Effective January 27, 2017, most car dealers who sell used vehicles must comply with the Federal Trade Commission's (FTC’s) Used Car Rule requiring a “Buyers Guide” window sticker, containing warranty and other information, to be displayed on used cars offered for sale.
Highlights of the new rule
- Effective date is January 27, 2017
- The Buyers Guide must be posted in the vehicle before it can be displayed for sale or a customer is allowed to inspect the vehicle for the purpose of buying
- The following must be included on the Buyers Guide:
- The major mechanical and electrical systems on the car, as well as some of the major problems that consumers should look out for;
- If there is a warranty on the vehicle or if it is being sold “as is”;
- The percentage of repair costs the dealer is paying under the warranty;
- That oral promises are difficult to enforce;
- To get all promises in writing;
- That the consumer should request to have the car inspected by an independent mechanic before they purchase;
- Provide information on how to get a vehicle history report and how to check for safety recalls and other topics, and
- To retain the Buyers Guide after the sale;
- If you sell to Spanish speaking consumers, you must provide the Buyers Guide in Spanish
The Used Car Rule applies in all states except Maine and Wisconsin as these two states already have similar regulations that require dealers to post disclosures on used vehicles. The rule also applies to the District of Columbia, Puerto Rico, Guam, the U.S. Virgin Islands, and American Samoa.
Penalties for noncompliance
Dealers who violate the Used Car Rule may be subject to penalties of up to $40,000 per violation. State and local law enforcement officials may have the authority to ensure that dealers post Buyers Guides, and to fine or sue them if they do not comply.
Steps to take
As a seller of used vehicles, you should take the following steps:
- Complete a Buyers Guide properly for each used vehicle you offer for sale
- Post the Buyers Guide prominently and conspicuously on each used vehicle
- If you have a signature line on the Buyers Guide, include the following language: I hereby acknowledge receipt of the Buyers Guide at the closing of this sale
- Put the required disclosure on the sales contract
- Give a copy of the Buyers Guide to the purchaser at the time of sale and ensure all warranty information negotiated is stated accurately
- If the sale is conducted in Spanish, provide a Buyers Guide in Spanish
- If you provide a written warranty, be sure it complies with federal law and is provided to the buyer
Learn more about the new Buyers Guide and obtain the required Buyers Guide form from the FTC or access the Dealer’s Guide to the Used Car Rule.
For more information on this topic, or to learn how Baker Tilly dealership specialists can help, contact our team.