Automotive News: Federal Used Car Rule

Used-Car Rule Goes to the Shop for a Tuneup

By Harry Stoffer, July 28, 2008

The growth of certified used-vehicle programs may spur changes in the buyer’s guide that must be posted in most used cars and trucks on dealership lots.

The Federal Trade Commission is considering updates to its regulation aimed at protecting buyers of used vehicles, commonly called the Used Car Rule.

The rule, adopted in 1984 and revised in 1995, requires window stickers with warranty information. A dealer must either check a box marked “as is” if there is no warranty or spell out details of any dealer-provided warranty.

Certified vehicles generally come with manufacturer-sponsored warranties. The label probably should reflect that reality, says Steve Baker, director of the FTC’s Midwest region.

The rule also warns customers not to rely on spoken promises of dealership employees unless the pledges are confirmed in writing. Baker says the rule protects buyers from salespeople whose vows to stand behind their cars and trucks are good only until the vehicles drive off their lots.

Sergei Lemberg, a lawyer who specializes in lemon law violations and motor vehicle sales fraud, says the Used Car Rule has limited value. Lemberg says he fears revisions will be mostly cosmetic.

Lemberg says fraud cases would be easier to prove if the rule required dealers to affirm that the vehicles they sell are not rebuilt wrecks or returned lemons.

Another possible change: Instead of having the option of providing guides in English or Spanish, some dealers want to use bilingual labels. Baker says the FTC wants to find out whether such labels would be “too cluttered.”

Used-vehicle dealers generally believe the rule is effective, says Keith Whann, general counsel of the National Independent Automobile Dealers Association. But the group’s 20,000 members generally agree the rule should be updated to deal with “kinks in the system,” such as certified-vehicle warranties, Whann says.

The National Automobile Dealers Association plans to consult with dealers, state associations and others in the industry before it comments on possible rule changes, says Paul Metrey, NADA’s director of regulatory affairs.

The FTC is taking public comment until Sept. 19 on the Used Car Rule and possible changes.

Original story: At Automotive News