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HOT TOPICS
2015 GNYADA Membership Directory
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to the product; disclose clearly that the purchase of the product is voluntary and not required; make all legally
required disclosures in a clear manner and at reasonable speed; and after disclosures are read, require the
customer to acknowledge the purchase is voluntary and that the customer affirmatively requests or consents to
purchase the product. If the product has a cancellation or refund policy, the dealer must disclose the policy and
give the phone number to cancel and the time in which to get a refund. The customer’s purchase and means of
payment must also be disclosed and confirmed. If paying by credit card, the customer must give the full credit
card number for payment to the sales representative.
Advertising Laws and Regulations
FTC Used Car Rule
The FTC Used Car Rule requires auto dealers to prominently and conspicuously post a “Buyer’s Guide”to keep in
plain view on all used vehicles offered for sale. The notice must be placed on the vehicle before the used vehicle
is offered for sale. The Used Car Rule defines a “used car” as any car that has been driven more than necessary
to move it or for road testing prior to delivery to a consumer. This would include many “demo” models used
for customer test drives. The Buyer’s Guide must disclose whether the vehicle is being sold “as is” or with a
warranty. If it is sold with a warranty, the Buyer’s Guide must state the general terms of the warranty, including
whether it is full or limited; the specific systems covered (engine, transmission, etc.); a list of parts or systems
not covered if necessary for clarity (e.g., a battery); what percentage of repair costs the dealer will pay under the
warranty; an explanation of how the customer gets warranty service; and who to see about complaints. State
law governs the legal requirements for disclaiming warranties.
The Buyer’s Guide must also tell consumers that oral promises are difficult to enforce and to get all promises
in writing, the major mechanical and electrical systems on the car that are covered by the warranty, the major
problem areas that consumers should look for, and to ask to have the car inspected by an independent mechanic
before they buy. If a used car transaction is negotiated in Spanish, the dealer must post a Spanish language
Buyer’s Guide. The Buyer’s Guide becomes part of the sales contract and the disclosures cannot be contradicted
orally or in writing. In addition to the Buyer’s Guide, the dealer must provide a separate warranty document
unless the dealer is not selling the used vehicle with its own warranty. A dealer who sells a car with only the
remaining manufacturer’s warranty, if that still applies, may simply state that clearly on the Buyer’s Guide. The
Buyer’s Guide is not a warranty document.
The FTC is actively monitoring dealers’ compliance with the Used Car Rule. In 2013, the FTC issued
warnings to 11 dealers in Arkansas that FTC staff inspections in Jonesboro, Arkansas found
that eight dealers failed to display Buyers Guides on almost all used cars offered for
sale, and three dealers failed to display the guides on a significant number
of used cars. The warnings reiterated the need for posting the
Guides on all cars and indicated that further violations
could be considered an unfair or deceptive trade
practice under Section 5 of the FTC Act. A year
later, the FTC returned to the dealerships
and found one of them that was still not
displaying Used Car Buyers Guides on all