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Tuesday

May 17, 1988

Part IX

Federal Trade —

Commission.

46. CFR Part 455

Trade Regulation Rule; Sale of Used

Motor Vehicies; Analysis of Public

Comments. and Final Staff Compliance

Guidelines

ye

17658 Federal Register / Vol. 53, No. 95 / Tuesday, May 17, 1988 / Rules and Regulations

FEDERAL TRADE COMMISSION action, the staff has made both September, 1987.2 NADA commented

” substantive and editorial revisions. during that proceeding that sales by any

16 CFR Part 455 dealer, not just a lessor, at auctions,

Trade Regulation Rule; Sale of Used

Motor Vehicles

*“FNcy: Federal Trade Commission.

ACTION: Analysis of public comments on

staff compliance guidelines.

SUMMARY: The staff of the Federal Trade

Commission publishes its analysis of the

public comments received in response to

its request for comment on the staff

compliance guidelines for the Used Car

Rule. This notice summarizes and

analyzes the issues raised by the

commenters and notes those parts of the

guidelines that have been modified in

response to the comments. The revised

compliance guidelines are published in a

separate notice in the Federal Register.

FOR FURTHER INFORMATION CONTACT:

Joyce E. Plyler (202-326-3021) or

Matthew D. Gold (202-326-3019),

Attorneys, Division of Enforcement,

Bureau of Consumer Protection, Federal

Trade Commission, Washington, DC

20580.

SUPPLEMENTARY INFORMATION: The

Division of Enforcement staff published

compliance guidelines for the Used Car

Rule in the Federal Register on May 18,

1987. The guidelines are meant to

%

oon

| __ Jiiesp guidance concerning how the

/Rule applies in specific situations. They

are the opinion of staff only and have

not been adopted by the Commission

and are not binding on the Commission.

However, the guidelines serve as criteria

for the staff in assessing compliance

with the Used Car Rule.

Five comments were received during

the 30-day comment period after

publication of the guidelines.* Three

comments were submitted by trade

associations—the National Automobile

Dealers Association ("NADA"), the

National Independent Automobile

Dealers Association (“NIADA"), and the

National Vehicle Leasing Association

(“NVLA”"). One bank holding company,

First Virginia Banks, Inc., also

commented. The fifth comment, from a

consumer, did not make specific

substantive comments about the

guidelines and is not discussed here.

The comments raised six substantive

issues, which are discussed separately

below, in the order of their appearance

in the guidelines.

Based on its analysis of the

comments, further review of the

guidelines, and subsequent Commission

ee

) ' The comments were placed on the public record

_,AN FTC File 215-54 and are labelled 106-1 through

"108-5.

A. Public Comments

1. Demonstrators

NADA objected to staff's

interpretation that all demonstrators,

including those still in service as

demonstrators, must have a Buyers

Guide posted on them before being

shown to a consumer. In its comment,

NADA distinguished between

demonstrators that are “offered for sale”

and those that are “available for sale.”

Although NADA agreed that

demonstrators are “used" vehicles, it

contended that demonstrators are not

“offered for sale” until they are taken

out of Gemonstrator service and put on

the car lot. While acknowledging that

demonstrators are always "available"

for sale, NADA argued that a

salesperson who merely responds to a

customer's questions about a

demonstrator does not offer that vehicle

for sale. NADA proposed that the

guidelines instruct dealers that they

must post Buyers Guides on

demonstrator vehicles only after the

demonstrators have been removed from

service.

Staff rejects NADA's interpretation,

We disagree that in used car sales there

is a meaningful distinction between

“offering” a vehicle for sale and making

it “available” for sale. In staff's view,

when a salesperson discusses a vehicle

that is available for sale with a

customer, and is willing to sell the

vehicle, then that vehicle is “offered” for

sale.

The guidelines have not been

substantively revised on this issue, but

the illustrations concerning

demonstrators have been clarified.

Illustration 2.6 has been modified to

apply to situations in which

demonstrators are still in service so that

dealers will be guided on that specific

issue. Ulustration 2.7 in the former

guidelines was deleted because staff

agrees with NADA's suggestion that the

illustration would not apply in the "real

world” and therefore is not helpful to

dealers. Dealers do not impose time or

mileage restrictions within which

demonstrators are not available for sale,

as suggested in the former illustration.

2. Lessor/Lessee Saleg

All three trade associations

commented about sales of leased

vehicles. NADA resubmitted the

comments it made in the leasing

company exemption proceeding, which

was considered by the Commission in

repossession lots, through solicitation

for bids and by consignment should be

exempted from the Rule. The

Commission rejected the petitioners’

and NADA's request to exempt sales to

consumers through such methods.’

NADA's comment on the petitions for

exemption raises no issues that have nat

been previously considered by the

Commission. Staff has revised the

guidelines to make them consistent with

the Commission's decision.

NIADA and NVLA both disagreed

with staff's advice that sales by lessors

to buyers procured by lessees would be

covered by the Rule if the lessees _

advertised the vehicles for sale, but

would not be covered if the buyer

approached the lessee about purchasing

the vehicle. Staff's advice was prompted

by its interpretation that the Rule

intended to exclude only sales to buyers

procured by individual lessees for the

vehicles they had personally driven, and

not to exclude sales when numerous

buyers had been procured by lessees for

vehicles the lessees had never driven, as

in the case of leased fleets.

NIADA contended that the Rule

should apply to all non-lessee or nonemployee sales, regardless of how the

buyers were procured. NVLA argued

that the Rule should not apply to any

sales by lessors to buyers procured by

lessees because the Rule makes no

distinction based on how purchasers are

acquired by lessees.

Upon reconsideration of the-Rule,

staff agrees with NVLA. Section

455.1(d)(3) of the Rule excludes from its

definition of dealer “a lessor selling a

leased vehicle by or to that vehicle's

lessee or to an employee of the lessee.”

(emphasis added). The Statement of

Basis and Purpose (SBP) for the Used

Car Rule, states:

The definition of dealer specifically

excludes * * * a lessor selling leased

vehicles to the vehicle's lessee, to a buyer

procured by the vehicle's leseee, or to the

lessee's employee.*

Neither the Rule nor the SBP

distinguishes between the methods a

lessee uses to procure a buyer. Thus,

staff deleted its advice that lessors

would have to comply with the Rule for

sales to buyers procured by lessees

through advertising.

* See 62 FR 34760 (1987) (Commission denial of

patitions for exemption).

"Id

* Statement of Basis and Purpose for the Used

Car Rule ("SBP"), 49 FR 45892, 45708 (Nov. 19, 1984).

a ms

,

Federal Register / Vol. 53, No. 95 / Tuesday, May 17, 1988 / Rules and Regulations

17859

However, the Rule excludes only

certain sales by Jessors. It does not

exclude /essees if the lessee offers for

sale more than five vehicles within

twelve months and therefore is a

“dealer” as defined by the Rule. Thus,

lessees offering for sale six or more

vehicles wihin a year are responsible for

complying with the Rule.

Staff has modified the guidelines to

state that lessors are not required to

comply with the Rule for sales to buyers

procured by lessees, regardless of how

the buyer is procured. Staff also has

added a guideline stating that lessees

will be required to comply with the Rule

if they offer for sale, to persons other

than their employees or dealers, six or

more used vehicles within a year.

3. Disclosure of Mandatory Warranties

NIADA took exception to staff's

advice that the Rule requires dealers to

disclose on the Buyers Guide any

warranty that they must provide as

mandated by state or local law. NIADA

analogized mandatory warranties to

unexpired manufacturers’ warranties

because neither is a type of warranty

provided voluntarily by the dealer and

subject to negotiation. NIADA argued

that because the disclosure of unexpired

manufacturers’ warranties is optional

«nder the Rule, then the Rule must have

meant to make disclosure of mandatory

warranties optional as well.

Staff rejects NIADA's analysis

because it draws an inapt parallel

between dealer warranties mandated by

law and unexpired manufacturers’

warranties. The distinction between the

two types of warranties is that the

former must be honored by the dealer

while the latter is the responsibility of

the manufacturer. Section 455.2(b)(2) of

the Rule states: “If you [the dealer] offer

the vehicle with a warranty, briefly

describe the warranty terms in the space

provided.” Although a dealer may be

required by law to provide a warranty,

such a mandatory warranty is

nevertheless a dealer-offered warranty

that must be diaclosed.® Disclosure of

warranties that a dealer must provide,

as required by the Rule, is important to

ensure that consumers are aware of

their potential rights to have repairs

made by the dealer. Therefore, staff has

not changed its guidance that warranties

mandated by law must be disclosed on

the Buyers Guide.

4. Service Contracts

NADA requested that one minor word

change be made in staff's explanation

regarding the disclaimer of implied

warranties when service contracts are

5 See id. at 45710.

sold. NADA suggested that staff

substitute the words “enter into” for the

word “sell” to make clear that implied

warranty obligations attach only when a

dealer enters into a service contract, i¢.,

when the contract obligates the dealer,

rather than a third party, to perform

services under the contract. If the dealer

sells a third party service contract, the

dealer may disclaim implied warranties

in states allowing such disclaimers.

Although staff did not intend the word

“sell” to include the sale of a third party

contract, staff has substituted “enter

into” for “sell” in order to make

absolutely clear that only when a dealer

“enters into” a service contract for any

period of time within 90 days of sale

may the dealer not disclaim implied

warranties. The only sentence affected

by this change now reads, “if you also

enter into a service contract covering

the engine for six months, you

automatically provide an implied

warranty on the engine.”

5. Sales Contract Disclosures

NADA questioned staff's guidance

that final warranty terms must be

identified in the contract of sale, arguing

that it is unnecessary to include such

terms in the sules contract since they

must appear in a warranty document.

The original guidelines stated: “You

must include warranty information in

the sales contract. (The warranty

information may be printed in your sales

contract, or it may be on a separate

warranty page that is referred to and

made part of your sales contract)”

(emphasis in original).

Staff revised the guidelines to clarify

that although final warranty terms must

appear in one single document that is

part of the contract with the consumer,

they are not required to be placed in a

document titled, “sales contract,” or

incorporated by reference into it. The

contract with the consumer may include

several documents, only one of which

must include all of the warranty

disclosures required by the Warranty

Disclosure Rule.* However, neither the

Used Car Rule nor the Warranty

Disclosure Rule requires that warranty

terms be referenced to or repeated in the

“sales contract.” In addition to revising .

the main text, staff deleted Illustration

4.2 to eliminate confusion on this issue.

