Of Warranties and Consumer Protection: An Xbox 360 Story

Last evening, my second Xbox 360 died, approximately 7 months after it arrived. I had a launch console, which died about 8 months ago, and was replaced by the recently deceased refurbished console. I know what you are thinking, “Join the club.” Or “Yep, and it seems Microsoft is never going to tell you why.”

However, Law of the Game is a site about video game law, and while my second dead Xbox 360 may seem like it has nothing to do with the law portion of that description, it works as an interesting lead in to a short post on the law of warranty and the concept of consumer protection.

The concept of a warranty is simple enough: Someone selling a product assures the buyer that of something. In a typical consumer transaction, the assurance is generally that the product will work for some period of time or is free from defect. Warranties can be express (written) or implied (imposed by law on all sales). Express warranties must be available to the consumer pre-sale, according to the Magnuson-Moss Act of 1975, a Federal Law. The FTC has a fairly complete consumer guide for written warranties.

We all know what the Xbox 360 warranty says, it’s right here and here. It is the second variety of warranties that are more complex, the implied warranties. Implied warranties are imposed by law, and vary from state to state in the US and country to country abroad. As a result, I could spend the next year just trying to lay out the complex worldwide warranty matrix and still not finish the task. So, instead I will briefly mention two major forms of implied warranties: Merchantability and Fitness for a Particular Purpose.

Merchantability implies that the goods are what they say they are, and they conform to the standards of trade for that item so that they can be used as expected for that item. So, when sold, an Xbox 360 is warranted to be working, packaged and assembled in a uniform way, and able to play Xbox 360 games and DVD movies.

Fitness for a Particular Purpose is more specific. A merchant in this case must know that the consumer is planning to use the item for something specific and tells the consumer that the items are fit for that purpose. Say I went into a furniture store asking for a table to support a very heavy (200+ pound) TV set. If the salesman told me that a particular table would work, and it in fact collapsed, there would be a violation of the warranty.

Neither of these implied warranties are of much use, unless your system is dead out of the box. Moreover, they typically apply to the merchant (the place you bought the item), not the manufacturer.

A related issue is the concept of a deceptive trade practices acts. Deceptive trade practices are pretty much what they sound like (an action that in some way deceives the consumer about the product), and they are also a state by state action. In fact, some states have a long list of industry specific violations in addition to the general violations. It would be a bit of a stretch to apply this as well, although some concept of a failure of represented quality might be applicable, although Microsoft has generally admitted Xbox 360 failures, which may preclude this option.

There are probably potential other causes of action related to the Xbox 360 failures, but these are the ones that seem to appear on the message boards the most.

I would also like to take a moment to point out another legal issue related to the Xbox 360 failures: Fraud. Going to Wal-Mart (or other retail store), purchasing a console, and then returning your broken console is fraud. While it may seem like an easy fix, just don’t do it.

Microsoft has encountered an interesting problem with the 360. The failure rate is high, but so are sales. What is a gamer to do? Hunt for weeks, if not months, to get a Wii, which I admit I enjoy thoroughly but is a little short on software until some of the big releases later this year (Metroid Prime 3, Smash Bros. Brawl, Mario Galaxy). Buy a PS3, which is even more expensive than the 360 and has, for the time being, a weak software lineup. Or buy a 360 and play some quality games until it fails, which seems a near certainty, at which point you might be under warranty, might have to pay for a repair, or might just buy a new console. It’s quite an odd problem, and one I certainly wish Microsoft would resolve. Unfortunately, sales don’t seem to be suffering enough for Microsoft to really take notice. Not that I blame the consumer, since I’m just as hooked as most everyone else. This issue, though, is also one that I cannot remember happening to this degree with any other console. In fact, I have never had another console in my collection fail, including my launch PS2 (which did have a notable failure rate).

What is a consumer to do? Unfortunately, short of a product recall (which seems unlikely given that it has not happened yet and safety is not the issue) or a class action suit, the individual consumer is likely stuck. Why? The cost of an action against Microsoft would be astronomical, and more than likely, they will just settle before any court could place any actual fault on them in order to avoid future, similar suits. This speaks to the failure of consumer protection on the whole. The Xbox 360 user base is vocal and adept at using the internet, so this issue is well known and widespread. Who knows what other products may present the same result to a less technically savvy group. On the flip side, I am certain that other products that work well are being unduly burdened by consumer protection attempts. It probably balances out in the grand scheme of things, but is unfortunate in many particular instances.

And so I, like everyone else, will be once again calling 1-800-4-MY-XBOX and hoping for the best. At least this time, it is in the off season, rather than right before a major game release (my last console was being repaired during the Gears of War release).

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About Mark Methenitis

Mark Methenitis is an attorney in Dallas Texas. Mark received his Juris Doctorate and his Master of Business Administration from Texas Tech University and his Bachelor of Arts from The University of Texas.

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