Used Vehicle Buyers Guide

Used Vehicle Buyers Guide

The FTC conducted a Buyer’s Guide Compliance Sweep in 20 cities nationwide from April – June 2018. Although car dealers were the target this time, your dealership could be exposed to an audit if you sell used trucks, cars or possibly lightweight Class B or C motorized units with a GVWR of less than 8,500 lbs. and a curb weight of less than 6,000 lbs. These would be very lightweight Class B and C’s.

The FTC found the Buyer’s Guide on 70% of the more than 2,300 vehicles inspected. Of the 94 dealerships inspected, including Texas dealerships in Arlington, Dallas, and Grand Prairie, 33 had the revised Buyer’s Guide on more than half their vehicles and 14 had the revised Buyer’s Guide on all their used vehicles. In Texas, the Texas Department of Motor Vehicles (TxDMV) assisted in the compliance sweep.

The dealerships that did not display the revised Buyer’s Guide can expect follow-up inspections to ensure they are complying. As of January 28, 2018, dealers are required to display a revised Buyer’s Guide on their vehicles subject to the display requirements.

Under the FTC Act, a penalty can be up to $41,484 per violation.

Background:
The Federal Trade Commission’s (FTC) Used Car Rule became effective May 9, 1985, revised in 2016. This rule requires a dealer to display a completed “Buyers Guide” on a used vehicle that is offered for sale to a consumer and to disclose if the vehicle is offered with or without a dealership’s warranty (“as is”).

Definitions:
For purposes of the FTC’s Buyers Guide [Used Motor Vehicle Trade Regulation Rule], the following definitions apply:

Consumer: Any person who is not a used vehicle dealer.

Dealer: Any person or business which sells or offers for sale a used vehicle after selling or offering for sale 5 or more used vehicles in the previous twelve months. It does not include a bank or financial institution, a business selling a used vehicle to an employee of that business, or a lessor selling a leased vehicle by or to that vehicle’s a lessee or to an employee of the lessee.

Used Vehicle: Any vehicle driven more than the limited use necessary in moving or road testing a new vehicle prior to delivery to a consumer but does not include any vehicle sold only for scrap or parts (title documents surrendered to the state and a salvage [undeliverable] certificate issued).

Vehicle: Any motorized vehicle, other than a motorcycle with a GVWR of less than 8,500 lbs., a curb weight of less than 6,000 lbs., and a frontal area of less than 46 sq. ft.

Warranty: Any undertaking in writing in connection with the sale by a dealer of a used vehicle, to refund, repair, replace, maintain or take other action with respect to such used vehicle and provided at no extra charge beyond the price of the used vehicle.

Service Contract: A contract in writing for any period of time or any specific mileage to refund, repair, replace, or maintain a used vehicle and provided at an extra charge beyond the price of the used vehicle unless offering such contract is “the business of insurance” and such business is regulated by State law.

  1. The new Buyers Guide, effective January 27. 2017, is revised to:

    1. Change the description of an “As Is” sale to state “As Is—No Dealer Warranty”.
    2. Place boxes to check on the front side of the Buyers Guide as to whether the vehicle is covered
    by a manufacturer’s or third-party warranty and whether a service contract is available.
    3. Adds airbags and catalytic converters to the list of major defects that may occur on the reverse side of the Buyers Guide.
    4. Adds a statement directing a consumer to obtain a vehicle history report by visiting ftc.gov/usedcars and to check for an open recall by visiting safercar.gov.
    5. Adds a Spanish statement to the English Buyers Guide that advises a Spanish speaking consumer to ask for a Buyers Guide in Spanish if the dealer conducts the sale in Spanish.
    6. Provides a Spanish translation of the statement that a dealer may use to obtain a consumer’s
    acknowledgment of receipt of the Buyers Guide.

    Window Form:
    The capitalization, punctuation, and wording of the form must be exactly as required by the FTC. The
    entire form must be printed in black ink on a white stock that is no smaller than 11” high by 7 ¼’ wide in
    the type styles, sizes, and format as FTC required.

    If the dealership offers the vehicle with a warranty, briefly describe the warranty terms in the space provided on the Buyers Guide, including:

    1. If the dealership’s warranty is “Full” or “Limited.” Mark the appropriate box.
    2. Describe the specific systems that are covered, for example, “engine, transmission, differential.”
    Do not use shorthand verbiage such as “drive train” or “power train” for a covered system.
    3. The duration, such as 30 days or 1,000 miles, whichever occurs first.
    4. The percentage of the repair cost paid by the dealership, for example: “The dealer will pay 100%
    of the labor and 100% of the parts.”
    5. If disclosing an applicable non-dealer warranty, mark the applicable box or boxes.
    6. If a service contract is available on the vehicle, mark the applicable box.

    If a sale is conducted in Spanish. the Spanish Buyers Guide is required to be given to the consumer.

    Reminders:

  2. 1. Use a side window to display the form so that both sides of the form can be read with the Buyers Guide facing to the outside.
    2. The Buyers Guide may be removed temporarily from the window during a test drive but it must be replaced as soon as the test drive is complete.
    3. Complete the reverse side of the form with the dealership’s name, address, telephone, email and
    who to contact after the sale with a complaint.
    4. Give the buyer a completed Buyers Guide.
    5. Do not make any statements, oral or written, or take an action that alters or contradicts the disclosures on the form.

    Do you need printable samples of the Buyers Guide in both English and Spanish? Follow these links to download those forms or look for the attachments in the email containing this Compliance Alert! The attachments can be filled out on your computer and printed, the links must be complete by hand.

    English:

    https://www.dropbox.com/s/1qlfpmyh8walnh4/Fillable%20CFR%20Buyers%20Guide%20English.pdf?dl=0

    Spanish:

    https://www.dropbox.com/s/de8jac3d6ynvb7q/Fillable%20FTC%20Buyers%20Guide%20Spanish.pdf?dl=0