16 CFR Part 455 Used Motor Vehicle Trade Regulation Rule; Project No. P087604 #563688-00137

Submission Number:
James Scruggs
Initiative Name:
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 worked on consumer fraud cases for over 15 years. I believe that the current rule regarding the Buyer’s Guide is defective and should be amended, but not as currently proposed by the FTC. The Buyer’s Guide should be a way to fully inform consumers who shopping for an automobile. The last sentence in the proposed Buyer’s Guide contains the following language: "AS IS - NO DEALER WARRANTY THE DEALER WON'T PAY FOR ANY REPAIRS. The dealer is not responsible for any repairs regardless of what anybody tells you." This language is not legally correct. If the dealer commits fraud, violates a state UDAP statute, or makes an express oral or written warranty then the dealer can be held responsible. The FTC should not mandate a form that misrepresents the law. Additionally, with this new language, FTC seems to take the position that consumers should seek out information, instead of requiring that the dealer provide the same motor vehicle information to all potential buyers who are looking at a specific vehicle. The FTC’s position actually encourages fraud against consumers who have limited access to information. What the FTC should do is insist 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. 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 other states 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 any claim or assurance that the car is fit to be a car at all. In states 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. If a dealer does not want to guarantee that a car it is selling is, at a minimum, fit to be a car, it should be required to expressly state this. Additionally, known defects should be disclosed in the Buyer’s Guide. 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. 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. Finally, 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. This information should also be required to be included on the Buyer's Guide