These revisions merely clarify that

warranty terms need not be placed in

the sales contract as long as they appear

in a separate document. Of course, the

disclosure-regarding incorporation of the

Buyers Guide into the contract must be

placed conspicuously in the sales

° 16 CFR Part 701 (1975).

contract as required by § 455.3(b) of the

Rule.

6. Financing Agreements

First Virginia Banks, Inc., NADA, and

NIADA each commented that a

“financing agreement” should not be

required to include the foreclosure

concerning incorporation of the Buyers

Guide into the salea contract, contained

in § 455.3(b) of the Rule.” The original

guidelines had advised dealers that the

financing agreement might have to

include the incorporation disclosure if

the financing agreement contained terms

apart from those governing the financing

of the transaction.

Staff agrees with the commenters that

this guideline-should be revised to state

that a financing document must contain

the § 455.3(b) disclosure only if the

financing document is the only

document used to record the transaction

or if the document contains a clause

stating that it is the complete and total

agreement between the dealer and the

consumer. Illustration 4.1 was revised to

make this poirt.

B. Other Revisions:

Staff made two substantive changes

that were unrelated to the comments.

First, staff modified slightly its

explanation of the Rule's exclusion of

banks and financial institutions. Section

455.1(d}(3) states that the definition of

dealer “does not include a bank or

financial institution * * *." The

guidelines explain that the “definition of

‘dealer’ specifically excludes banks and

financial institutions selling used

vehicles forfeited as collateral on

consumer loans.” Staff has revised the

guidelines to delete the phrase “forfeited

as Collateral on consumer loans.”

Although the SBP specifically

identified the sale of cars forfeited as

collateral as a type of sale by banks that

would be excluded from coverage,® this

was only an illustration of one

transaction that is excluded. The Rule

itself unequivocally excludes banks and

financial institutions. Deletion of the

- phrase “forfeited as collateral en

consumer loans” will eliminate the -

incorrect implication that a bank's sale

of used vehicles other than those

forfeited as collateral would be covered

by the Rule.

™NADA'waa apparently under the mistaken

impression that the guidelines indicated that

warranty terme must zometimes appear in a

financing agreement. [lustretion 4.1, which is the

relevant section, applied only to the question of

whether the § 455.3(b) discloaure should appeer im

the financing agreement.

540 FR at 45708.

17660

Federal Register / Vol. 53, No. 95 / Tuesday, May 17, 1988'/ Rules and Regulations

Second, staff revised ita guidance

concerning sales at auctions to make the

guidelines consistent with the

Commission's ruling in the proceeding

denying exemptions to a number of

automobile leasing companies.*® The

guidelines previously stated that sales at

‘ictions are covered by the Rule if the

auctions are open to consumers and

advertised to consumers. The revised

guidelines eliminate advertising as a

condition to coverage of the Rule in

auction settings and state that sales to

consumers at any auctions that are open

to consumers are covered by the Rule.

Finally, the staff made a number of

nonsubstantive editorial changes. For

example, all of the illustrations are now

placed at the end of the text to make

them easier to find within the document.

C. Conclusion

In this notice, staff has analyzed

cumments on its initial compliance

guidelines for the Used Car Rule and has

noted a number of areas in which it

«grees that changes in the guidelines are

warranted. Final staff compliance

guidelines for the Used Car Rule

incorporating these changes are

published in a separate notice in the

Federal Register.

7—~. List of Subjects in 16 CFR Part 455

3

}

Se

Used cars, Trade practices.

By direction of the Commission.

Emily Rock,

Secretary.

[FR Doc. 68-11012 Filed 5-16-88; 8:45 am)

BILLING CODE 6750-01-M

16 CFR Part 455

Trade Regulation Rule; Sale of Used

Motor Vehicles

AGENCY: Federal Trade Commission.

ACTION: Final Staff compliance

guidelines.

SUMMARY: The staff of the Federal Trade

Commission publishes its staff

compliance guidelines for the Used Car

Rule to provide assistance to industry

members. The views expressed in the

guidelines are those of the staff only.

They have not been approved or

adopted by the Commission and are net

binding on the Commission. However,

the guidelines will serve as enforcement

criteria for the staff in assessing

° Staff made-public its anforcement policy

regarding consumer sales at auctions in a ataff

opinion letter to each pf the leasing companies who

hat! petitiuned for exemption from the Rule.

compliance with the trade regulation

EFFECTIVE DATE: May 17, 1988.

FOR FURTHER INFORMATION CONTACT:

Joyce E. Plyler (202/326-3021) or

Matthew D. Gold (202/326-3019),

Attorneys, Division of Enforcement,

Bureau of Consumer Protection, Federal

Trade Commission, Washington, DC

20580.

SUPPLEMENTARY INFORMATION:

Staff Compliance Guidelines Outline

I. Introduction

I. What Transactions Does the Rule Cover?

A. “Vehicle” Defined—Section 455.1(d)(1)}

B. “Used Vehicle" Defined—Section

456.1(d)(2}

C. “Dealer” Defined—Section 455.1(d)(3)

D. “Consumer” Defined—Section

455.1(d)(4)

E. Consignment Sales

F. Auctions

G. Where Does the Rule Apply?

IH. The Buyers Guide

A. General Information

B. Preparing the Buyers Guide

1. Buyers Guide Format—-Section 455.2(a)

2. Vehicle Information—Section 455.2(d)

3. Warranty Information—Section

455.2(b)

a. "As Is—No Warranty” Version

b. "Implied Warranties Only” Version

c, Filling in the Warranty Portion of the

Buyers Guide

d. Unexpired Manufacturer's

Warranties

e. Mandatory Warranties

4. Service Contract Availability

5. Dealer Identification and Consumer

Complaint Information

C. Spanish Language Sales—Section 455.5

D. How to Display the Buyera Guide

E. Changes in Warrenty Coverage

IV. Sales Contract and Warranty Disclosures

A. The Used Car Rule’s Requirements

B. The Warranty Disclosure Rule's

Requirements

V. Contrary Statements—Section 455.4

VI. State Exemption Petitions—Section 455.6.

VII. Illustrations :

I. Introduction

These staff compliance guidelines

describe certain. provisions of the

Federal Trade Commission's Trade

Regulation Rule Concerning the Sale of

Used Motor Vehicles (the “Rule” or

“Used Car Rule"), 16 CFR Part 455,

which was promulgated on November

19,.1984.! The Used: Car Rule became

effective on May 9, 1985. Violations of

‘48 FR 46692 (1984). That netice included the

Used Car Rule and the-Commiesion's Statement of

Basis and Purpose concerning the Rule.

* Id. But see Section II{G). infra, concerning the

application of the Rule within the State of

Wisconsin.

the Rule can result in the imposition of

civil penalties of up to $10,000 per

violation.$ :

These final guidelines are a

modification of the guidelines published

in the Federal Register on May 18, 1987.

Some of the changes were based on

several comments that were received.

An analysis of those comments is

included in a separate notice in the

Federal Register.

The guidelines neither amend nor

modify the Rule. Staff is publishing

these guidelines to. provide assistance to

indtistry members in understanding the

Rule and complying with its obligations.

In addition, staff has prepared a

brochure entitled’ “Facts For Business:

{A] Dealer's Guide to the FTC Used Car

Rule,” designed to assist dealers in

understanding the Rule. Staff mailed a

copy of this brochure to more than

89,000 dealers before the Rule took

effect. If you are a new dealer, did not

receive this brochure, or need another

copy, you may request a free copy by

writing to the Publications Branch,

Federal Trade Commission,

Washington, DC 20580. You also may

request a free copy of these compliance

guidelines.

The views expressed in these

guidelines are those of staff only. These

views have not been approved or

adopted by the Commission and they

are not binding on the Commiasion.

However, the guidelines will serve as

enforcement criteria for staff in

assessing compliance with the Used Car

Rule.

The Used Car Rule is primarily

intended to prevent oral

misrepresentations and unfair omissions

of material facts by used car dealers

concerning warranty coverage. The Rule

requires clear disclosure through a

window sticker, called the “Buyers

Guide,” of any warranty coverage and

the terms and conditions of any dealeroffered warranty, including the duration

of warranty coverage and the

percentage of total repair costs that the

dealer will pay. The Rule also requires

certain additional disclosures on the

Buyers Guide, including: a suggestion

that consumers ask the dealer if a prepurchase inspection is permitted; a

warning against reliance on spoken

promises that are not confirmed in

writing; and a list of the fourteen major

systems of an automobile and defects

that can occur in these systems.

In addition, the Rule provides that the

Buyers Guide disclosures are

incorporated into the sales contract.

Dealers are required to place a specific,

745 U.S.C. a5(ml1}{A}

Federal Register / Vol

. 53, No. 95 / Tuesday, May 17, 1988 / Rulee and Regulations

17682

two-sentence disclosure in the sales

contract informing the purchaser that, in

the event of any inconsistency between

the Buyers Guide and the sales contract,

the information on the Buyers Guide will

govern. The Rule also requires dealers

to give a copy of the Buyers Guide

reflecting the final warranty terms to the

purchaser.

When the used car transaction is

conducted in Spanish, the Rule requires

that the dealer display a Spanishlanguage version of the Buyers Guide on

the vehicle prior to offering the vehicle

for sale. The Rule includes a text for the

Spanish-language version.

These guidelines explain the Rule's

requirements, section by section. The

discussion includes illustrations of how

the Rule applies in specific fact

situations that are faced by many

dealers. If further compliance questions

arise, dealers may seek aninformal staff

advisory upinion,* or if appropriate, a

furmal advisory opinion from the

Cummission, as provided for in Section

1.1 through 1.4 of the Commission's

Rules of Practice, 16 CFR 1.1-1.4.

H. What Transactions Does the Rule

Cover?

Generally, all sellers of used vehicles

are covered by the Rule, except those

who sell, or offer to sell, fewer than six

{6} used vehicles in a twelve month

period. A used vehicle is any car, lightduty 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.

‘The following definitions, included in

the Used Car Rule, provide more

detailed information as to the persons,

firms, and vehicles that are covered by

the Rule. The Used Car Rule does not

affect the definitions of terms in state

law such as “dealer,” “used vehicle,”

“new vehicle,” or "vehicle." Likewise,

state law definitions of the specific

terms set out in § 455.1(d) of the Rule

have no effect on the Used Car Rule.

