The Federal Trade Commission’s (FTC) Used Car Rule has been in existence since 1984. It is straightforward and uncomplicated. Yet 30-plus years later, and despite fines that can reach $16,000 per violation, dealers continue to feel the sting of civil penalties from their violation of the Rule.
Recently, an Arkansas auto dealer agreed to pay a $90,000 civil penalty to settle FTC charges for failing to display Buyers Guides on used vehicles offered for sale.
Meanwhile, Operation Ruse Control—a nationwide and cross-border crackdown to protect consumers when purchasing or leasing a car, encompassing 252 enforcement actions—levied fines on numerous dealerships for failing to post Buyers Guides, fill them out properly, and deliver them to purchasers.
Dealerships can stop needlessly paying fines to the government for violations of the Rule by following six simple guidelines:
- Every used car on your lot that you are willing to sell must have a completely filled-out Buyers Guide prominently posted on or in the vehicle.
This means every used car will have either a Buyers Guide or a sign stating “Not for Sale.” The latter should be in every vehicle taken in trade until a completed Buyers Guide is put on it.
- Prominently display the completed Buyers Guide.
The Guide needs to be separate and apart from any other sticker on the vehicle. It is not OK to make the Guide a part of the vehicle sale sticker, or to cover any portion of the guide with any other document, sticker, or writing. If you cannot read the entire front page of the Guide while looking at the car, then it is not prominently posted.
- Post Spanish Buyers Guides on vehicles if you transact business with Spanish-speaking customers.
By law, any purchase negotiation in Spanish cannot proceed until a Spanish Buyers Guide is on the vehicle. If you encounter this situation frequently, be safe and put both the English and Spanish Guides on the car.
- Make sure the purchase contract you deliver to the buyer provides the following language:
“The information you see on the window form for this vehicle is part of this contract. Information on the window form overrides any contrary provisions in the contract of sale.”
- Deliver the Buyers Guide, or a copy, to the customer as part of the transaction, and include on the back all of the following:
Name of dealership, its complete address and phone number, and contact person at the dealership. In the majority of transactions that are reviewed, a piece, if not all, of the foregoing information is almost always missing.
- A good practice—and a requirement in some states—is to have the buyer sign a copy of the Buyers Guide acknowledging receipt.
It should include following statement near the signature: “I hereby acknowledge receipt of the Buyers Guide at the closing of this sale.” Per the FTC, the acknowledgment statement must be near where the buyer signs. The place for the buyer’s signature is at the bottom of the back page of the Guide, under the dealership information—not scrawled across the front page in the place reserved for warranty information.
Why let your hard-earned money flow to the feds by violating this simple rule? By following the steps given in this article, you will avoid costly and needless penalties.
For more information on this subject, contact the author or visit www.compliantnow.com.
David R. Missimer, [email protected], is general counsel for Automotive Compliance Consultants Inc. (www.compliantnow.com). He spent 28 years in private practice as a seasoned litigator and trial lawyer representing lenders, auto dealers, and numerous other entities and individuals.0