Do you have a Buyers Guide displayed in the window of each used vehicle on your dealership lot? If you don’t, you could be breaking the FTC Used Car Rule.
Do you sell more than five used vehicles in a 12-month period? If so, there’s an important compliance rule you’ve hopefully been following — if you haven’t, you could face penalties of $16,000 per violation.
It’s called the Federal Trade Commission (FTC) Used Car Rule, and it’s been on the books since 1985. There are still plenty of auto dealerships around the country, however, that either don’t know about the rule, or just don’t care enough to comply. In June 2015, an Arkansas auto dealer was ordered to pay $90,000 in civil penalties because they failed to follow the FTC Used Car Rule, even after receiving a warning in 2013.
What is the FTC Used Car Rule?
The formal name of the FTC Used Car Rule is the Used Motor Vehicle Trade Regulation Rule. According to the FTC, “it requires car dealers to display a window sticker, known as a Buyers Guide, on the used car vehicles they offer for sale.”
The Buyers Guide should have full and complete details about whether or not your dealership offers a warranty, and if so, what that warranty includes. If you operate in a state that doesn’t allow used cars to be sold “as is,” or without warranties, you have to display an alternative version of the Buyers Guide.
Currently, the Used Car Rule applies in the District of Columbia, Puerto Rico, Guam, the U.S. Virgin Islands, American Samoa, and every state except Maine and Wisconsin; those states have similar regulations that require the posting of disclosures on used vehicles.
What should be included in the Buyers Guide to follow the FTC Used Car Rule
A fully compliant Buyers Guide isn’t just the law — it helps consumers make educated and informed decisions about any vehicles they are interested in purchasing. By posting a Buyers Guide, you are showing the people shopping on your lot that you are trustworthy, transparent, and care about helping them make the right choice.
You can find an example of a blank Buyers Guide here from the FTC, but this is a general list of what you should include:
- If the vehicle is being sold with a warranty or “as is”
- The percentage of repair costs you’ll pay under the warranty
- A reminder to get all promises in writing, because spoken promises are difficult to enforce
- A reminder that the consumer should keep the Buyers Guide for reference after the sale is complete
- A list of all the car’s major mechanical and electrical systems, including some of the bigger problems the consumer should look out for
- A note encouraging the consumer to have an independent mechanic inspect the car before he or she buys it
Additionally, on the back of the Buyers Guide, you must list your dealership’s name and address, as well as the name and phone number of who they should contact at the dealership in the event they have any issues after buying the vehicle
And if your dealership conducts used car transactions in Spanish, you must post a Buyers Guide in Spanish before offering it for sale.
Each and every Buyers Guide must also be posted “prominently and conspicuously” to comply with the FTC Used Car Rule. Acceptable locations to hang or post the Buyers Guide include the rear-view mirror inside the car, the side view mirror outside the car, under a windshield wiper, or attached to a side window. You should not put the Buyers Guide in a glove compartment, trunk, or under a seat.
A compliant dealership is a successful dealership, so if your team isn’t aware of the FTC Used Car Rule, take the time to educate them and ensure your dealership is always on the right side of the law.