A. “Vehicle” Defined—Section

455.1(d){1)

For the purposes of the Rule, a

“vehicle” is defined as “any motorized

vehicle, other than a motorcycle, with a

gross vehicle weight rating (GVWR) [the

loaded weight] of less than 8,500 lbs., a

curb weight [the weight of an unloaded

vehicle] of less than 6,000 Ibs., and a

frontal area of less than 46 aq. ft.” Thus,

the Rule covers automobiles, including

“classic cars,” as well as most light-duty

vans and light-duty trucks. Due to the

* Staff may be contacted at the addrese listed in

the beginning of these guidelines, under the heading

“For further Information.”

limit on the vehicle size built into this

provision, large trucks and recreational

vehicles generally are not covered.

Staff believes the Rule also does not

apply to the sale of tractors, combines,

tillers, and other vehicles that are

designed primarily for agricultural use,

but which meet the definition of the term

“vehicle” that is set forth in the Rule. -

Motorcycles are not covered by the

Rule. Staff believes that mopeds, like

motorcycles, also are not covered by the

Rule.

B. “Used Vehicle” Defined—Section

$55.1(d)(2)

Under the Rule, the term “used

vehicle” includes all vehicles that have

been “driven more than the limited use

necessary in moving or road testing a

new vehicle prior to delivery to a

consumer.” This definition, therefore,

includes demonstrators and company

cars.° However, a vehicle sold as scrap

or for its parts and not as an operating

vehicle is specifically excluded from the

definition of used vehicle, if the dealer

surrenders any title documents to the

appropriate state authority and obtains

a salvage certification. lustrations 2.5

and 2.7 discuss the application of the

Rule to demonstrator vehicles.

Illustration 2.6 discusses how the Rule

applies when a vehicle is transferred

from one dealer to another.

C. “Dealer” Defined—Section 455.1(d}(3)

Under the Rule, the term “deaier”

includes any person or business that is

presently selling or offering for sale a

used vehicle, after having sold or offered

for sale five or more used vehicles

during the previous twelve montha. In

other words, a person or business

becomes a “dealer,” for purposes of the

FTC Used Car Rule, upon offering for

sale the sixth used vehicle in twelve

months. The Rule does not impose any

requirements on persons or businesses

that offer fewer than six used vehicles

for sale in twelve months. Illustrations

2.1 and 2.2 discuss this provision of the

Rule. -

The Used Car Rule's definition of

“dealer” specifically excludes banks

and financial institutions selling used

vehicles. However, the Rule applies to

the retail sale of used vehicles by

affiliates and subsidiaries of banks or

financial inatitutions. [lustration 2.11

discusses the application of the Rule to

banks.

* As used in these guidelines, the term

“demonatrator” refers to "new" vehicles that have

never been sold to a retail customer, but have been

driven for purposes other than teat drives or

moving. This may include use by the dealer, the

dealer's employees, the dealer's corporate officers,

or anyone else.

Section 455.1{d)(3} of the Rule also

excludes sales of used vehicles by a

business to its own employees. In

addition, the term “dealer” excludes 4

lessor offering to sell a leased vehicle to

any of the following parties: (1} The

lessee; (2) an employee of the lessee; or

(3) a buyer procured by the leasee.®

Sales and offers for sale by lessors to all

other parties are covered by the Rule. If

8 lessee offers {cr sale (other than to its

employees) more than five leased

vehicles within a twelve month period,

the lessee most comply with the Rule

because the lessee fits the definition of

“dealer” and ia not apecifically

excluded. Illustration 2.8 discusses how

the Rule applies ta the sale of leased

vehicles,

D. “Consumer” Defined—Section

455.1(d}{4)

For purposes of the Used Car Rule, the

term “consumer” is broadly defined to

include any person whe is nct a used

vehicle dealer. Section 455.2{a) of the

Rule requires you (the dealer) to prepare

and display a Buyers Guide before

offering to sel! a used vehicie to a

consumer. In the Statement of Basis and

Purpose, the Cemmission indicated that

the term “consumer” also includzs small .

businesses. 49 FR 45892, 45708 (1984). if

you are offering te sell a used vehicle

only to another deeter, the Rule does not

apply ic the sale of that vehicle.

Nlustrations 2.4 anc 2.4 highlight this

provision of the Bula.

E. Consignment Sales

Before you offer to sell a used vehicle

that you have on your lot through a

consignment, pewer of attormey or other

such agreement, the Rule requires you to

prepare and dispiay a Buyers Guide.

The point to remember is that whenever

you, the dealer, offer to sell a used

vehicle to a consumer, you are

responsible for making sure that there is

full compliance with the Rule. if you are

a dealer who consigns a car te another

dealer for sale to a consumer on your

behalf, both you and the other dealer

are responsible for complying with the

Rule.

F. Auctions

The Rule does not apply if you offer to

sell a vehicle through an auction that is

open only to other dealers. It does apply

when vour vehicles are offered for sale

at an auction that is open to

consumers.”

® See Statement of Baeia and Purpose, 49 FR at

45708.

7 See 52 FR 24765 (1987) {Commission declined ta

exempt from the Used Car Rule salea te consumera

of used vehiclee at auctions that are open to

consumers.)

a

17682

Federal. Ragivter / Vol. 63, No. oS / Tuesday, May 17, 1988 / Rules end Remilations

The auction company is algo covered

by the Rule if it has acid.or offered to.

sell six or more used vshicles to

\, consumers within a Svelve month

| period. In. this case, as with consignment

..” Bales, both you and the auction

-a.pady are responsible to: cornplying

with the Rule. See Illustrations 2.92.10.

me Fe chershece .iua of sales through

auctions.

G. Where Does tne Rule Apply?

The Used Car Rule was issued by the

FTC based upon two sources of

authority: Section 109(b) of the

Magnuson-Moss Warranty Act, 15

U.S.C. 2308(b}, and section 18 of the

Federal Trade Commission Act, 15.

U.S.C. 57a. These Acts apply in all 50

states, the District of Columbia, the

Coimanwealth ef Puerto Rico, the U.S.

Virgin Islands. Guam and American

Samoa. 15 (15.0, 2309115), In addition,

the Rule covers vehicles exported from

the United States for sale at military

post exchanges. 16 CFR 700.1fi).

Therefore, with the exceptions of

Wisconsin and Maine, which have been

granted statewide exemptions, the Used

Car Rule applies in each of these

jurisdictions. The Conwnission granted

these exemptions under $ 455.6 of the

Rule, based on the finding that the

relevant law in each stete “afforda an

overall level of protection to consumers

jhat is as great as, or greater then, that

<o“afforded by the Used Car Rule.” 51 FR

20938, 20943 (1486); 53 FR 16390, 16394

(1968).

HL. The Buyers Guide

A. General Information

Section 485.2 of the Rule requires

dealers tu prepare and Hiaplay a

window sticker called the “Buyers

Guide" befcre offering a used vehicle for

sale to a consumer. The Buyera Guide

must disclose whether any warranty ia

offered and the basic terms of any

warranty. If the dealer-does not provide

an express warranty, then the Buyers

Guide must indicate thei the vehicle is

being offered for sale “as ie" (with no

express or implied wervanties), or with

only thy apphosbt- “usglied warranties"

required Ly siatc law. Each ef these

terms is explained on the Buyers Guide,

The Buyers Guide also includes

several additional disclosures, including:

A list of the fourteen maior systema of

an automobile and defects that can

occur in these systems: a auggestion that

consumers ask the dealer if a prepurchase inspection ia permitted: and a

-—~<waiming against relignce on spoken

jromises that are not confirmed in

iting. Finally, at the time of sale, the

dealer must give the buyer the origins!

Buysre Guida (or an accurate copy) that

wae.diepiaved on the vehicle. This

Buyere Guidu- must reflect the final

warranty terma agreed on between the

buyer and seller.

&. Preparing the Buyers Guide

Section 455.2(a) of the Rule explains.

how to fill in the Buyers Guide. You

must complete four different parts.of the

preprinted Buyere Guide: (1) Vehicle

information; (2) warranty information;

{3) servce contract availability; and (4)

dealer identification and consumer

complaint information.

1, Buyers Guide Format-—Section

455.2[a)

The Rule requires dealers to use the

exact format for the Buyers Guide that is

shown in the Rule. The text of the Rule

contains a model Buyers Guide, in both

English end Spanish, and also provides

specific printing instructions. Dealers

may print their own Buyers Guides or

get copies from sny other source, such

as trade associations and from

companies.

All Buyers Guides must comply

exactly with the standardized werding,

type style. type size, end format

required by the Rule, Section 455.2(a)[2}

of the Rule requires that the Buyers

Guide be printed in 100% black ink on

white stock that is at least 11 inches

high and 7% inches wide..Dealers alan

may post a completely separate window

sticker to make other truthful and nondeceptive information known to the

conaumer, es long as that information

does not conflict with the Buyers Guide

and the gales contract. ;

2, Vehicle Informntion—Section $55.2{d)

In the epsane provided at the top of

the Bnyers Guide, fill in the vehicle

make, model, madel year, and vehicle

identification number (VIN). You may

write in a dealer stock number in the

space provided or you may leave this

space blank, -

3. Warranty inforrvation—Section

455.2(b)

o. "Ag Is-—-No Warranty" version. If

you alfer « velicle “as ia," which means

without any express or implied

warranties, mark the box provided next

to the “As Ie—No Warranty” disclosure.

The Used Car Rule does not affect any

state law that requires you to use

epecial language or a separate fern: to

make an efiestive ‘ae is" sale, “As is"

disclusuies wiil excuse you from

lishility under state Jaw only if you

follow state law: requirements for -

mieking the diaclosure. Ulustration 4.2

further discusses this pertion of the

Ruta

b. “dmplied Warranties Only” version.

£ome states limit or prohibit the sale of

used vehicles “as is." The Used Car Rule

does not override such state laws. In

those states §455.2(b)}{1){ii) of the Rule

requires you to use the version of the

Buyers Guide containing the following

“Implied Warranties Only” heading

instead of the “As ls—No Warranty"

heading:

Implied Warranties Oniy. This means that

the dealer does not make any specific

promises te fix things that need repair when

you buy the vehicle or after the time of sale.

But, state law “implied warranties” may give

you some rights to have the dealer tuke care

of serious prublems that were not apparent

when you brought the vehicle.

If you are not offering an express

warranty, the “Implied Warranties

Only” box raust be checked. Hf you offer

an express warranty. check the

“Warvanty" tax on this Buvera Guide.

fn states that sliow “es is” ales vou

#iso mual use the “Implied Warranties

Only” heeding when you chooge to offer

only implied warranties. Jf a state

allows “as is” sales for some, but not all,

used vehicles, you msy use an "As la—

No Warrenty’ Buvers Guide on those

vehicles that the state will alinw you to

ori as ie.”

