under warranty.

    This happened to me on a Sony receiver that I bought used anyways. The original seller had bought it from an unauthrized dealer, and he gave me his original sales receipt when I purchased the receiver from him.
     
  8. Brett DiMichele

    Brett DiMichele Producer

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    Though the state laws do vary, generaly speaking they are
    always in the consumers favor. There is Fitness Of Merchantability
    on every item these companies sell and they simply can not
    refuse warranty repair work whether it is posted on thier
    web site or not! What happens if a person walks into a store
    that carries said product but is not "authorized" the consumer
    has no clue of this and the company is going to deny warranty
    work? I don't think so Tim!

    Clearly it's a scare tactic and it's a way to gouge the
    consumer it has nothing to do with "upholding reputable and
    knowledgeable dealers" it's all about limiting who you sell
    the largest quantities to and cutting them tremendous deals
    wholesale and then letting them rape the consumer rampantly.

    I am no lawyer so check local laws, always... YMMV..
     
  9. Mark Dickerson

    Mark Dickerson Stunt Coordinator

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    Actually, this issue was litigated about 28 years ago at the U. S. Supreme Court. It has been a long time since my class in anti-trust law, but the Supreme's agreed that a manufacturer could disavow products that were not sold through its authorized dealer network (regardless of the source) because of the need to maintain a qualified dealer network (this is the Sylvania case). I will get a citation and post it tomorrow.

    Mike, the warranties you are citing (correctly I might add), are contained in the Uniform Commercial Code, Article 3. The warranty on merchantability is the only one that applies here and that only means that if it is a receiver, does it work as a receiver, or did it work when received. The warranty for fitness for a particular purpose only applies when a product has been made for a specific, unusual purpose (not the case here). But this presents three problems: first, the product is purchased from a dealer and the manufacturer can claim that the dealer has the primary responsibility to fix the receiver and you as the consumer have the obligation to "work the system" before blaming them. They would be correct. This also dovetails with the logic of the Sylvania case that the purpose of maintaining authorized dealers is precisely so that the manufacturer has the ability to get the product fixed. So you have to go back to the dealer you purchased the product from to get it fixed. It is only when purchased from an authorized dealer that they allow you to use any warranty station.

    The second problem is a procedural one. The unauthorized dealer is what is called an unrelated necessary party. You can't maintain an action against the manufacturer without suing the dealer in the same action.

    And this bring us to the ultimate out for the manufacturer: since the product was not purchased from an authorized dealer, how can anyone be sure the product has not been altered? By having authorized dealers, the manufacturer is actually making them the agents of the manufacturer (for this purpose, anyways) and the manufacturer is responsible for any action they take in altering the product (and by contract between the dealer and the Manufacturer, the dealer agrees not to do that). But this argument cuts both ways as a manufacturer is not responsible for an unauthorized dealer. Another way of putting this is if a manufacturer does claim the product was altered in some way, how can you prove it wasn't?

    Finally, don't tell me what a small claims court might do. Small claims courts are usually done by a judge pro tem (a lawyer who is moonlighting) and all kinds of strange decisions are issued by these part-timers looking to play Solomon. But it would never stand up on appeal and I even doubt that you could get service of process on such a defendant with a small claims summons. Small claims court generally does not have the power to issue a summons to an out of state party.

    I do not write this because I agree with it--it just is what is.
     
  10. Brian Fitterman

    Brian Fitterman Stunt Coordinator

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  11. MikeWe

    MikeWe Agent

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    Mark,

    While I realize this isn't a legal forum, I read the Sylvania case this morning, and, after doing so, I believe it actually supports my original statement. The court in Sylvania upheld a manufacturers right to impose and enforce geographic restrictions on franchisees.

    The case focuses solely on the relationship between the dealer and manufacturers and its dealer network, as well as the protection of a particular dealer from competition.

    The case does not address the validity of an express or implied warranty for a product sold by a non-authorized dealers, and instead finds that geographic restrictions by the manufacturer on its authorized franchisees does not violate anti-trust laws. The case authorizes the manufacturer to enforce its franchise agreements and restrict un-authorized sales by geographic region. There is no mention of disavowing a product.

    In my mind, if the case is at all relevant, it is only to the extent that it provides manufacturers with the grounds to restrict non-authorized dealers from selling their products. Manufacturers refusal to do so indicates they tacitly approve of the system of distribution, and makes the case against them to honor the warranty stronger. This is particularly true in cases where a dealer is (for example) an authorized Pioneer dealer but not an Elite dealer. The manufacturer knows the retailer is selling the unathorized product yet continues supplying them with its products.

    As for enforcement, that of course is another issue. If you buy out of state, you may have problems suing the manufacturer or retailer. However, in California, the prevailing party on an implied warranty claim is entitled to recovers attorney's fees and costs, so avoidance of small claims court would be a reasonable approach.

    Again, in California, a buyer can bring an action against either the retailer or manufacturer for failure to honor a warranty. As long as you have gone through the proper channels in terms of trying to get the product repaired by the manufacturer, you can bring an action directly against the manufacturer.

    As for the issue regarding whether the product was altered in some way, if it doesn't work I believe the manufacturer would have the burden of proving it was altered, rather than the consumer having the burden of proving it wasn't. Seems like an awful lot of trouble to get out of fixing a receiver.

    Mike
     
  12. MikeWe

    MikeWe Agent

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    Interesting so far. Still waiting to hear from someone who actually had the manufacturer refuse to honor the warranty.

    Since my post, I did a bit of research on this. Turns out, in California, unless an item is sold explicitly and conspicuously in writing "as is", the implied warranty is in effect.

