16 CFR Part 455 Used Motor Vehicle Trade Regulation Rule; Project No. P087604
Re: Used Car Rule Regulatory Review, Project No. P087604 I am a consumer lawyer and have been involved in autofraud lawsuits for over 17 years. I read the text of the Notice and all the reasoning behind the proposed rule. The current Buyers Guide is defective and should be amended, but not as proposed. Regarding the used car market, the goal we all share is improving its effectiveness. As stated by the United States Supreme Court, "blind economic activity is inconsistent with the efficient functioning of a free economic system such as ours, whose ability to provide desired material at the lowest cost is dependent on the asserted preferences and informed choices of consumers." Mourning v. Family Publications Svc., Inc. 411 U.S. 356, 364 (1973). Therefore, the goal of the Buyers Guide should be to deliver as much information as possible into the hands of consumers who are looking at vehicles. In the Notice, the FTC repeatedly took the position that consumers should go out and get information rather than having the same information made available to all consumers looking at a specific vehicle. This "everyone must protect themselves attitude" approach merely invites fraud by the more sophisticated upon those with less access to information. Instead of inducing fraud, the FTC should mandate that the Buyers Guide be an information device that conveys to all consumers the necessary information for a vehicle to be properly priced by the market. Providing this information not only protects consumers from fraud but strengthens and enhances our economic system. Specifically, the following changes should be made to the proposed rule- 1. As currently proposed, the new AS IS statement misrepresents that no remedy is available for other express statements. This provides inaccurate legal advice in Virginia and must be altered. Instead, the AS IS notice should state what AS IS actually means. In an AS IS sale the seller is disclaiming two common concepts that are ordinarily implied in sales- fitness and merchantability. The legal effect is denying responsibility for repairs, but the actual statement is to deny that the car is fit to be a car at all. In states like mine that allow such sales, the FTC should mandate that the truth be told. Therefore, the AS IS disclosure should first state "THE DEALER DENIES RESPONSIBILITY FOR ANY REPAIRS" followed by a sentence that summarizes that the dealer denies that the vehicle is fit to be sold as a car. Most consumers do not really know what AS IS means and the Buyers Guide should honestly tell them. 2. The NMVITS should be checked by all car dealers prior to selling any car and then a disclosure made about it. All the dealer must do is accurately represent whether a title brand or damage appears in the database and the date the database was checked. 3. Dealers should be required to state if a manufacturer's warranty still applies. This information is crucial for the market to properly value the car. As the owner of the car, a car dealer is in a better position to determine this rather than a future owner. 4. The statement about the manufacturer's warranty and the service contract should be on the front. On the back, further description of any dealer warranty can be provided by combining that disclosure with the list of possible and known defects in a vehicle. The dealer can indicate which part of the possible defects items in the list are covered by the warranty. A few other lines should be added to allow for additional warranty areas to be listed. 5. Known defects should be disclosed. A car that has a known defect should not be sold without disclosure of the defect. This information is necessary for the market to properly price the vehicle. If a dealer knows a defect exists, it should be listed on the Buyers Guide. The dealers can use the list of major defects and indicate which of these defects is known to be present, and additional lines can be added for other known defects.