Buvers Guides with the “imoled

Warranties Only" heading are available

trom .he game sources that supply the

“As Ila—No Warranty” version of the

Buyers Guide. Alternatively, dealers

could have the “Implied Warranties

Only” disclosure printed on labels, and

then simply affix these labels to the

Buyers Guide, covering up the "Ag Is—-

No Warranty" state. illustration 3.1

diseugses use of Buyers Guides with the

“buplied Warrantias Oniy’ beading.

Appendix 4 gives an axamuie of the

“Iraplied Warranties Only” Huvers

Guide.

6. Filling in the Warraniy Fartion of

the Buyers Guide. Dealers who offer 4

warranty on the vehicle must mark the

large hox next te the word “warranty,”

and complete the other narts of the

warranty section of the Buyers Guide,

Section 465.2{b]. First, mark one of the

srnaller boxes to indicate whether the

werranty offered is “Full” or "Limited."

Section 455.2(b)(2Hi). Under federat lew

your warranty ie “full if each ot the

following fiva statements about your

werranty's terme and conditions is

true:*

5 These ptundands ere sf aut in aectiun 164 of the

Magminsn-boaa Warreaty Act. 16 U.S.C. 2306: The

Msgnnson-Mose Act does not apply tc vebictes

sonnutactured hetore July 4, 1975. Therefore, in

offering such vehicles for sale, deelere are not

required to indicele whether the warrenty offered Is

Continued

Federal Register / Vol. 53, No. 95 / Tuesday, May 17, 1988 / Rules and Regulations

EFEGS

(1) You provide warranty service ta

anyone who owns the vehicle during the

warranty period, when they report a

problem.

{2) You provide warranty service free

of charge, inchiding such costs as

returning the vehicle or remeving and

reinstalling a “covered” system when

necessary.

(3) You provide, at the consamer’s

choice, either a replacement or a full

refund if you are unable, after a

reasonable number of tries, to repair the

vehicle.

(4) You do not require consumers to

perform any duty as a precondition for

receiving service, except notifying you

that service is needed, unless you can

derionstrate that the duty is reasonable.

(5) You do not limit the duration of

implied warranties.

If any une of these statements is not

true. then your warranty is “limited.” A

“limited” warranty tells your customers

that there are some costs or

responsibilities that you will not cover

for the specified systems.

A “full” or “limited” warranty need

not cover the entire vehicle. You may

give a “full” warranty on some systems,

and a “limited" warranty on others. If

most systems are covered by a “limited”

warranty, check the limited warranty

box, aad iist which systems will be

covered by a full warranty. See

llustration 3.4 for an additional

discussion of this issue.

Second, fill in the percentage of the

repair cost that will be paid by the

dealer. For example, “The dealer will

pay 100% of the labor and 100% of the

parts * * *." ® See Dlustration 3.8 for a

discussion of how the Rule applies to

the use of a deductible. Section

455.2(b){2)fiv).

Third, indicate which of the specific

systems are covered. Do not use

shorthand terms such as “drive train" or

“power train”. Rather, indicate the exact

systems (e.g., frame and body, brake

systems, etc.) that are covered. A list of

the major systems of an automobile is

printed on the back of the Buyers Guide.

Those terms may be used to indicate the

specific systems covered by the

warranty. Illustration 3.5 provides an

explanation of how to disclose the

systems covered. Section 455.2(b)(2)fii).

Some dealers may wish to provide

warranty coverage for some systems of

a used vehicle and at the same time

“full” or “limited.” Rather, dealers may eimply cross

out the terms “full” snd “Himited,* leaving fust the

term “warranty.” However, ail other provisions of

the tlaed Car Rule apply to sstes of auch vehicles.

° The Used Car Rule does not require that a

dealer-pay any specific Percentage of repair or labor

costs, The figure in the example is-provided only for

illustration. .

disclaim aff other express or implied

warranty coverage for the other systems

of the car. A dealer may use the apace

provided for warranty disclosures to

write in ariy disclaimers or exclusions.

You may entarge the Buyers Guide, if

necessary, to provide additional

warranty information. Mustration 3.3

further discusses this issue.

Fourth, indicate the duration of the

warranty. For example, “30 daye or 1,000

miles, whichever occurs first.” If there

are different durations for different

systems, write cut each different

duration. if the duration of the waranty

is the same for all systems covered by ©

the warranty, you need only write the

duration once. Section 455.2(b)(2){iii).

d. Unexpired Manufacturer's

Warranties. If you choose, you may

disclose unexpired manufacturer's

warranties in the warranty section of

the Buyers Guide. To disclose that a

manufacturer's warranty still applies on

a used vehicle, staff suggests that

dealers use one of two methods, .

depending on whether the dealer offers

a warranty in addition to the unexpired

manufacturer's warranty. Section

455.2({b)}(2}{v).

First, if additional warranty coverage _

is not offered by the dealer, the dealer

should check the large box to indicate

that a “warranty” is affered, and then

simply fill in (with a rubber stamp, if

desired) the following statement, which

is set forth in § 455.2(b)(2)¢v):

MANUFACTURER'S WARRANTY STILL

APPLIES. The manufacturer's original

warranty hag not expired on the vehicle.

Consult the manufacturer's warranty booklet .

for details as to warranty coverage, service

location, etc. . .

Separately, and beneath that ;

statement, the dealer may add the

following language, but only if permitted

by state law to sell a used vehicle on an ;

“as ia” basis:

The dealership itself assumes no

responsibility for any repaire, regardless of

any oral statements about the vehicle. All

warranty coverage comes from the unexpired.

manufacturer's warranty.

An example of a completed Buyers

Guide with this language is included as

Appendix B to these guidelines, :

Second, if a dealership warranty is

offered and the dealer also cheoses to

disclose the unexpired manufacturer's

-warranty, the dealer should: (1) Mark

the large box to indicate that a

“warranty” is offered, and fully ;

complete the rest of the Buyers Guide's

warranty section, indicating whether the

dealer's warranty is full or limited, what

percentage of parts and tabor are

covered, the systema covered, and the

duration of coverage, as required by -

§ 455.2(b) of the Rule; and (2) fill in with

a rubber stamp, if desired) the

unexpired manufacturer's warranty

statement below the dealer's warranty

disclosure. An example of a completed

Buyers Guide with this language ig

included as Appendix C to these

guidelines. |

e. Mandatory Warrenties. Although

the Used Car Rule does noi require

dealers to disclose on the Buyers Guide

warranties that are the responsibility of

another party, such as the manufactuxar,

the Rule does require dealers to disclase

information about all warranty coverage

that they provide. Therefore, if federal,

state, or local laws require you ta give ¢

specific warranty on a used vehicle that

you offer for sale, you must briefly

describe this warranty on the Buyers

Guide.!° Section 455.2(b}(2). This

warranty information should be

included ih the ‘systems covered/

duration” portion of the Buyers Guide. If

necessary, you may enlarge the “syaten:

covered/duration” portion of the Buyers

Guide te accommodate additianal

warranty information. You also must

fully comply with disclosure

requirements of the state or local law.

For example, you must comply with a

state or local law that requires you ta

give the consumer a separate warranty

document.!!

4. Service Contract Availability

A “service contract” is defined in

Section 455.1(d){7) of the Used Car Rule

as “a contract in writing for any period

of time or any specific mileage to refund.

repair, replace, or maintain e vaed

vehicle [which is} promied a Gh extra

charge beyand the price o, used

vehicle.” (emphasis added). Although a

warranty also may provide such

Protection it is distinguishable from a

service contract because it is provided

at no extra charge beyond the price of

the vehicle.

If you offer a service contract an &

particular vehicle, § 455.2(b}{3} requires

you te mark the box provided on the

Buyers Guide, next to the folowing

disclosure:

SERVICE CONTRACT. A service contract

is available at an extra charge on this vebicls.

If you buy a service comract within 86 daye of

the time of sale, state law “implied

warranties” may give you additional righte.

'° For one exampla, see New York General

“Business Law Section 196-b. Thig provision of Neve

York law requires dealers to give consumers written

warranties cavezing sever mechanical oxelems of

any used vehicle that fa sold fer over $1,520,

41 See, e.g, New York General Buginese Law

Section 198-b(b).

17664

Federal Register / Vol. 53, No. 95 / Tuesday, May 17, 1988 / Rules and Regulations

Remember: When a dealer enters into

8 service contract with a consumer

=r, within 90 days of selling the vehicle,

) federal law prohibits the dealer from

__./” disclaiming implied warranties on the

evetems covered in that service contract.

For example, if you ure a dealer who

sells a car “as is," the car normally will

-ue ue GOVered Ly uuplcd warranties

{assuming that state law permits “as is”

sales). But if you also enter into a

service contract covering the engine for

six months, you automatically provide

an implied warranty on the engine.

If you are in a state that regulates

service contracts as the ‘business of

insurance," you need not include the

service contract disclosure on your

- Buyers Guides. Section 455.2(b)(3). In

those states, you have the option to

check the box next to the service

contract disclosure, cross out the service

contract disclosure, delete it from the

Buyers Guide, or do nothing to change

the pre-printed Buyers Guide that you

have obtained.

5. Dealer Identification and Consumer

Complaint Information

Put the name and address of your

dealership in the apace provided on the

back of the Buyers Guide. If you do not

have a dealership, use the name and

“~~s, address of your place of business (for

jexample, your service station) or your

wy” OWN Name and home addresza. Section

455.2(c),

In the space provided below the

dealer's name and address, you must

put the name and telephone number of

the person to contact if the buyer has a

complaint. You might want to include

the position of the person to be

contacted, along with their name, so that

consumers will know who to contact if

the individual named has left the

dealership. Section 455.2(e).

C. Spanish Language Sales—Section

455.5

Section 455.5 of the Rule sets forth a

Buyers Guide in Spanish that must be

used by a dealer who conducts a sale in

Spanish. From a practical standpoint,

dealers must post both the English and

Spanish versions of the Buyers Guide

where a substantial number of sales are

made in both languages. See Illustration

3.10 for a further discussion of this

provision of the Rule.

D. How to Display the Buyers Guide

The Buyers Guide must be displayed

_-~~., in a side window of the vehicle go 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. Section

455.2(a)(1).

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 iiuids 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.

