Ever since the invention of the automobile — and, for that matter, the horse — there has been a thriving market for used means of transportation.
This provides opportunity and peril. Opportunity comes from lower initial cost. Peril comes from a risk of defective merchandise. The Federal Trade Commission — one of the country’s two consumer protection watchdogs, the other being the Consumer Financial Protection Bureau) — has taken action to protect buyers of used motor vehicles (but not horses) through something called the Used Car Rule. The Used Car Rule has been around since 1985 and most recently received a regulatory freshening in 2018.
The Used Car Rule applies to anyone who sells more than five used motor vehicles in a single 12-month period. Most cars and light-duty vans and trucks are included in the definition of motor vehicle. Under the rule, a vehicle qualifies as used if it has been driven for any purpose other than moving or testing, without reference to mileage. However, a Colorado regulation says a vehicle doesn’t become used until it has 1,500 miles on the odometer.
The Used Car Rule applies in all states except Maine and Wisconsin. In those states, the legislature has put in place laws more protective of consumers, earning them an exemption. The rule also applies in the U.S. territories and the District of Columbia.
So what does the rule require? Well, actually not much. Dealers must display on any used vehicle they sell an official FTC form called the Buyers Guide. On its front, the Buyers Guide warns buyers not to trust oral promises. It also states whether the vehicle is being sold “as is” — with no warranties — or with a warranty. If there is a warranty, and it is less than a “full” warranty (which no used car dealer in its right mind would ever offer), the Buyers Guide requires basic information about the warranty, such as the systems covered and the warranty’s duration. If the vehicle is being sold with a manufacturer’s warranty still in place, the dealer can comply with the rule by stating that the manufacturer’s warranty has not expired, and that a buyer should ask the dealer for further information about the warranty.
The front of the Buyers Guide has a box to check if the dealer offers a service contract for the vehicle and, if so, encourages a buyer to ask for details. The front of the guide concludes with a statement that a buyer should ask the dealer if the vehicle can be inspected, either on or off the dealer’s lot, by a mechanic of the buyer’s choice, and that a buyer should obtain a vehicle history report and check for recalls (at safercar.gov).
The back of the Buyers Guide contains the name and address of the dealer, and the name of a person to contact in case of complaints. It also contains a lengthy (and thought-provoking) list of all the things that can go wrong on a motor vehicle.
Dealers who don’t comply with the Used Car Rule are at risk of a civil fine up to $43,792 (!) per violation. So, they take the rule seriously.
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Money & the Law: FTC seeks to protect car buyers with Used Car Rule - Colorado Springs Gazette
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