FTC Used Car Rule - Part 3

by: AFI


FTC Used Car Rule - Part 3


In some states, use of the "As Is-No Warranty" Buyers Guide may be legally sufficient to eliminate implied warranties.

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.

* The length of implied warranties must not be limited.

The warranty is considered "LIMITED" if any of these conditions don't apply.


If the vehicle still has Factory Warranty on it: Check the "Warranty" box and include this disclosure: "MANUFACTURER'S WARRANTY STILL APPLIES".
The manufacturer's original warranty has not expired on this vehicle.
Consult the manufacturer's warranty booklet for details as to warranty
coverage, service location, etc."

The FTC requires the disclosure to be stated in the exact language quoted above. Using phrases such as "balance of factory warranty" are not sufficient.

You must give the buyer a copy of this Buyers Guide at the close sale. The guide must reflect all final changes.

If you offer a written warranty, you must also comply with the Magnuson-Moss Warranty Act. This will be discussed in a future post.

Dealers who violate the Used Car Rule may be subject to penalties of up to $11,000 per violation in FTC enforcement actions. Many states have laws or regulations that are similar to the Used Car Rule. Some states incorporate the used car rule by reference in their state laws. As a result, state and local law enforcement officials may have the authority to ensure that dealers post Buyers Guides and to fine them if they do not comply.

To file a complaint or to get free information on consumer issues call toll-free at 1-877-FTC-HELP (1-877-382-4357

*** IN CASE OF AN AUDIT, A COPY OF THE BUYERS GUIDE MUST BE IN EVERY USED CAR DEAL JACKET. SEE ABOVE PENALTY -it is the Finance Manager who will get thrown under the bus if the dealership get's sued. To protect the dealership and yourself, personally make sure that a Buyers Guide is in every used car deal. I had to audit each of my stores for the last five years specifically looking for deals without Buyers Guides. FYI