Staff of the Federal Trade Commission and local investigators recently checked used car lots in Washington, D.C. and Oregon to evaluate compliance with the FTC's Used Car Rule, which requires used car dealers to post a Buyers Guide detailing warranty and other important information on the used cars they sell. These inspections were part of the FTC's ongoing efforts, in conjunction with state and local officials, to enforce the Rule. More than 80 FTC actions have been brought since the Use Car Rule became effective in 1985, with civil penalties totaling over $1,000,000. In addition, hundreds of state actions have been brought to enforce the Rule.
In the District of Columbia, investigators from the Investigation Division, Office of Compliance, Department of Consumer and Regulatory Affairs recently cited 17 of the 49 dealers they and FTC staff examined for failing to post Buyers Guides and for failing to post inspection notices stating whether or not the vehicles have been dealer-inspected, which is required by D.C. law. A total of $28,400 in fines was assessed by the District of Columbia against these dealers.
Staff of the Oregon Attorney General's Office and the FTC inspected 14 used-car dealers in Portland and Salem, Oregon, and found that two of these dealers failed to post "Buyers Guides" on vehicles offered for sale. These two dealers have entered into assurances of voluntary compliance with the state of Oregon. Under these agreements, the dealers are subject to fines for future violations of the FTC Used Car Rule.
The FTC's Used Car Rule requires that Buyers Guides be posted at all times on each vehicle offered for sale. The Buyers Guide states:
- whether the vehicle comes with a warranty and, if so, whether it is a "full" or limited warranty;
- which systems are covered by the warranty and the duration of the warranty period;
- if it is a limited warranty, what percentage of the cost for covered parts and labor the dealer will pay for; or
- whether the car is sold with no written or implied warranty or , in other words, the car is sold "As Is;"
- whether the car is sold with no written warranty, but with implied warranties. (Some states and Washington, D.C. do not allow dealers to sell cars without implied warranties.)
The Rule also provides that the Buyers Guide becomes a part of the sales contract and overrides any contrary provisions contained in that contract.
The Buyers Guide also contains a number of important warnings and suggestions for consumers. For instance, it suggests that a consumer ask the dealer if it is possible to have the car they're considering inspected by a mechanic. The Buyers Guide also warns consumers not to rely on spoken promises, which may be impossible to enforce. Instead, consumers should ask the dealer to put any promises in writing on the Buyers Guide and in the sales contract.
Copies of the consumer publication, "Buying a Used Car," and the guide for used car dealers, "A Dealer's Guide: The Used Car Rule," are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
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