What happens to your device warranty when a company closes down

This is the scenario: you’ve had your new fitness band for 11 months when it stops working. It came with a 12-month warranty, though, so you’re not worried.

When you take it in to be repaired or replaced, you are informed that you are out of luck – the warranty is no longer valid.

The manufacturer of your gadget has gone bust and was stripped for parts, which were sold to the highest bidder.

If you think this sounds unlikely, think again. This happened to Pebble customers a few months ago when Fitbit acquired parts of the company, following its descent from riches to rags.

Suddenly, warranties were declared invalid and Pebble owners were warned not to expect any software updates for their smartwatches.

While Pebble and Fitbit are overseas companies, this kind of thing can happen in South Africa. For example, at the beginning of 2017, local smartphone brand AG Mobile was liquidated.

You’re stuffed

“If a company declares bankruptcy there is not much you can do,” said Nicholas Hall, an attorney at Michalsons.

“For practical purposes, the legal entity which you are contracted with no longer exists so there is no longer a person to try and enforce the warranty against.”

Hall said it is important to remember that a warranty is a contractual clause and is subject to the normal laws of contract.

When a company is acquired, things are more complex.

“If the actual legal entity got sold, then in theory the warranty is still valid. If the business gets sold, then possibly not,” said Hall.

The manufacturer could have the ability to unilaterally change the terms of the agreement, including the terms of the warranty.

“If that is the case, there is not much the consumer could do.”

“If the warranty is a statutory provision – like the 6-month implied warranty in the CPA – then you could still enforce it against the company, as they do not have the power to contract out of their legislative responsibilities.”

Switching off essential cloud services

In addition to cancelling its warranties, Pebble also warned that functionality of its smartwatches may decrease over time.

Fitbit will keep Pebble’s software and services running through 2017, but its cloud services will eventually be switched off.

Fortunately, it has promised to reduce Pebble’s dependency on its patchwork of cloud services.

If a company decides to shut down a cloud service that is essential for its devices to work, there is also not much consumers can do.

“The key point here is that it is a service,” said Hall.

“While most services may have an uptime warranty, that warranty will be limited to while the service is still being provided.”

“If they choose to no longer provide the service, then the warranty would fall away.”

Now read: Pebble smartwatches – from rags, to riches, to rags

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What happens to your device warranty when a company closes down