The Federal Trade Commission announced in mid-July that it conducted the first compliance sweep of car dealerships since the effective date of its revised Used Car Rule requiring use of a new Buyers Guide sticker. The sweep took place between April and June 2018 in 20 cities nationwide. The FTC coordinated its efforts with 12 partner agencies in seven states to ensure that dealers are displaying a revised version of the Buyers Guide, which contains warranty and other information for consumers.
In the sweep, inspectors found that approximately 70 percent of vehicles displayed Buyers Guides and roughly half of those displayed the revised Buyers Guide. Inspectors reviewed 94 different dealerships and reported that 33 dealerships posted the revised Buyers Guide on more than half of their vehicles, but only 14 dealerships had revised Buyers Guides on all of their used vehicles for sale. The FTC Act provides for penalties of up to $41,484 per violation for those dealerships that do not properly comply with the Used Car Rule.
As we reported here, the FTC issued additional guidance on the Used Car Rule in September 2017 in response to a number of questions raised by dealers regarding compliance. The guidance was in the form of frequently asked questions (“FAQs”) and addressed topics such as: whether and what type of changes can be made to the language; the format and font of the Buyers Guide; disclosure requirements regarding manufacturer and third-party warranties; and guidance for completing the “systems covered” portion of the revised Buyers Guide. The amendments to the Rule included a grace period that permitted dealers to use their remaining stock of Buyers Guides for up to one year after the January 28, 2017 effective date, making January 28, 2018 the deadline for compliance.
The FTC and its partners inspected dealerships in California, Florida, Illinois, New York, Ohio, Texas, and Washington. The FTC reports that those dealerships that were not compliant can expect follow-up inspections to ensure compliance.