be taken away from the consumer. NHFA agrees that the consumer should be told at the time of the sale of the availability of a service contract, but this should not prohibit the retailer from later selling the service contract. This is important in order to properly serve the consumer who moves from one area to another. She should be afforded the privilige of purchasing a service contract from a retailer who did not originally offer the contract.

NHFA suggests that the availability and cost of the service contract be disclosed at the time of the original sale. Service contracts are very important to TV customers since service can be so expensive. The sale of service constracts should not be denied to any customer whether sold by the original retailer or by another retailer or service establishment. At all times, third parties should be permitted to sell service contracts. 5. Retailers should not be a legally responsible arm or agent of a manufacturer-guarantor. Legal responsibility within the realm of the bill should be clarified to indicate more firmly that only the actual guarantor is legally responsible for performance under the terms of the guarantee.

6. General offers of satisfaction should be permitted. Many retailers throughout the Nation use terminology similar to "satisfaction assured," "satisfaction guaranteed," or "we guarantee you will be satisfied when you purchase at our store." Such general offers should not be prohibited. Many of these statement have become the trademark of the store and to remove the opportunity to use such longtime statements would pose a serious disadvantage to the retailers. In many instances retailers, for the sake of customer good will, go far beyond any manufacturer guarantees making good their promises of satisfaction. This is, of course, a great benefit to the consumer.

The famous return policy of Rich's in Atlanta is the best example of liberal service policies building a successful business. Legislation could never accomplish this result. Only pressure within the marketplace.

7. Goods in commerce at the time the bill is passed should be exempted from coverage. In the home furnishings industry, it is often difficult for the home furnishings retailer to "turn over" his merchandise in 6 months, a year, or even longer. With this in mind, goods that are in stock, in delivery, or already manufactured should be exempted from coverage. Only products manufactured after the effective date of the bill should be covered.

8. "Reasonable" time guarantees should be determined by individual guarantors. In the proposed legislation the term reasonable is used to determine appropriate guarantee periods. The Federal Trade Commission is given the responsibility of writing appropriate trade practice rules for compliance with the law and it would seem inappropriate for the Commission to determine how long a product should last. The guarantors themselves should be given the opportunity to offer a guarantee of any "reasonable" duration.

In summary, the National Home Furnishings Association supports the concept of full disclosure of the terms and conditions of whatever guarantee is offered. If, after the committee reviews the President's Task Force Report on Warranties in the appliance industry, legislation is deemed necessary, we suggest that such legislation drawn along the lines of the Magnuson-Moss bill presently before this committee be amended to include the changes and clarifications discussed in our testimony.

Whatever is eventually done in the field of guarantees, it is important that certain basic principles be maintained. The guarantor, be he manufacturer or retailer, should continue to retain the right to voluntarily decide whether to offer a guaranty and to determine the scope and duration of his guarantee. The consumer must retain the right to make decisions as to whether she wishes to purchase a product with a guarantee or without a guarantee. The guarantee has become a major sales tool and a major aid for the consumer. To legislate the guarantee out of existence through too stringent requirements, or to require guarantees for all products, would not be in the best interests of either the guarantor or the consumer.

Thank you for inviting us to appear.

Senator Moss. Thank you, Mr. Breuner. That was a very fine state

ment.

I am pleased to know that you feel that the approach in the Magnuson-Moss bill is realistic, and if legislation in this field is required, that it represents a reasonable approach to the problem.

I appreciate the constructive suggestions that you made in your testimony, of things that you wanted to make sure were appropriately covered in any legislation that would become law.

I wonder, would you characterize the wording of S. 3074 as making guarantees compulsory? I gathered from your remarks you didn't think they were compulsory.

Mr. BREUNER. We disagree with that terminology. We discussed it. Senator Moss. But don't you think the language makes it quite clear that no guarantee or warranty is required, but simply if one is given it has certain standard meanings? Isn't that

Mr. BREUNER. We considered it voluntary.

Senator Moss. To what extent do the products that members of your association sell fall within the scope of this bill?

Mr. BREUNER. Quite substantial. In my own store, the television department is the largest single department in my store. Now, not all retailers carry television, because there are a lot of problems involved with it. But television and appliances, stereo, electronics, are a very large part of furniture retailing, and those are areas that are in this. Senator Moss. Has your association already taken some voluntary steps in this warranty situation?

