The Federal Trade Commission (FTC) has recently amended its Used Car Rule. This adjustment will mean a lot for buyers in the used car market. Take a look at what this rule is, how it has changed, what this means for buyers, and how the FTC is keeping dealerships in check.
The Used Car Rule
The Used Car Rule is an FTC regulation that has been in place since 1985. Previously called the Used Motor Vehicle Trade Regulation Rule, this standard required that car dealers display a window sticker with pertinent information about every used car for sale. This information is also called a “Buyer’s Guide” and used to include details such as:
- Whether a warranty is available or included with the vehicle as well as its terms and conditions and the type of coverage provided
- What portion of covered repairs the dealer will pay
- What systems the warranty covers
This ruling was enforced in all states — even those that don’t permit selling a used car without a warranty. In such a case, a special type of Buyer’s Guide had to be displayed in the window.
How the Rule Has Changed
The FTC has changed the ruling following a self-audited that investigated the efficiency of this system. The new version of the regulation, which has been in effect since January 2018, still requires that used cars for sale display a Buyer’s Guide in the window. However, this guide must now include more detailed warranty information, such as:
- How the dealership will repair parts that fail and are covered by the warranty
- How recall notices will be issued
- A note prompting the buyer to ask the dealer if a third-party mechanic can inspect the vehicle before making a purchase
These changes were made after the FTC scrutinized buyer’s comments and feedback and personally inspected thousands of used vehicles on dozens of lots across the country.
What the Rule Means for Buyers
The rule means that buyers will have access to more and better information about the vehicles they’re considering purchasing. Understanding warranty coverage is vital for consumers, and the FTC’s changes will keep dealerships accountable in this regard.
How the FTC Is Keeping Dealerships in Check
The FTC keeps dealerships in check through audits such as the one it performed while conducting research on how it would revise the Used Car Rule.
If a dealership isn’t compliant with regard to the new regulations, the FTC will provide information about how it can meet the requirements. If the dealership still does not comply, the FTC can issue fines of up to $41,484 per violation. Moreover, if a consumer purchases a vehicle and there’s an issue with misinformation or confusion about the warranty due to the lack of a proper Buyer’s Guide, the case can go to court.
The changes to the Used Car Rule help to protect buyers and make sure they have all the information they need to make a wise purchase. Remember to check for a Buyer’s Guide on every vehicle you’re considering, and don’t hesitate to ask the car dealer if you have any questions.
Photo by Michel Curi | Licensed under cc BY 2.0
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