California DMV Certified Auto Dealer License Educator #CCC0028
24-7 Dealer Training Specialists ®
December 13th, 2021 by Jessica Biarbe
Every retail dealer that offers vehicles for sale must have a Federal Trade Commission Buyers Guide affixed to the vehicle. The Used Car Rule has been in effect since 1985. This article gives the basics of the Used Car Rule and information for the Buyers Guide.
The Buyers Guide is a disclosure regarding purchasing and warranty information. The Buyers Guide tells consumers:
Before a dealer displays a vehicle for sale or discusses the vehicle with a consumer, the Buyers Guide must be posted. If you conduct a used car transaction in Spanish, a Spanish version of the Buyers Guide must be posted before you display or offer the vehicle for sale. The exception to the rule is vehicles at dealer auctions that are closed to consumers.
Any vehicle driven for the purpose other than moving or test driving is considered a used vehicle, even if it hasn’t been previously titled that meet the following specifications:
Exceptions to the Used Car Rule are:
The Buyers Guide must be in plain view and both sides must be visible. Ideas for display are:
When test driving the vehicle the Buyers Guide may be removed, however once the test drive is over be sure to replace it.
Fill in the vehicle make, model, model year, and vehicle identification number (VIN). Write in a dealer stock number if you wish.
On the back of the Guide, fill in the name and address of your dealership. Also fill in the name (or position) and the telephone number of the person the consumer should contact with complaints. You may use a rubber stamp or preprint your Guide with this information.
You may include a signature line on the Guide and you may ask the buyer to sign to acknowledge that he or she has received the Guide. If you opt for a signature line, you must include a disclosure near it that says: "I hereby acknowledge receipt of the Buyers Guide at the closing of this sale." This language can be preprinted on the form. The signature line and the required disclosure must appear in the space provided for the name of the individual to be contacted in the event of complaints after the sale.
As Is-No Dealer Warranty. If a dealer chooses not to offer a warranty — written or implied —check the box next to the heading "As Is-No Dealer Warranty" on the Guide. Remember the vehicle must still meet Division 12 Safety Equipment Requirements.
Warranty. If a dealer offers the vehicle with an express warranty, check the box next to the heading "Warranty" and complete that section of the Guide. Warranties required by state law must be disclosed in this section.
Is the Warranty "Full" or "Limited"? For a warranty to be considered "full:"
The warranty is considered "limited" if any of these conditions don’t apply.
What Percentage of Costs Does the Warranty Cover?
Fill in the percentage of parts and labor costs covered by the warranty in the spaces provided on the Buyers Guide. If a deductible applies to repairs made under the warranty, put an asterisk next to the number and explain the deductible in the "systems covered/duration" section. For example, "*A $100 deductible applies to each repair visit.
What Systems Are Covered? For How Long?
There's one column to list the systems covered, and another to list the length of the warranty for each system. On the left side, the dealer must specify each system that's covered by the warranty. The Rule prohibits the use of shorthand phrases such as "drive train" or "power train" because it's not always clear what specific components are included in the "power train" or "drive train."
On the right side, the dealer must state the length of the warranty for each system. If all systems are covered for the same length of time, you may state the duration once.
Situation when the Manufacturer’s Warranty Still Applies:
If the manufacturer's warranty has not expired, you may disclose this fact by checking the box, "MANUFACTURER'S WARRANTY STILL APPLIES. The manufacturer's original warranty has not expired on some components of the vehicle,” in the Non-Dealer Warranties for this Vehicle section of the Buyers Guide.
If the buyer must pay to get coverage under the manufacturer's warranty, you may not check the "Warranty" box. Such coverage is considered a service contract. However, you may check the "Warranty" box if you pay for coverage from the manufacturer and the buyer doesn't have to pay anything more than the price of the vehicle to get the coverage. If you provide a warranty in addition to the unexpired manufacturer's warranty, explain the terms of your warranty on the Buyers Guide.
If the dealer and the buyer negotiate changes in the warranty, the Buyers Guide must reflect the changes. For example, if you offer to cover 50 percent of the cost of parts and labor for certain repairs, but agree to cover 100 percent of the cost of parts and labor after negotiating with the buyer, you must cross out the "50 percent" disclosure and write in "100 percent." If you the dealer first offers the vehicle "as is" but then agree to provide a warranty, you must cross out the "As Is-No Dealer Warranty" disclosure and complete the "Warranty" section of the Buyers Guide properly.
The service contract provides repair and or maintenance for a specific period. The difference is that warranties are included in the price of the vehicle and a service contract costs extra and is sold separately. If you offer a service contract be sure and mark the box on the Buyers Guide.
The buyer receives the original or a copy of the vehicle's Buyers Guide at the time of sale. The Guide must reflect all final changes. If you include a signature line on your Buyers Guides, make sure the buyer signs the Guide that reflects all final changes.
If you the dealer offers a written warranty, or if the manufacturer's warranty still applies, you also must comply with the Magnuson-Moss Warranty Act and other FTC Rules, including the "Warranty Disclosure Rule." The Warranty Act contains provisions that establish consumers' rights with respect to written warranties. For example, the Act prohibits you from eliminating implied warranties when you provide a written warranty.
The Warranty Disclosure Rule requires that you disclose certain information about the coverage of your warranty and consumers' rights under state law. This information must be included in a single document that is clear and easy to read.
The warranty information you provide on the Buyers Guide is not sufficient to meet the requirements of the Warranty Disclosure Rule. The dealers written warranty and the Buyers Guide must be two separate documents.
Failure to comply with the Used Car Rule is subject to penalties up to 43,792 per violation of the Federal Trade Commission enforcement actions.
State and local law enforcement officials have the authority to ensure dealers are posting the Buyers Guide and also may impose penalties. Violations of the Used Car Rule may be up to 16,000 per incident for non-compliance.
Disclaimer
Information within this publication is not intended to give legal advice or compliance with any Federal, State, or local laws and/or regulations. It should be noted that laws, regulations and standards are subject to revisions, additions or deletions at any time. If legal advice or assistance is required, the services of a competent professional should be obtained.
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