The Federal Trade Commission (FTC) requires dealers who sell, or offer for sale, more than five used vehicles in a 12-month period to comply with the FTC’s Used Car Rule (the Rule). As part of the Rule, dealers must prominently and conspicuously display the FTC “Buyers Guide” form, which provides important purchasing and warranty information to consumers, on or in a vehicle when a used car is available for sale. The following article provides important tips for all New Hampshire dealers who sell used cars that need to comply with the Rule.
Which Buyers Guide to Use
The FTC offers two different versions of the Buyers Guide. State law dictates which Buyers Guide is applicable to your dealership. New Hampshire law allows the sale of as-is sales, so the “As Is — No Dealer Warranty” option (instead of the “Implied Warranties Only” version) is appropriate for used vehicle sales in New Hampshire.
Completing the Buyers Guide
Dealer Warranties
The first section of the “As Is — No Dealer Warranty” Buyers Guide appears as follows:
Importantly, the first section concerns the warranties that the dealership is offering to the customer. To the extent the customer is receiving a different type of warranty, i.e., manufacturer or other warranty, those are handled in separate sections. This is an important distinction that is often overlooked.
As Is — No Dealer Warranty
The box that says “As Is — No Dealer Warranty” means that the dealership is not offering any warranties for the used vehicle. If the dealership is making a sale and disclaiming all warranties, please check this box.
In the event the dealership seeks to disclaim all warranties and sell a vehicle as-is, please note that state law requires a dealership to comply with additional laws beyond the Buyers Guide. Therefore, the Buyers Guide alone is NOT sufficient for completing an “as-is” sale in New Hampshire.
Dealer Warranty
The box that says “Dealer Warranty” means that the dealership is offering an express warranty on the vehicle at no additional cost to the customer. If the dealership is offering express warranties on the vehicle, please check the second box. The dealership is also required to check whether the dealer warranty is a “Full Warranty” or “Limited Warranty.” A “Full Warranty” is one that satisfies the federal minimum standards for warranties set forth in Section 104 of the Magnuson-Moss Act. In most cases, a dealer is offering a “Limited Warranty.” When offering a limited warranty, a dealer must indicate the percentage of the repair cost covered by the dealer warranty and list the specific systems, as well as the duration of the warranty. Here, a dealer must be diligent in listing the exact systems that are covered (e.g., engine, brake system, tires). Please refer to the back of the Buyers Guide for the major systems that are commonly listed.
Non-Dealer Warranties
The second section of the Buyers Guide concerns warranties that are not provided by the dealership but apply to the vehicle, such as manufacturer warranties. However, this section also applies to any other warranty provided for the vehicle that is not provided by the dealership.
The first box should be checked if the manufacturer’s original warranty still applies to the used vehicle. In the event the manufacturer’s original warranty no longer applies to the vehicle, but the manufacturer provides a different used vehicle warranty for the vehicle (and that warranty applies), please check the second box. At times, a dealership may provide a non-dealer and non-manufacturer used vehicle warranty, i.e., a warranty provided by a third party, for a vehicle. Under such circumstances, the dealership should check the third box.
To note, this section only applies to warranties provided at no charge to the customer. Accordingly, none of these boxes should be checked for warranties that the customer purchased.
Below this section, you will see an option for a “Service Contract.” The “Service Contract” box must be checked if the dealer offers a service contract for the used vehicle. Put simply, this section concerns whether the dealership simply offered a service contract — not whether a consumer actually purchased a service contract. In the event the dealership offered a service contract to the customer, this box must be checked.
The Back of the Buyers Guide
On the back of the Buyers Guide, a dealer must provide the name and address of the dealership. Additionally, a dealer must include the name, email address and phone number of the actual person who the consumer should contact regarding complaints. To easily comply with this part of the Buyers Guide, dealers may want to preprint copies of the Buyers Guide with this information.
Visibility and Availability of the Buyers Guide
Before a dealer offers a used vehicle for sale, the dealer must ensure that the Buyers Guide is prominently and conspicuously displayed on or in a vehicle, such that both sides are visible to the public. The Rule encourages dealers to either (1) hang the Buyers Guide from the rear-view mirror inside the car or on a side-view mirror outside the car, (2) place it under a windshield wiper, or (3) display it in a removable clear plastic sleeve on the side of a window. The Rule allows a dealer to remove the Buyers Guide for a test drive; however, the dealer must return the Buyers Guide to the vehicle as soon as the test drive is over.
At the End of the Sale
While a consumer is not required to sign the Buyers Guide, it is highly recommended that dealers obtain signatures on the Buyers Guide from all buyers in a transaction to verify compliance with the Rule.
A dealer must provide consumers with a copy or the original Buyers Guide at the conclusion of the sale. As a best practice, a dealership should retain a copy of the Buyers Guide for each transaction, so in the event an issue arises, a dealer has confirmation of compliance.
Penalties for Non-Compliance
A dealer who violates the Used Car Rule may be subject to fines of up to $50,120 per violation in FTC enforcement actions.
If you have any concerns or questions about compliance with the Buyers Guide, we recommend that you contact legal counsel.
