Not just used vehicles, the rule can apply to new vehicles too:

  • Previously titled or not, any vehicle driven for purposes other than moving or test driving, is considered a used vehicle under this section, including light-duty vans, light-duty trucks, demonstrators, and program cars that meet the following specifications:
    • a gross vehicle weight rating (GVWR) of less than 8,500 pounds;
    • a curb weight of less than 6,000 pounds; and
    • a frontal area of less than 46 square feet.

What if i don’t comply?

  • Dealers who violate the Used Car Rule may be subject to penalties of up to $40,654 per violation in FTC enforcement actions.

FTC Used Car Rule Overview

  • Must post a Buyers Guide before you “offer” a used vehicle for sale.
  • A vehicle is offered for sale when you display it for sale or let a customer inspect it for the purpose of buying it, even if the car is not fully prepared for delivery.
  • This requirement also applies to demos and used vehicles for sale on your lot through consignment, power of attorney, or other agreement.
  • At public auctions, dealers and the auction company must comply. The Rule does not apply at auctions that are closed to consumers.
  • The Buyers Guide must be displayed prominently and conspicuously on or in a vehicle when a car is available for sale. This means it must be in plain view and both sides must be visible. You can hang the Guide from the rear-view mirror inside the car or on a side-view mirror outside the car. You also can place it under a windshield wiper. The Guide also can be attached to a side window. A Guide in a glove compartment, trunk or under the seat is not conspicuous because it is not in plain sight.
  • You may remove the Guide for a test drive, but you must replace it as soon as the test drive is over.

New form became effective January 27, 2017:

  • Changed the description of an “As Is” sale;
  • Placed boxes on the face of the Buyers Guide that dealers can check to indicate whether a vehicle is covered by a third-party warranty and whether a service contract may be available;
  • Provided a box that dealers can check to indicate that an unexpired manufacturer’s warranty applies;
  • Added air bags and catalytic converters to the Buyer’s Guide’s list of major defects that may occur in used vehicles;
  • Added a statement that directs consumers to obtain a vehicle history report and to check for open recalls.
  • Added a statement, in Spanish, to the English-language Buyers Guide, advising Spanish-speaking consumers to ask for the Buyers Guide in Spanish if the dealer is conducting the sale in Spanish; and
  • Provided a Spanish translation of the statement that dealers may use to obtain a consumer’s acknowledgement of receipt of the Buyers Guide.
  • NOTE: The additional Spanish statement is not intended to change the Rule’s existing requirement that dealers provide a Spanish Buyers Guide if the dealer conducts a sale in Spanish. (See below for additional information)

The amended Rule permits dealers to use their remaining stock of Buyers Guides for one year after the effective date of the amended Rule (until Jan. 27, 2018).

  • In Florida, use of the “As Is-No Dealer Warranty” Buyers Guide is legally sufficient to eliminate implied warranties.
  • In other states “as is” sales are allowed only if specific action is taken or certain language is used. For example, some states may require you to eliminate implied warranties by using special language and/or a document other than the Guide.

AS IS

 

 

ON FRONT SIDE

  • Typically, the top box is checked.
  • If you provide a 30 day limited warranty, then second big and second small boxes are checked.

 

 

 

 

 

IF DEALER WARRANTY:

Is the Warranty “Full” or “Limited”?

  • For a warranty to be considered “full:”
    • Warranty service must be provided to anyone who owns the vehicle during the warranty period.
    • Warranty service must be provided free of charge when necessary, even for services like removing and reinstalling a system covered by the warranty.
    • The consumer must be able to choose either a replacement or a refund if the vehicle can’t be repaired after a reasonable number of tries.
    • The consumer is not required to take any action to receive service, except to give notice that service is needed. Service must be rendered after notice unless the warrantor can demonstrate that it is reasonable to require consumers to do more than give notice.
    • The length of implied warranties must not be limited.
  • The warranty is considered “limited” if any of these conditions doesn’t apply.

What systems are covered? For how long?

  • There’s one column to list the systems covered, and another to list the length of the warranty for each system. In the left hand column, you must specify each system that’s covered by the warranty. The Rule prohibits the use of shorthand phrases such as “drive train” or “power train” because it’s not always clear what specific components are included in the “power train” or “drive train.”
  • In the right hand column, you must state the length of the warranty for each system. If all systems are covered for the same length of time, you may state the duration once.

NON-DEALER

 

ON FRONT SIDE:

  • NON-DEALER WARRANTIES:
    • If the Manufacturer’s Warranty Still Applies – This Box will be checked.
    • If the Manufacturer’s Used Car Warranty Applies – This Box will be checked.
    • If another Used Car Warranty Applies – This Box will be be checked.
  • If a Service Contract is available for purchase, the Service Contract Box will be checked.

 

ON BACK SIDE:

  • Insert the name and address of the dealer.
  • Insert the name, telephone number and email address of the person to contact for complaints following the sale. (FADA recommends that this be the controller.)
  • Insert the following “I hereby acknowledge receipt of the Buyer’s Guide at the closing on this sale” with a signature line for the Buyer(s) to sign.
  • The customer receives a signed copy and the dealer retains a signed copy in the dealer jacket.

Spanish Transactions/Used Car Rule

  • If there will be no chance of anyone conducting a transaction in Spanish, you do not need to have a Spanish buyer’s guide or the Spanish contractual language required by the FTC Used Car Rule.
  • The reason some dealers elect to put both English and Spanish Buyer’s Guides on used vehicles is the FTC Used Car Rule requires you to place the Spanish Buyers Guide on a vehicle before you display or offer it for sale. If there is a chance that a salesman could conduct a used car transaction in Spanish, this protects the dealership.
  • If your dealership advertises in Spanish language publications or includes “Se Habla Espanol” in its advertisements, has Spanish speaking sales staff or posts “Se Habla Espanol” signs in the dealership, you must provide them with a buyers order in Spanish.
  • Additional documents should be in Spanish to protect the dealership from any deceptive trade practice act lawsuits.
  • There are many he said/she said lawsuits which are filed under FDUTPA and having any documentation not in the correct language, can complicate a lawsuit.
  • Some dealerships who conduct sales in Spanish elect to always use an English language only Buyers Order; however, the contracts must still include at a minimum the above statement in Spanish on the contract to protect the dealership.
  • Note: FTC will bring case when promo statement inconsistent with contract because that is deceptive (Promo statement in consumers’ primary language promised certain loan terms, but contract in English provided less favorable terms FTC v. Mortgages Para Hispanos.com (E.D. Tex. 2006)). Disclosures in language other than consumer’s native tongue will not cure deceptive statement.

Additional Resources

  • The FTC has great information on their website for dealers at https://www.ftc.gov/tips-advice/business-center/guidance/dealers-guide-used-car-rule

 

 

This content is restricted to FADA members. If you have an existing user account, please login. New users may register below.

Existing Users Log In