£. Changes in Warranty Coverage

If you and the buyer agree to any

changes in the warranty that was

described on the Buyers Guide, you

must write those changes onto the

Buyers Guide. Section 455.2(b)(2)(v)

(paras. 2-3). If, for instance, the car was

originally offered with a warranty, but

following negotiations it was actually

sold without a warranty, cross out the

offered warranty and mark the “As Is—

No Warranty" cr “Implied Warranties

Only" box, as appropriate. If you first

offer the vehicle for sale “as is" (or with

only implied warranties), but then sell it

with a warranty, simply cross out the

box for the “As Is—No Warranty"

Disclosure (or the “Implied Warranties

Only" disclosure) and fill in the

warranty terms. In these cases, be sure

that the Buyers Guide that you give to

the buyer accurately reflects the final

warranty terms. Appendix D and

Illustrations 3.7 and 3.8 further explain

this provision of the Rule.

In addition to noting any agreed-upon

changes in warranty coverage on the

Buyers Guide, you must remember to

include the final warranty terms in your

sales contract or separate warranty

document. Section 455.4. Your contract

with the consumer may include several

documents. It might include a “sales

contract" as well as a separate warranty

document that gives detailed warranty

information. Whether you make

warranty disclosures in the sales

contract or in a separate warranty

document, you must remember to make

any necessary changes to the warranty

information to reflect the final warranty

terms after negotiations with the

customer. Sales contract and warranty

disclosures are discussed in more detail

in the next section.

IV. Sales Contract and Warranty

Disclosures

A. The Used Car Rule’s Requirements

Pursuant to § 455.3(b) of the Rule,

information on the Buyers Guide will

override-any contrary provisions that

there may be in the aales contract, To

inform consumers of this provision of

the Used Car Rule, you must place the

disclosure that follows in the sales

contract in a conspicuous manner:

The information you see on the window

form for thie vehicle is part of this contract.

Information on the window form overrides

any contrary provisions in the contract of

sale.}3

See Illustration 4.1 for a discussion of

whether a financing document must

contain the disclosure.

B. The Warranty Disclosure Rule's

Requirements

Hf you offer a warranty, you must. .

comply with the Federal Trade

Commission's Warranty Disclosure

Rule, 16 CFR Part 701. The disclosures

required by this Rule may be placed in

the “sales contract” or in a separate

warranty document, but they must all

appear together in the same document.

Specifically, in simple and readily

understood language, your warranty

document must:

(1) State whether the warranty offered

is “full” or “limited.”

(2) Indicate the percentage of the

repair costs that you will pay.

(3) List the specific systema that are

covered by the warrenty.

(4) List any parts or systems that are

excluded from coverage under the

warranty, if it is necessary for

clarification. For example, “battery not

covered,”

(5) Indicate 'the duration of warranty

coverage for each of the covered

systems.

(6) Explain how a customer gets

warranty service. Include your

company's name, address, and the

telephone number of the person to call

concerning warranty service. _

(7) Include the following disclosure:

“This warranty gives you specific legal

rights, and you may also have other

rights which vary from state to state.”

(8) Disclose all obligations that the

consumer has, if any, as a condition to

obtaining warranty service.

(9} Include the following disclosure

only if you wish to limit the duration of

implied warranties: “Some states do not

allow limitations on how long an

implied warranty lasts, so the above

limitation may not apply to you.”

(10) Include the following disclosure

only if you wish to exclude or limit

consequential or incidental damages:

**8 16 CFR 455.3(b). The Spanish translation of this

disclosure ts: La informacion que aparece en la

ventanilla de eete vehiculo forma parte de este

contrato. La informacion contenida en el formulario

de la ventanille anula cualquier previaion que

eetabiezca lo contrarin y que sparezca en el

contrato de venta.

\y

C

)

Federal Register / Vol. 53, No. 95 / Tuesday, May 17, 1988 / Rules and Regulations

E7SBS

“Some states de not allow the exclusion

or limitation of incidental or

consequential damages, se the above

limitation may not epply te you.”

{11} Indicate who is covered by the

warranty, if you chooge to Hmit the -

coverage. For example, “warranty

covers only the original purchaser™ or

“commercial use excluded.” ,

Put into the warranty document

everything that you will do aad

everything that-you expect your

’ customers to do under the warranty.

Make sure that your customers can find

each item of information in the warranty

easily.

The Federal Trade Commissien has

prepare] several publications that alsa

may help you to comply with the lews

end regulations governing warrenties.

“Writing Readable Warranties” is

available for $2.00, from the

Superintendent of Documents,

Washington, DC 20402, GPO Order #:

018--000-600303-1. "A Businesspersen's

Guide to Federa] Warranty Law," GPO

Oider #: 018-000-00324-4, is available

for $1.59, also fram the Superintendent

of Documents. A supplement to that

publication, containing the relevent

statutes and regulations, ia available at

no charge from the Publications Branch,

Federal Trade Comission,

Washington, DC 20580.

You may ulso want to cansult your

lawyer to be sure that your warranty

meets all the requirements of bath

Federa} and atate laws.

V. Contrary Statements—Sectien 455.4

Section 455.4 of the Rule prohibits

dealers from making “any statements,

oral or written, or takfing} other actions

which alter or contradict the disclosures

required by §§ 455.2 and 455.3 (of the

Rule). For example, you may not write

that there is a warranty on the Buyers

Guide, but disclaim all warranties in the

contract of sale. As discussed in section

IV(A) of these guidelines, the

information om the Buyers Guide

supercedes contrary information im the

contract, under § 455.3(b} of the Rule.

However, staff does not interpret § 455.4

to mean that the Used Cer Rule

protibits a dealer from repatriag a

vehicle that was sold “as is."

VL State Exemption Pefitions—Section

455.6

The Used Car Rule includes a specific

provision that seta out the stemdarde for

granting statewide exemptions from the

Rule. This provision States thet Hie Efsed

Car Rule will not be in effect in a atate,

to the extent specified by the

Commission, where:

(1} There is a state requirement fn

effect which epplies to any transaction

to whieh this rule applies, and

(2) That state requirement affords an

overailf level of protection to consumers

which ia as great aa, or greater than, the

protection afforded by [tlre Used Car?

Rule; ° * * for as long as the State

administers and enforces effectively the

state requirement. :

Final staff guidelines for state

exemption petitions have bean

developed for the Commission's Trade

Regulation Rule Concerning Funeral

Industry Practices, 16 CFR Part 453 {the

“Funeral Rule’). The state exemption

provision in the Funeral Rule (26 CFR

453.9) is virtually identical to the Used

Car Rule provision [16 CFR 455.8]. .-

Therefore, staff recommends that states

that are interested in filing a petition for

statewide exemption from the Used Car

Rule congult the state exemption

guidelines for the Funeral Rule for more

detailed information about. § 455.8 of the

Rule. These guidelines (published at 50

FR 12521 (1985)] provide an analysis of

the procedures and materials that staff

believes are relevant to an exemption

proceeding.

VII. Blustations

When Does the Rule Apply?

illustratéon Z i: You ate opening your

fisst dealership, and on your firet dey of

business, pou offer ta sell five uaed

vehicles to ecasnmers. in the past

twelve months, pou have sot affered to

sell any other wed vehiches to

constmets. Are yor covered by the

Rule?

No. You aze rit a “dealer,” because

you have not offered to sell at least six

used vehicle is a twelve month period.

' However, ag eco as you offer your

sixth used vehicke for sale te cxmaumers

within a twelve month period you

become a “dealer,” as defined in the |

Rule, and therefore must prepare and

display » Buyers Guide on all eacd

vehicles that you offer for sale to ‘

consumers. Section 455. 1fdeE

ifastration 2.2: You are an individual

whe occasfonalty birys used cars,

repairs then, and then offers them for

sate to the public. In the past twelve

months, you have offered five used cara

for sale. You now ere offering to sell

your sixth used car to the public. Are

you covered by the Rute?

Yea. Even if you are not considered a

“dealer” under state law, the Rule

‘defines you as a “dealer. Because you

are offering te sell your sixth used

vehicle to consumers withit twelve

months, you must comply with all

aspects of the Rule, including preparing

-

and displaying a Buyers Guide on that

vehicle. Section 455.1fdi(3.

Ilustration 2.3: You are a dealer

offering to sell a parilcular used vehicle

only te dealers. You do net offer ta cell

the vehicle to consumers. Must you -

comply with the Rule in this instance?

No. Because pot are net offering to

sell the vehicle to consumers the Rule

does not appiy. Section 255.2(2).

THustration 2.4: Same aa in 2,3 above,

but it is your company's policy to offer a

vehicle for sale te consumers for only 32

days, and then if the vehicle is unsold, it

would be sold to a dealer at wholesale.

Must you comply with the Rule during

the 30 daya that the vehicle iz offered for

sale to consumers?

Yes. Whenever you offer ta sell a used

vehicle to a consumer, you mast cananly

with the Rule by psepering exc posting &

Buyers Guide before offering the vehicle

for sale. In this example, you would he

required to prepare and Giaplay a

Bayers Guide while the used yehicte is

being offered for sale te consumers.

However, the Rule does not apply when

you conduct a wholesale tranzaction,

even if the vehicle was first offered for

sale to consumers. Section 445.2{a).

Hlustration 2& You ase a dealer who

regularly offers both new and used

vehicles to the general public. You

cumently have four "demonstrates"

vehicles in service. Are the

demonstrators cevesed by the Rule?

Yes. Under the Rule demonstrator

vehicles are inchided writhin the

definition of “need velictes.“!#

Therefore, befare you show @

dergnstrator vehicle to = consumer, you

must post a properly completed Buyers

Guide on that vakicle. Demonstrators

that are segregated from other vehicles

being offered for gale need not have

Buyers Guides displayed at all times.

However, ag a practical matter, you may

wish ‘to post Buyers Guides an af

demonstrators whenever they are en

your lot so that you ean enewre your

compliance with the Rule. Ge

demonstrators that have never besa

titled to a consumer, both the Buyers

Guide and the pew vehicle disclosure

sticker (the “Mansoney Stickes"} must

” be posted.!* Section 455.1(d}{2}.

'S See supra note § foe a Glecwasian of the tesny

“demaaetrater,”

14 The Automobile infasmation Digclaanee Acct

{commonly known. es the Menroney Act! can be

found at 15 U.S.C. 1291-39. See alee the

Commission's Statement of Bacig and Purpose for

the Usect Cer Rate, 46 BR af sara n. ou6

(recognizing that dealarm: would have te dienay

both the Manroney Sticker and the FTC Buyars:

Guide on some vehicles.

a

17666 Federal Register / Vol

. 53, No. 95 / Tuesday, May 17, 1988 / Rules and Regulations

Ilustration 2.6: You are a dealer who

sometimes "transfers" or "trades" new

», vehicles with another dealer so that you

j}can provide your customers with the

__” exact car that they want. Do these trade

cars have to display a Buyers Guide

+ efc:e you can offer them for sale to a

consumer? ;

yh. cy Dee ope) i aig & Gua with

another dealer you have only

accumulated mileage for the purpose of

delivering the vehicle to the consumer.

