The Informal Dispute Settlement Procedures Rule

Section 110(a)(2) of the Magnuson-Moss Warranty Act (15 U.S.C. Section 2301, et seq.) directed the Commission to prescribe rules setting forth the minimum requirements for any informal dispute settlement procedure that the warrantor requires the consumer to use before pursuing any legal action in court. On December 31, 1975, the Commission issued its Rule on Informal Dispute Settlement Procedures, 16 C.F.R. 703 (the Rule or Rule 703), which sets minimum standards for informal dispute settlement mechanisms (IDSM) established to resolve consumer warranty disputes. The purpose of the Rule is to carry out Congress's intent to encourage the fair and expeditious handling of consumer disputes through the use of alternative dispute resolution methods. Rule 703 applies only to those warrantors who (1) provide a written warranty, (2) on a consumer product, and (3) place a prior resort requirement in their warranty (i.e., require consumers to use a dispute resolution mechanism before exercising their legal remedies in court). Neither the Act nor Rule 703 requires warrantors to set up IDSMs. Furthermore, a warrantor is free to set up an IDSM that does not comply with Rule 703 as long as the warranty does not contain a prior resort requirement. Rule 703 contains procedural standards that must be followed by every IDSM that is incorporated, through a prior resort clause, into the terms of a written consumer product warranty. These standards include requirements concerning the mechanism's structure, the qualifications of staff or decision makers, the mechanism’s procedures for resolving disputes, recordkeeping, and annual audits.

The latest form for The Informal Dispute Settlement Procedures Rule expires 2023-07-31 and can be found here.

Recordkeeping for disputes

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