Mr. BREUNER. Yes; we have had meetings with manufacturers and we have done survey work. Maybe I would ask Mr. Spencer Johnson to elaborate on that. He is more familiar.

Senator Moss. Could you tell us, briefly, Mr. Johnson?

Mr. JOHNSON. Yes, sir. The association has developed for its members a report on warranties and guarantees as they are used in the retail home furnishings industry. The report, which has been supplied to your committee, identifies the three basic types of warranties used in the industry-the general warranty, the specific warranty, and the defensive warranty-and identifies for stores how they might go about developing "in-store" warranties of their own which would be warranties given in addition to manufacturers' warranties and, in most cases, go beyond what the manufacturer warranties to customers that buy their products.

Senator Moss. Thank you. Without objection, we will include that document as part of the record, so that the record will be clear as to what we're talking about.

(The document follows:)

MPIA Special Report

THE SQUEEZE FOR VOLUNTARY ACTION TO REFINE THE INDUSTRY'S WARRANTIES

Truth in Warranty legislation may be just around the corner if the home furnishings industry further delays taking some positive steps in devising its own set of warranties that clear up the incongruities now existing. It is strongly apparent that both segments of the industry-manufacturers and retailers - must now take a full look at their responsibilities to the consumer and get ready to either revise their present policies or to accept the impending legislation. Because of the urgency of the issue, the Washington office of National Retail Furniture Assn. has prepared this Special Report to alert members of the industry.

Today's consumer is interested not only in the product but in its durability, quality and repairability. No one expects a product to last indefinitely, but the life expectancy of a product is often the crucial test under which the item is purchased.

There was a time when the consumer was pleased to have a 30-day warranty on his automobile, even though the clock would definitely stop on the thirtyfirst day after purchase. Those days, however, have gone.

The warranty can be either a curse or a blessing to the retailer. Good service and quality repairs often can do far more for a retailer than any amount of advertising.

While no one can disagree with this, the challenge arises in the implementation of these principles. It is casy to say that a home furnishings retailer should stand behind the merchandise he sells, but who stands behind him? Is it the retailer's responsibility to back up all products sold with unconditional warranties and be simply left holding the bag?

No one is asking the retailer to give service beyond that which is economically possible, but the problems of the consumer have been brought to the forefront by Ralph Nader, his "Raiders" and members of Congress.

The "White House Report of the Task Force on Appliance Warranties and Service" served notice that legislation is just over the horizon unless something is voluntarily done. The January, 1969, report gave manufacturers and retailers one year to make "substantial progress" toward implementation of some of the recommendations in the report. That year is not

even half over and federal legislation has been introduced with more to follow.

Warranties, however, do not have to be viewed as a necessary evil. Utilized properly, with a firm understanding of the store's individual business and customers, the warranty can be an effective sales tool. Federal legislation might spell out the general form of the service warranty with minor changes by retailers.

Industry-wide voluntary action to revise its own programs and adapt its own warranty policies could climinate the need for legislation. While universal acceptance of one warranty is in opposition to the antitrust laws, general recommendations regarding the basis of a good warranty is legal and advisable.

THE WARRANTY: WHAT IS IT?

There is little question with the actual definition of a warranty. (Ed. note Because of general acceptance, the words "warranty" and "guaranty" are used interchangeably in this Special Report.) Problems arise when the consumer challenges the "extent" of the warranty.

The statement of a warranty is the consumer's only protection as to what degree the manufacturer or retailer will stand behind the product purchased. The Federal Trade Commission struggled with the problem of "extent" in its 1960 guidelines and in the material contained in the White House report of last January.

If it were possible to devise the perfect warranty, it might simply include the name of the product guaranteed and the length of the warranty in a short sentence. This, however, is often an impossibility. Because different types of materials perform according to where and how they are used, a uniform warranty is not always feasible.

Automobile manufacturers at the present time are trying to devise a warranty that will protect them and the consumer without the use of unnecessary disclaimers on the basis that consumers feel if one part on an automobile is warrantied for five years, the entire car should also be warrantied for that period. In the samé light, those in the furniture industry obviously would be hard-pressed to warranty for the same period of