Therefore, the car would not be a “used

vehicle" under the Rule. Section

455.1(d)(2).

I/lustration 2.7; Same as 2.6 above,

except that the first dealer drove the

vehicle as a demonstrator before trading

it to vou. Does the traded car have to

have a Buyers Guide before it can be’

offered for sale to a consumer?

Yes. if the vehicle was used as a

demonstrator at any time, it must have a

Buyers Guide in its side window before

it can be offered for sale to a consumer.

Section 455.1(d)(2).

//lustration 2.8: You are a dealer who

also leases vehicles. You lease a car to

Jones, who is not a dealer. At the end of

the lease term you offer to sell the car to

Jones. Must you prepare a Buyers Guide

for this vehicle?

No. Although you are a used vehicle

~~~. dealer, the Rule does not cover

“—~

oF

Situations in which you sell or offer to

_/ sell the leased vehicle to the lessee, to

an employee of the lessee, or to a buyer

who is found by the lessee. Thus, you

would not have to comply with the Rule

if you offered to sell the car to Jones (the

lessee) or to an employee of Jones. In

addition, you would not be required to

display a Buyers Guide if Jones’ next

door neighbor asked Jones about buying

the car. But, if you reclaimed the car at

the end of the lease term and then

offered it for sale to the public, the Rule

would apply. Section 455.1(d)(3).

Illustration 2.9: You are a used vehicle

dealer who sells vehicles, from time to

time, at auctions, These auctions are

open only to other dealers. The only

advertisements for these auctions are in

trade journals. Are these sales covered

by the Rule?

No. Selling at an auction that is open

only to other dealers is just like a nonauction sale to another dealer: the Rule

does not apply. Sections 455.1(d)(3),

455.2(a).

Illustration 2.10: Same as 2.9 above,

but instead the auctions are open to

consumers. Are these sales covered?

Yes. Before your used vehicles are

~, offered for sale, sold, or made available

‘\ for inspection at an auction that is open

‘to consumers, yeu must prepare and

~ display a Buyers Guide as required by

the Rule. If the vehicle is sold to a

consumer, you must comply with the

other requirements of the Rule, just as if

you had sold the vehicle from your

regular place of business. If your used

vehicle {s sold at the auction to another

dealer, you need not comply with

respect to that particular yehicle. \

Zlustration 2.11: In your state, banka |

und {inanciai iustitutions may own or

operate general businesses aa separate

entities. You operate 4 retail used

vehicle dealership that is owned in part

by a bank. Must you comply with the .

Rule?

Yes. The Rule is intended to cover all

used vehicle dealers, regardless of

ownership. However, banks and

financial institutions that directly offer

to sell used cars are not covered by the

Rule. Section 455.1{d)(3); Statement of

Basis and Purpose, 49 FR at 45708.

Preparing the Buyers Guide

Hustration 3.1: You are offering a

used vehicle for sale in a state thatprohibits you from selling used vehicles

“as is.” Do you have to replace the “As

Is—No Warranty” disclosure with the

“Implied Warranties Only" disclosure

on the Buyers Guide?

Yes. The “Implied Warranties Only"

disclosure must appear on the Buyers

Guide in place of the "As Is—No

Warranty” disclosure if: (1} the vehicle

is offered for sale in a state which

prohibits ‘as is” sales; or (2) you decide

to offer implied warranties, but no other

warranties. In states that prohibit “as

is" sales, the “Implied Warranties Only"

heading must appear on the form even if

you offer an express warranty. If you do

offer a warranty you would leave the.

box next to “Implied Warranties Only”

blank, check the warranty box, and fill

out the rest of the warranty portion of

the Buyers Guide. See Appendix A for

an example of a Buyers Guide

incorporating the “Implied Warrarities

Only" disclosure. Section 455.2(b)(1)(ii).

Hlustration 3.2: You offer all -your used’

vehicles for sale on an “as is" basis.

Under the laws of your state, you must

prepare a warranty disclaimer form,

using specific language required by state

law, and have the buyer sign the form.

Can you display that form instead of the

Buyers Guide?

No. The state law requirement does

not affect your obligation to prepare and

post a Buyers Guide on the used vehicle,

nor will the Buyera Guide substitute for

a state-required form. The Used Car

Rule does not affect your obligations

under state law, so you still must ~

comply with all applicable provisions of

state law, including warranty disclaimer

requirements. Sections 455.2(a),

455.2(b)(1)(i).

Hlustration 3.3: You are a dealer who

ia offering a used vehicle for sale and

you want to offer a warranty on the

vehicle. You would like to warrant only

the engine, transmission and drive shaft,

differential and elgctrical systems, and

you would like to disclaim any

walranties, express or implied, on the

other systems of the vehicle. Can you

indicate this diaclaimer on the Buyers -

Guide? ,

Yes. Mark the large box to indicate

that a warranty is offered on the vehicle.

Indicate whether the warranty is “full”

or “limited.” 15 Fill in the lines to show

what percentage of parts and labor you

will pay for repairs to covered aystems.

Beneath the warranty disclosure, fill in

the list of covered systems, and the

duration of the warranty coverage for

each covered system. Below that, you

may indicate that you disclaim all

warranties, express or implied, on other

systems or parts of the vehicle. OF

course, you still must describe the

warranty in a separate warranty

document, including the systems

covered and the systems not covered,

Thia requirement is more fully discussed

in Section I'V(B) of these guidelines.

Be careful to check your state's laws

for any restrictions that might apply to

disclaimers of express warranty

coverage or disclaimers of implied

warranty coverage.

Illustration 3.4: You are a dealer who

is offering a warranty on a used vehicie.

The warranty that you offer covers less

than 100% of the cost of labor and parts

for the systema covered. Is this a “full”

warranty?

No. A “full” warranty is one which

meets the minimum standards for a

warranty under Section 104 of the

Magnuson-Moss Act, 15 U.S.C. 2304. All

other warranties are called “limited.” In

the example provided in this illustration,

.the warranty covers less than 100% of

the repair costs of the covered systems, \

and thus does not meet one of the \

elements of a “full" warranty. The

elements of a “full” warranty are

discussed more completely in the text

that accompanies footnote §, supra.

Section 455.2(a}(2)(il.

Illustration 3.5: You are a dealer who

wishes to previde a warranty covering

all vehicle systems shown on the

reverse of the Buyers Guide. Under

“systems covered” in the warranty

section of the Buyers Guide, can you

write “all systems shown on reverse of

the Buyers Guide"?

Yes. To indicate that your warranty

covers all systems shown on the reverse

16 See supro text accompanying note 8 for a

diacuasion of the terme “full” and “Hmited.” |

Federal Register / Vol

. 53, No. 95 / Tuesday, May 17, 1988 / Rules and Regulations ©

17667

side of the Buyers Guide, write in the .

“systems covered” section that the

warranty covers: “All systems shown on

the reverse side of the Buyers Guide.” If

you choose to use this sentence, you

must specifically list in the “systema

covered” section any systems not

covered. For example, if your warranty

covers all systems shown on the reverse

of the Buyers Guide, except for the fuel

system, write: All systems shown on

the reverse side of the Buyers Guide,

except the fuel system.” .

You may not use shorthand terms,

such as “power train” or “drive train" to

describe the systems covered by a

warranty. These requirements are

designed so that both you and the

consumer will understand exactly what

is covered by the warranty. This avoids

misunderstandings and potential

disputes that might otherwise occur.

Section 455.2(a}{2}(ii).

ilustration 3.6: You offer a warranty

that covers 100% of labor and parts, but

with a $50 deductible over the course of

the warranty. Should you fill in “100%"

on the Buyers Guide in the lines for

percentage of repair cost covered under

the warranty?

Yes. Fill in “100%*" in the lines for

percentage of parts and labor, and

include a note to explain the deductible

on the first line of the "systems covered/

| duration” portion of the Buyers Guide.

j Fur example, on the first line of the

“ayéiems covered/duration" portion,

write: ""—A one-time $50 deductible

will apply on repairs.” See Appendix E

for an example of a completed Buyers

uide with this language. Section

455.2(a){2){iv).

ilustration 3.7: You are a dealer who

is offering a used car for sale “as is" ina

state that permits such sales. The Buyers

Guide displayed on the vehicle indicates

that the car is offered “as is." However,

after negotiating with the buyer, you

agree to warrant the vehicle's engine for

90 days or 3,000 miles, whichever comes

first, and to pay 75% of the cost of parts

and labor involved in necessary repairs

during the warranty period. Do you have

tc change the Buyers Guide before you

give it to the buyer?

Yes. Before you give the buyer a copy

of the Buyers Guide, you must change it

to indicate the warranty you have

agreed to provide. In the alternative, you

may simply fill out a new Buyers Guide

with the new information. If, however,

you choose to change the “old” Buyers

Guide, first cross out the “As Is—No

Warranty” box. Next, fill in the

warranty portion of the Buyers Guide

just as you would if you were originally

offering the car with that warranty.

Remember that the final warranty terms

must be included in the sales contract

for the car. An example of the front of a

Buyers Guide like the one described in

this illustration is included as Appendix

D to these guidelines. Sections ©.

455.2(a)(2)(v) (paras. 2~3), and 455.4.

Illustration 3.8: Same as above, but

instead you originally offered the car

with a warranty. Now you want to sell it

with implied warranties only. Do you

have to change the Buyers Guide before

you offer the vehicle with implied

warranties only? 7

Yes. You should cross out the

warranty portion of the Buyers Guide

and mark the box for the “Implied