    California Civil Code Section 1791.1. "Implied warranty of merchantability"; "Implied warranty of fitness"
    As used in this chapter:

    (a) "Implied warranty of merchantability" or "implied warranty that goods are merchantable" means that the consumer goods meet each of the following:

    (1) Pass without objection in the trade under the contract description.

    (2) Are fit for the ordinary purposes for which such goods are used.

    (3) Are adequately contained, packaged, and labeled.

    (4) Conform to the promises or affirmations of fact made on the container or label.

    (b) "Implied warranty of fitness" means (1) that when the retailer, distributor, or manufacturer has reason to know any particular purpose for which the consumer goods are required, and further, that the buyer is relying on the skill and judgment of the seller to select and furnish suitable goods, then there is an implied warranty that the goods shall be fit for such purpose and (2) that when there is a sale of an assistive device sold at retail in this state, then there is an implied warranty by the retailer that the device is specifically fit for the particular needs of the buyer.

    (c) The duration of the implied warranty of merchantability and where present the implied warranty of fitness shall be coextensive in duration with an express warranty which accompanies the consumer goods, provided the duration of the express warranty is reasonable; but in no event shall such implied warranty have a duration of less than 60 days nor more than one year following the sale of new consumer goods to a retail buyer.

    In California, recovery includes restitution or replacement, as well as reimbursement of attorneys fees and costs for bringing suit. Obviously, it could be a huge hassle to enforce a warranty in court for something that costs $500, but the consumer certainly appears protected for at least the first 60 days, and possibly the duration of the express warranty.

    Of course, none of this matters if the product works as intended in the first place. If it doesn't, I believe it is the manufacturer deriving profit from the sale, rather than the consumer, that should bear the cost, unless the product is sold "as is".
     
  13. JohnnyG

    JohnnyG Screenwriter

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    The one critical element that's missing here is the understanding that a product does not HAVE to come with a warranty at all. In fact, this is exactly the case for Denon and Pioneer - except - if you purchase it from an authorized dealer, they will GIVE YOU a warranty.

    As has been stated, the "implied warranties of merchantability and fitness for a particular purpose" are in effect for any product, but as has been stated, that only means that if a product is sold as an amplifier, it must amplify.
     
  14. Bill Wise

    Bill Wise Agent

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    I've watched this discussion intently and debated whether or not to jump in or not. You see, I work at one of those "unauthorized" dealers. We are a small (five employees) dealer and custom installer in a rural part of the country. We don't sell on the 'net and we are extremely concerned about being able to honor the warranties on equipment we've sold and installed. I know that I wouldn't buy something which carried an invalid warranty, so why should I expect my clients to do the same?

    Some of our products come from manufacturers with whom we have a direct relationship (BIC America, Kimber Kable, etc.), but most of our stuff comes from wholesalers (primarily Allnet) because we couldn't possibly hope to turn the kind of volume needed to be factory direct with ONE manufacturer, much less many.

    I'll refer to Denon here because they have been repeatedly mentioned as one of the companies which are real sticklers about their warranties and dealer network. We directly posed the question, "If we sell Denon equipment, will the warranty be valid?" to Tandem Marketing (Denon's rep in our part of the country), Allnet (our primary wholesaler and a Denon authorized dealer), and Denon themselves. All three responded that if the customer contacts us as their reseller and then we contact Allnet as our source for the equipment, there will be no problem in honoring the warranty. If the customer was to contact Denon directly, they would be asked to contact their reseller for warranty service.

    To date, we have never had any problems with warranty coverage on any of the brands we sell, which includes but is not limited to Denon, Harman Kardon, Elan, and Canton. I think the short of it is that if you have a local dealer with which you have a personal relationship, trust in them to take care of you as a customer. It's a LOT less expensive for us to keep our current customers happy than it is to try to find new ones.

    Regards,

    Bill
     
  15. MikeWe

    MikeWe Agent

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    Johnny G,

    I agree with you that a product need not come with an express warranty, but where a company offers an express warranty on a new, non-refurbished reciever, and they all do, then it should apply unless the product is sold "as is".

    As for the implied warranty, the product must, at least under California law "fit for the ordinary purposes for which such goods are used" and "conform to the promises or affirmations of fact made on the container or label".

    Thus, if the box says it decodes x, and it doesn't decode x, the warranty is breached. Pretty extensive coverage, probably more so than the express warranty.
     
  16. Kevin C Brown

    Kevin C Brown Producer

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    Good stuff!

    1) I live in California, cool... [​IMG]

    2) In actuality, if I did buy a product from an unauthorized dealer, and if it broke, I would try very nicely actually to go through the manufacturer to get it fixed. "Loyal customer," "didn't know it was an unauthorized dealer," "gee, I just want to enjoy [product xyz]..." etc.

    Heck, I have even found that if you write a nice enough letter to a manufacturer, you can actually get repair work done on a unit *outside* of the warranty period for free... [​IMG]
     
  17. MikeWe

    MikeWe Agent

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    Bill,

    Thanks for the comments.

    I called Pioneer to try to get a definitive answer on this question and was told that if the product is purchased from a non-authorized dealer, the warranty will not be honored, which I expected. I mentioned implied warranty and was met with silence, which I also expected. I would imagine one would need to escalate and speak to a supervisor to obtain a resolution.

    I then called the local service center, which basically told me they would repair it as long as I had the receipt and it was within two years. They didn't seem to care who the dealer was.
     
  18. JohnnyG

    JohnnyG Screenwriter

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