FTC Conducts “Used Car Rule” Compliance Sweep

Between April and June 2018, the FTC, alongside 12 partner agencies, conducted “Used Car Rule” compliance sweeps across 20 cities in seven states.  The FTC inspected over 2,300 vehicles at 94 car dealerships and found that only 35% of the vehicles inspected had the required revised Buyers Guides displayed on the vehicles.  Of the 94 dealerships inspected, only 14 were compliant on all their vehicles.

As background, the “Used Car Rule” was amended on November 18, 2016, and dealerships were required to display the revised Buyers Guide on vehicles by January 28, 2018.  The amended rule requires the Buyers Guide to include additional information to be displayed that was not previously required by the old rule, including:

• A change to the description of an “As Is” sale;
• A box that dealers can check to indicate if a vehicle is covered by a third-party warranty and if a service contract may be available:
• A box that dealers can check to indicate that an unexpired manufacturer’s warranty applies;
• An updated list of major defects, including air bags and catalytic converters, that may occur in used vehicles;
• A statement that directs consumers to obtain a vehicle history report and to check for open recalls;
• A statement, in Spanish, on the English-language Buyer Guide, advising Spanish-speaking consumers to ask for the Buyers Guide in Spanish if the dealer is conducting the sale in Spanish; and
• A Spanish translation of the statement that dealers may use to obtain a consumer’s acknowledgement of receipt of the Buyers Guide.

Dealerships that fail to comply with the amended “Used Car Rule” can face civil money penalties of up to $41,484 for each violation.  Both state and local enforcement agencies may enforce the recently amended rule.

The FTC article about the compliance sweep may be found here.