The Federal Trade Commission’s Used Car Rule is one of the most important federal compliance requirements for dealerships selling used vehicles. The rule is designed to make sure consumers receive clear information about a vehicle’s warranty status and other important purchasing considerations before completing a sale.
For independent and Buy Here Pay Here dealers, understanding the Buyers Guide requirements can help reduce compliance problems and make the sales process more transparent.
What Is the FTC Used Car Rule?
The FTC Used Car Rule requires most dealers who sell or offer more than five used vehicles during a 12-month period to comply with specific disclosure requirements. The rule generally applies throughout the United States, with Maine and Wisconsin having their own similar disclosure requirements.
A major part of the rule is the Buyers Guide, a disclosure document that must be displayed on used vehicles offered for sale.
The Buyers Guide gives customers important information about the vehicle and tells them whether the dealer is selling the vehicle with a warranty or without a dealer warranty.
What Is the Buyers Guide?
The Buyers Guide is essentially a window disclosure that provides important information to potential buyers.
It explains:
- Whether the vehicle is being sold as is or with a warranty
- Which major systems may have problems
- What systems are covered if a dealer warranty is provided
- How long the warranty lasts
- What percentage of repair costs the dealer will pay
- Important reminders about getting promises in writing
- The importance of obtaining a vehicle history report
- The option to have the vehicle inspected by an independent mechanic
Dealers should make sure the information on the Buyers Guide accurately reflects the terms of the vehicle sale.
When Must Dealers Display the Buyers Guide?
The Buyers Guide generally must be displayed before the vehicle is offered for sale or made available for customer inspection.
It needs to be positioned prominently and conspicuously so customers can easily see it. Dealers may place it on a side window, windshield, side mirror, or rear-view mirror. Simply putting it inside the glove compartment or trunk does not meet the FTC’s conspicuous-display requirement.
If the Buyers Guide is removed during a test drive, it should be replaced after the test drive.
What Information Goes on the Buyers Guide?
The dealer must provide vehicle information such as the make, model, model year, and VIN. Dealer information must also be included, including the dealership name and address and contact information for the person or position handling customer complaints.
Dealers should complete the form carefully because the Buyers Guide is an important part of the transaction.
As-Is Sales vs. Warranty Sales
One of the most important sections of the Buyers Guide concerns warranty coverage.
If state law permits the dealer to sell the vehicle without a dealer warranty, the appropriate “As Is–No Dealer Warranty” version may be used when applicable.
In states where implied warranties cannot be eliminated, the appropriate “Implied Warranties Only” version may be required.
If the dealer provides an express warranty, the Buyers Guide must identify the applicable warranty information, including the covered systems and duration. State law can also affect how warranty disclaimers must be handled.
This is why dealers should not assume that an “as is” disclosure works identically in every state.
What About Manufacturer Warranties?
A used vehicle may still have some portion of its original manufacturer warranty.
The FTC’s revised Buyers Guide provides a way for dealers to disclose that an unexpired manufacturer warranty still applies. Dealers can also provide additional information about manufacturer warranty coverage when appropriate.
Dealers should distinguish between a warranty provided by the dealership and coverage provided by a manufacturer or third party.
The Buyers Guide Must Reflect the Final Sale
A common compliance issue is failing to update the Buyers Guide when the terms of the transaction change.
If warranty terms are negotiated or changed before closing, the final Buyers Guide should accurately reflect the terms agreed upon by the dealer and buyer. The FTC explains that dealers can prepare a new Buyers Guide or make the appropriate changes to the existing Guide so that it accurately reflects the final transaction.
This is particularly important for dealerships that negotiate warranty coverage during the sales process.
Spanish Buyers Guides
Dealers should also pay attention to language requirements.
When a used vehicle sale is conducted in Spanish, the dealer must post a Spanish-language Buyers Guide on the vehicle before displaying or offering it for sale.
Dealerships serving multilingual communities should have an appropriate compliance process in place so the correct version is available when needed.
What Happens at the Time of Sale?
The dealer must provide the buyer with the original Buyers Guide or a copy at the time of sale. The document should reflect the final warranty terms of the transaction.
Dealers that offer written warranties may also have additional federal warranty-law obligations. The Buyers Guide itself does not replace a separate written warranty document when one is required.
Common FTC Used Car Rule Mistakes
Dealers should watch for several common compliance problems:
Not displaying the Buyers Guide: Every applicable used vehicle should have the required disclosure displayed properly.
Using the wrong warranty version: State law can affect whether an as-is sale or implied-warranty disclosure is appropriate.
Leaving outdated information on the Guide: The final document should match the final transaction.
Failing to provide the Guide to the buyer: A copy or original must be provided at the time of sale.
Using the wrong language: Spanish-language transactions require the Spanish Buyers Guide.
Treating the Buyers Guide as the written warranty: The Buyers Guide does not replace a separate written warranty when one is required.
A Simple Dealer Compliance Checklist
Before putting a used vehicle on the lot, dealers can review the following:
- Confirm that the dealership is subject to the Used Car Rule.
- Complete the vehicle information on the Buyers Guide.
- Add the required dealership information.
- Select the correct warranty disclosure.
- Display the Buyers Guide prominently on the vehicle.
- Make sure any warranty information is accurate.
- Update the Guide if the final deal changes the warranty terms.
- Provide the final Buyers Guide to the buyer at closing.
- Use the Spanish Buyers Guide when the sale is conducted in Spanish.
- Keep dealership procedures consistent across inventory and sales staff.
Penalties and Compliance Risk
Failure to comply with the Used Car Rule can create significant enforcement risk. The FTC’s current Dealer’s Guide states that dealers violating the rule may face civil penalties of up to $53,088 per violation, and state or local authorities may also enforce similar requirements under their own laws.
For independent dealers, this makes a consistent Buyers Guide process an important part of overall compliance management.
Final Thoughts
The FTC Used Car Rule is primarily about making warranty and vehicle-sale disclosures clear and understandable to consumers. For dealers, compliance starts with correctly completing and prominently displaying the Buyers Guide before a vehicle is offered for sale.
Dealers should also remember that federal requirements are only part of the compliance picture. State laws can impose additional requirements, particularly regarding warranties and “as-is” sales.
A good dealership compliance process should therefore include both FTC requirements and applicable state requirements before a vehicle reaches the sales lot.
This article is for general informational purposes and is not legal advice. Dealers should review applicable federal and state requirements with qualified legal or compliance professionals.