Warranties Only” disclosure.

Alternatively, you could prepare a new

Buyers Guide, and just mark the box

next to the “Implied Warranties Only”

disclosure. Sections 455.2(a)(1)(ii),

455.2(a)(2)(v) (paras. 2-3), and 455.4.

Hustration 3.9: Your dealership has a

used vehicle that is still being prepared

for sale. A consumer is interested in

looking at that vehicle, with the

understanding that it cannot be

delivered until the preparations are

complete. Does the vehicle need to have

a Buyers Guide?

Yes. Before you offer to sell, show, or

actually sell any used vehicle to a

consumer, you must prepare and display

a Buyers Guide in the side window of *

that vehicle. Therefore, you may want to

prepare and display a Buyers Guide

soon after you acquire the vehicle.

Section 455.2(a).

Illustration 3,10: You are a dealer who

makes a substantial number, but not a

majority, of your sales to Spanish

speaking customers. Your staff is trained

to conduct sales in both Spanish and

English. Should you display beth a

Spanish and English version of the

Buyers Guide on all your vehicles?

Yes. To ensure your compliance with

the Rule, it is a good idea to post both

versions of the Buyers Guide if you

expect that a gale could be conducted in

either Spanish or English. A Spanish

language Buyers Guide must be posted .

on a used vehicle before you begin to

discuss, in Spanish, that vehicle with a

. Customer. Therefore, as a practical way

to ensure compliance, you should post

both English and Spanish Buyers Guides

if you make a large number of sales in

both languages. Sections 455.2, 455.5.

Sales Contract and Warranty

Disclosures

illustration 4.1: When you sell a

vehicle, you complete a customer order,

or bill of sale, and, if the consumer

finances the vehicle, a financi

document prepared by a bank. Do both

of these documents have to contain the

contract disclosure required by

§ 455.3(b) of the Rule?

No. The disclosure is required only on

the “contract of sale.” The contract of

sale is the document by which you agree

to transfer title to the vehicle upon

payment of the purchase price. The

“financing agreement” must contain this -

disclosure if the document contains a

clause stating that the financing

document represents the complete and

total agreement between the dealer and

the consumer, or if the financing

agreement ia the only document given to

the consumer to record the transaction.

List of Subjects in 18 CFR Part 455

Used cars, Trade practices.

By direction of the Commission.

Emily Reck,

Secretary.

Editorial note.—This form, which appears

in the Code of Federal Regulations in 16 CFR

Part 455, is republished for the convenience

of the reader.

BILLING CODE 6750-01-m

Federal Register / Vol. 53, No. 95 / Tuesday, May 17, 1988 / Rules and Regulations 17689

a BUYERS GUIDE.

IMPORTANT: Spoken promises are difficult to enforce. Ask the dealer to put all promises in writing. Keep this form.

VEHICLE MAKE MODEL YEAR VIN NUMER

DEALER STGCK NUMBER (Options)

WARRPANTIES FOR THIS VEHICLE:

IMPLIED WARRANTIES ONLY

This means that the dealer does not make any specific promises to flx things that need repair when you buy

the vehicle or after the time of sale. But, state law “implied warranties" may give you some rights to have the

dealer tzke care of serlous problems that were not apparent when you bought the vehicle.

|_| WARRANTY

Cl) FWoe (1) LIMITED WARRANTY. The dealer will pay % of the labor and ___% of the parts for

the covered systems that fail during the warranty period. Ask the dealer for a copy of the warranty document for a full explanation of warranty coverage, exclusions, and the dealer's repalr

obligations. Under state law, “implied warranties” may give you even more rights.

SYSTEMS COVERED: DURATION:

Cj SERVICE CONTRACT. A service contract Is available at an extra charge on this vehicle. Ask for details ag toe

coverage, deductible, price, and exclusions. If you buy a service contract within 90 days of the time of sale, state

law “implied warranties” may give you additional rights.

PRE PUFICHASE INSPECTION: ASK THE DEALER IF YOU MAY HAVE THIS VEHICLE INSPECTED BY YOUR

MECHANIC EITHER ON OR OFF THE LOT.

SEE THE BACK OF THIS FORM for important additional information, Including a list of some major defects that

may occur in used motor vehicles.

17670 Federal Register / Vol. 53, No. 95 / Tuesday, May 17, 1988 / Rules and Regulations

Below Is a lint of some major defects that may occur In used motor vehicles.

| Frame & Body

\ A Frame-cracka, corrective welds, or rusted through

_ Dogtracks—be.nt or twisted frame

Peo ipg ,

Oil leakage, excluding normal seepage

Cracked block or head

Belts missing or inoperable

Knocks or misses related to camshatt lifters and

push rods

Abnormal exhaust discharge

Transmission & Drive Shaft

Improper fluid level or leakage, excluding normal

seepage

Cracked or damaged case which is visible

Abnormal noise or vibration caused by faulty

transmission or drive shaft

Improper shifting or functioning in-any geer

Manual clutch slips or chatters

Differential

improper fluid level or ijeakage excluding normal

seepage

Cracked or damaged housing which is visible

Abnormal noise or vibration caused by faulty

differential

Coaling System

Leakage including radiator

Improperly functioning water pump

Electrical System -

Battery leakage

Improperly functioning alternator, generator,

battery, or starter

», Fuel System

' Visible leakage

: y inoperable Accessories

Gauges or warning devices

Air conditioner

Heater & Defroster

Brake System

Failure warning light breken °

Pedal not firm under pressura (DOT spec.)

Not enough pedal reserve (DOT spec.)

Does not stop vehicte in straight line (DOT spec.)

Hoses damaged

Drum of rotor too thin (Migr. Specs)

Lining or pad thickness less than 1/32 inch

Power unit not. operating of leaking .

Structural or mechanical parts damaged

Steering System

Too much free play at steering wheel (DOT specs.)

Free play in linkage more than 1/4 inch

Steering gear binds or jams

Front wheels aligned improperly (DOT specs.)

Power unit belts cracked or slipping ;

Power unit fluid level impraper

Suspension System,

Ball joint seals damaged

Structural parts bent or damaged

Stabilizer bar disconnected

Spring broken

Shock absorber mounting loose

Rubber bushings damaged or missing

Radius rod damaged or missing

Shock absorber leaking or functioning improparty

Tires

Tread depth less than 2/32 Inch

Sizes mismatched

Visible damage

Wheels

Visible cracks, damage or repairs

Mounting bolts loose or missing

Exhaust System

Leakage

XYZ Auto Sales, Inc.

OLALZA

123 Main Street

ADOAESS

Anytown, U.S.2. 01234

Ms. Smith, Used Car Sales Manager

(123) 456-7890

SEE FOR COMPLAINTS

_.. IMPORTANT: The Information on this form Is part of any contract to buy this vehicle. Removal of this label before

a

5 consumer purchase (except for purpose of test-driving) Is a violation of federal. taw (16 C.F.R. 455).

)

Sistas

Federal Register / Vol. 53, Nox 95 / Tuesday, May 17, 1988 / Rules and Regulations 17671

“_ BUYERS GUIDE

IMPORTANT: Spoken promises are difficult to enforce. Ask the dealer to put alt promises In writing. Keep this form.

VEHICLE MAKE MODEL Year VIN NUMBER

DEALER STOCK NUMBEA (Optlonaly

WARRANTIES FOR THIS VEHICLE:

WARRANTY

YOU WILL PAY ALL COSTS FOR ANY REPAIRS. The dealer assumes no responsibility for any repairs regardiess

of any oral statements about the vevicte.

() FULL L) LIMITED WARRANTY. The dealer wili pay __-__% of the labor and___—'% of the parts for

the covered systems that fall during the warranty period. Ask the dealer for a copy of the warranty document for a full explanation of warranty coverage, exclusions, and the dealer's repair

obligations. Under state law, “implied warranties" may give you even more rights.

SYSTEMS COVERED: ' DURATION:

MANUFACTURER'S WARRANTY STITT, APPIIFS, The Manufacturer's original warranty

has not expired on this vehicle Consult '

for details as tn warranty coverage, service locations, etc,

C) SERVICE CONTRACT. A service contract Is available at an extra charge on this vehicle. Ask for detalle a3 to

coverage, deductible, price, and exclusions. If you buy a service contract within 90 days of the time of gale, state

law “implied warranties" may give you additional rights.

PRE PURCHASE INSPECTION: ASK THE DEALER IF YOU MAY HAVE THIS VEHICLE INSPECTED BY YOUR

MECHANIC EITHER ON OR OFF THE LOT.

SEE THE BACK OF THIS FORM for important .addittonat information, Including a list of some major defects that

may occur In used moter vehicles.

( \

es

es

;

4

z

ai”

17672

Federal Registe: / Vol. 53, No. 95 / Tuesday, May 17, 1988 / Rules and Regulations

Below is a list of some major defects that may occur In used motor vehicles. -

Frame & Body

Frame-cracks, corrective welds, or rusted through

Dogtracks—bent or twisted frame

Engine

Oil leakage, excluding normal seepage

Cracked block or head

Belts missing or inoperable

Knocks or misses related to camshaft lifters and

push rods

Abnormal exhaust discharge

Trenamission & Drive Shaft ;

improper fluid level or leakage, excluding normal

seepage

Cracked or damaged case which is visible

Abnormal noise or vibration caused by faulty

transmission or drive shaft

improper shitting or functioning In any gear

Manual clutch slips of chatters

Differential

improper fiuid level or leakage excluding norma!

seepage

Cracked or damaged housing which is visible

Abnormal! noise or vibration caused by fauity

differential

Coaling Syatem

Leakage Including radiator

improperly functioning water pump

Electrical System

Battery leakage

Improperly functioning alternator, generator,

battery, or starter

Fuel System

Visible leakage

Inoperable Accessories

Gauges or warning devices

Air conditioner

Heater & Defroster

Brake Syetem

Failure warning light broken

Pedal not firm under prezsure (DOT spec.)

Not enough pedal reserve (DOT spec.) ;

Does not stop vehicle In straight line (DOT spec )

- Hoses damaged

Drum or rotor too thin (Mfgr, Specs)

Lining or pad thickness less than 1/32 Inch

Power unit not operating or leaking

Structural or mechanical parts damaged

Steering System

Too much free play at steering wheel (DOT specs.)

Free play in linkage more than 1/4 inch

Bence as,

s allg p DOT 8.

Power unit belts cracked onal, Peng specs)

Power unit fluid level improper —

