Traveling through Eastern Washington last winter an associate and I were shocked to discover a well-known franchise store violating the Used Car Rule. Bear in mind, this isn’t a small dealer we’re talking about – this is a dealer who owns multiple franchises and has been in business for years. In fact, he wasn’t merely violating the rule in a few instances, from the road I counted 75 used cars for sale that had no Buyer’s Guide. Concerned, my associate and I stopped our vehicle immediately and asked to see the dealer principal.
The receptionist informed us that Mr. Dealer was on premises but made it a practice not to meet anyone without an appointment. Presuming she thought we were salesmen, I told her that this was not a sales call and that it was extremely urgent that we speak to Mr. Dealer immediately. She phoned Mr. Dealer and informed us Mr. Dealer had no interest in speaking with us and that we should leave. Fearful of making a public scene on the showroom floor, I added the penalties in my head ($11,000.00 x 75 cars) and calmly stated, “Every second Mr. Dealer avoids speaking to me is another second he risks being fined $875,000.00 by the Federal Trade Commission.” That did the trick.
Mr. Dealer, now sufficiently convinced it was worth his time to see us, came down to the floor, extended his hand, and said nervously, “You aren’t the FBI are you?” Once we clarified our identity, I explained how we’d been passing by and realized not one of the cars on his used lot had a Buyer’s Guide. He looked confused. I asked if he was aware that the penalty for each vehicle was $11,000.00 and to our surprise he replied “Get lost – get off my property now.”
I wasn’t expecting a hug but I did think he might have been happy to learn of the error before being fined. I certainly wasn’t expecting him to have us escorted off the property. Talk about shooting the messenger. I wonder what he would have done if we were the FTC?
The moral of the story is twofold: 1) if someone wearing a suit walks in off the street and requests to speak with the dealer immediately it may just be in your best interest to meet with them, and 2) display the Buyer’s Guide in every used vehicle on your lot or be prepared to pay the $11,000 fine for each vehicle that doesn’t have one.
DOES THE USED CAR RULE APPLY TO ME?
If you sell or offer for sale more than 5 used cars in a 12-month period the Used Car Rule applies to you.
WHAT DOES THE USED CAR RULE REQUIRE?
The Used Car Rule requires you to be gracious to anyone who notifies you of violations before you are fined by the government. Just kidding, but maybe it should. In reality, the Used Car Rule requires dealers to prepare and display a window sticker called the “Buyers Guide” before offering a used vehicle for sale to a consumer. The Buyers Guide must disclose whether any warranty is offered and the basic terms of any warranty. If the dealer does not provide an express warranty, then the Buyers Guide must indicate that the vehicle is being offered for sale “as is” (with no express or implied warranties), or with only the applicable “implied warranties” required by state law. Each of these terms is explained on the Buyers Guide.
The Buyers Guide also includes several additional disclosures, including: A list of the fourteen major systems of an automobile and defects that can occur in these systems; a suggestion that consumers ask the dealer if a prepurchase inspection is permitted; and a warning against reliance on spoken promises that are not confirmed in writing. Finally, at the time of sale, the dealer must give the buyer the original Buyers Guide (or an accurate copy) that was displayed on the vehicle. This Buyers Guide must reflect the final warranty terms agreed on between the buyer and seller.
WHAT VEHICLES ARE CONSIDERED “USED” FOR PURPOSES OF THE USED CAR RULE?
A used vehicle is any car, light-duty van or light-duty truck that has been driven more than the distance necessary for test driving or moving the vehicle prior to delivery to a consumer. This includes demos and company vehicles. However, the definition of vehicle does not include motorcycles or trailers.
WHEN MUST THE BUYER’S GUIDE BE PLACED IN THE VEHICLE?
Buyer’s Guides must be placed in used vehicles before they are “offered for sale”. A vehicle is offered for sale when it is displayed for sale (placed on your lot) or when a dealer permits a customer to inspect the car for purposes of buying it, even if the car is not fully reconditioned and ready for delivery.
HOW SHOULD BUYER’S GUIDES BE DISPLAYED?
The Buyers Guide must be displayed in a side window of the vehicle so that the front side (with the title “Buyers Guide”) faces the outside. You may display copies of both the front and back of the Buyers Guide so that both sides can be read from outside. The Buyers Guide should be firmly affixed to the inside of the side window. This may be accomplished using any method you select, such as tape, light glue, etc. If desired, you may display the Buyers Guide inside a clear plastic sleeve which holds the Buyers Guide against the inside of the side window. If necessary, the form may be removed from the window temporarily during a test drive, but you must return it to the window as soon as the test drive is over.
THE TRICKY PART – SPANISH BUYER’S GUIDES
When the used car transaction is conducted in Spanish, the Rule requires that the dealer display a Spanish language version of the Buyers Guide on the vehicle prior to offering the vehicle for sale. This presents a logical dilemma because you won’t know if the transaction will be conducted in Spanish until the customer appears and decides to negotiate on a particular vehicle. So if a Spanish speaker comes onto your lot and wants to buy a particular car, it better already have the Spanish Buyer’s Guide in it otherwise you’re in violation. Accordingly, the safest bet is to place both English and Spanish Buyer’s Guides in every used car offered for sale. Remember, the customer speaking broken English today may speak “only” Spanish when they want to sue you for unfair or deceptive trade practices.