Suspension System

Bail joint seals damaged

Structural parts bent or damaged

Stabilizer bar disconnected

Spring broken

Shock absorber mounting loose

Rubber bushings damaged or missing

Radius rod damaged or missing

Shock absorber leaking of functioning Improperty

Tires

Tread depth less than 2/32 inch

Sizes mismatched

Visible damage

Wheels

Visible cracks, damage or repairs

Mounting bolts loose or missing

Exhaust System

Leakage

XYZ Auto Sales, Inc.

123 Main Street

AODAESS

Anytown, U.S.A. 01234

Ms. Smith, Used Car Sales Manager

(123) 456-7890

BEE FOR COMPLAINTS

IMPORTANT: The Information on this form Is part of any contract to buy this vehicle. Removal of this tabel before

consumer purchase (except for purpose of test-driving) Is a violation of federal law (16 C.F.A. 455).

Federal Register / Vol. 53, No. 95 / Tuesday, May 17, 1988 / Rules and Regulations 17673

“mers BUYERS GUIDE.

IMPORTANT: Spoken promises are dificult to enforce. Ask the desler to put all promises in writing. Keep this form

VEHICLE MAKE " MODEL VEAR VIN NUMBER

DEALER STOCK NUMBER (Optional)

WARRANTIES FOR THIS VEHICLE:

YOU WILL PAY ALL COSTS FOR ANY REPAIRS. The dealer assumes no responsibility for any repairs regardieas

of any oral statements about the vehicle.

~

| WARRANTY

O FULL p LIMITED WARRANTY. The dealer will pay /2.@ % of the labor and _/22 % of the parts for

the covered systems that fall during the warranty period. Ask the dealer for @ copy of the war

ranty document for a full explanation of warranty Coverage, exclusions, and the dealer's repalr

obligations. Under state law, “Implied warranties" may give you even more rights. .

SYSTEMS COVERED: DURATION:

Engine )

Frame & Body )

Transmission )

Drive Shaft } : ;

Differential ) 12,000 miles or Iv tonths alter

Electrical Systen (except battery) : é, (o} ;

MANUFACTURER'S WARRANTY’ oTlLE APPLIFS. The mamikachirer S original warranty — ani —

Consult ac "

has not expired on this vehicle, man ancy

booklet for details as te Warranty coverage, Service locations; em,

0 SERVICE CONTRACT. A service contract Is available at an extra charge on this vehicle. Ask for detalis as te

coverage, deductible, price, and exclusions. If you buy a service contract within 90 days of the time of sale, state

law “implied warranties” may give you additional rights.

PRE PURCHASE INSPECTION: ASK THE DEALER IF YOU MAY HAVE THIS VEHICLE INSPECTED BY YOUR

MECHANIC EITHER ON OR OFF THE LOT.

SEE THE BACK OF THIS FORM for important additional Information, including a fst of some major defects that

~~ *ay occur in used-motor vehletes.

,

17674

Federal Register / Vol. 53, No. 95 / Tuesday, May 17, 1988 / Rules and Regulations

Below Is a list of some major defects that may occur In used motor vehicles.

Frame & Body

Frame-cracks, corrective welds, or rusted through

Dogtracks—bemt or twisted frame

Engine

Co. lon Ze, exclud..g curmal seepage

Cracked block or head

Belts missing or inoperable

Knocks or misses related to camshaft liters and

push rods

Abnormal exhaust discharge

Tranamiasion & Drive Shaft

improper fluid level or leakage, excluding normal

seepage

Cracked or damaged case which !s visible

Abnormal noise or vibration caused by faulty

transmission or drive shaft

improper shifting or functioning In any gear

Manual clutch slips or chatters

Ditterentlal

Improper fluid level or leakage excluding normal

seepage

Cracked or damaged housing which Is visible

Abnormal noise or vibration caused by faulty —

differential

Cooling System

Leakage including radiator

Improperly functioning water pump

Electrical System

Battery leakage

Improperly functioning alternator, generator,

battery, or starter

Fual System

Visible leakage

Inoperable Accessories

Gauges or warning devices

Air conditioner

Heater & Defroster

Brake System

. Fallure warning light broken

Pedal not firm under pressure (DOT spec.)

Not enough peda! reserve (DOT spec.)

Does not stop vehicle In straight line (DOT spec.)

Hoses damaged

Drum or rotor too thin (Mfgr. Specs)

Lining or pad thickness leas than 1/32 inch

Power unit not operating or. teaking

Structural or mechanical parts damaged .

Steering System

Too much free play at steering whee! (DOT specs.)

Free play in linkage more than 1/4 inch

Steering gear binds or jams

Front wheels aligned improperly (DOT specs.)

Power unit belts cracked or slipping

Power unit fluid level improper

Suspension System

Balt joint seals damaged

Structural parts bent or damaged

Stabilizer bar disconnected

Spring broken

Shock absorber mounting loose

Rubber bushings damaged or missing

Radius rod damaged or missing

Shock absorber leaking or functioning improperty

Tires

Tread depth less than 2/32 inch

Sizes mismatched

Visible damage

Wheels

Visible cracks, damage or repairs

Mounting bolts loose or missing

Exhaust System

Leakage

XYZ Auto Sales, Inc.

123 Main Street

ADDRESS

Anytown, U.S.A. 01234

Ms. Smith, Used Car Sales Manager

(123) 456-7890

SEE FOR COMPLAINTS

‘IMPORTANT: The Information on this form Is part of any contract to buy this vehicle. Removal of this label before

consumer purchase (except for purpose of test-driving) Is a violation of federat law (16 C.F.A. 455).

Federal Register / Vol. 53, No. 95 / Tuesday, May 17, 1988 / Rules and Regulations 17875

A APPENDIX D BUYERS GUIDE

IMPORTANT: Spoken promises are difficult to enforce. Ask the dealer fo put all promises In writing. Keep this form.

VEHICLE MAKE MODEL : YEAR VII NUMBER

DEALER STOCK NUMBER (Optional

WARRANTIES FOR THIS VEHICLE:

YOU WILL PAY ALL GESTS FO R ANY REPAIAS. The dealer assumes no responsibility for any repites

: poral siatements about the vehicle.

a aN

C] FULL LIMITED WARRANTY. The dealer will pay 75 _% of the labor and 75 % of the parts for

the covered systems that fall during the warranty period. Ask the dealer for a copy of the war:

ranty document for a full explanation of warranty coverage, exclusions, and the dealer's repalr

obligations. Under state law, “implied warranties” may glve you even more rights.

SYSTEMS COVERED: DURATION:

Engine ; 90 days or 3,000 miles, whichever

comes first

C) SERVICE CONTRACT. A service contract Is available at an extra charge on this vehicle. Ask for detalis ag te

coverage, deductible, price, and exclusions. if you buy a service centract within 90 days of the time of sale, state

law “Implied warranties” may give you additional rights.

PRE PURCHASE INSPECTION: ASK THE DEALER IF YOU MAY HAVE THIS VEHICLE INSPECTED BY YOUR

- MECHANIC EITHER ON OR OFF THE LOT. :

a

) SEE THE BACK OF THIS FORM for important additlonal information, Including a list of some major defects that

—, May occur In used motor vehicles.

17678 _ Federal Register { Vol. 53, No. 95 / Tuesday, May 17, 1988 / Rules and Regulations

Below Is a list of some major defects thet may occur in used motor vehicles. -

\, ;

\ | Frame & Body Brake Syctem

“Nu” Frame-cracks, corrective welda, o: rusted sheaugh Folkers warning light broken

Dogiracki—bdent or twisted heme @edal not firm under peeesure f00T spec.)

Engine . Not enough pedal reserve (DOT spec.)

Oil leakage, ex_nding normal seepage coos | oss commen Braight line (DOT epec.)

Cracked block or head . Dru thin (Mf

Belts missing or Inoperable m of roior too thin (Migr. Specs)

Knocks of misses related o camshatt lifters and Lining OF pad thickness less than 1/32 Inch

push rods ; Power unit net operating or leeking

Abnormal exhaust discharge Structural or mechanical parts damaged

Transmission & Drive Shaft Steering tes play at steering

improper fiuld level or leakage, excluding normal — ; ruc wheel (DOT apace)

seepage "0 Free play in linkage more than 14 inch

Crached or damaged case which is visible Swering gear binds or jams

Abnormal noise or vibration caused by faulty Front aligned improperly (DOT specs.)

transmission or drive shaft : Power unit belts cracked or slipping

improper shifting or functioning in any gear : _ Power unit fluld level iexproper .

Manual clutch slipa or chatters . : 8

Differential — . ; Bail jolt seals damaged

improper fluid level or teakage exciuding normal Structural parts bent or damaged

seapage Stabilizer bar disconnected

Cracked or damaged housing which le visible Spring broken

Abnormal noise or vibration caused by daulty Shock absorber ssounting loose

differonilal . Rubber

damaged or miasing

Cooling System Radius rod damaged or missing

Leakage including rediator ; Shock ebserber tenking or functioning Improperty

improperty functioning water pump Tres

Electrical System "Tread depth less than 2/32 Inch

Battery leakage . Siamese mismatched .

improperty functioning alternator, generator, : ot . ‘Viaible damoge

battery, or garter

(~~, Fuel System Visible cracks, damage or repai

4 repairs

. y, Visible leakage : Mounting bolts loose or misaing

<=" inopersble Accessories. . ;

Gauges or warning devices Exhaust Byster

Air conditioner Leakage

Heater & Defroster

X¥Z Auto Sales, Inc.

O£ALgA

123 Main Street

Anytown, U.S.A. 01234

____Ms:_ Smith, Used Car Sales Manager- . (123) 456-7890 _

BEE FOR COMPLAINTS

7, IMPORTANT: The Information on this form Is part of any contract ta buy thig vehicle. Removal of this label before

) consumer purchase (except for purpese of test-driving) Is a violation of federat law (16 C.F-R. 455)..

No {FR Doc. 68-11011 Filed 5-16-88; 8:45 am]

BILLING CODE 6760-01-C

Federal Register / Vol. 53, No. 95 / Tuesday, May 17, 1988 / Rules and Regulations 17897

~~" BUYERS GUIDE

IMPORTANT: Spoken promises are difficult to enforce. Ask the dealer to put all promises in writing. Keep this form.

VEHICLE MAKE MODEL ‘YEAR Vii NUMBER

DEALER STOCK NUMBER (Options)

WARRANTIES FOR THIS VEHICLE:

AS IS - NO WARRANTY

YOU WILL PAY ALL COSTS FOR ANY REPAIRS. The dealer assumes no responsibility for any repairs regardiesa

of any oral statements about the vahicie.

| WARRAI

OC) -FULL x LIMITED WARRANTY. The dealer will pay Le of the labor and lot, of the parts for

the covered systems that fail during the warranty period. Ask the dealer for a co of the war

ranty document for a full explanation of warranty coverage, exclusions, and the dealer's repair

obligations, Under state law, “implied warranties” may give you even more rights. ,

SYSTEMS COVERED: DURATION:

* - A one-time $50.00 deductible will apply on repairs,

Engine )

Transmission & Drive Shaft )

Electrical System ) 6 months or 6,000 Miles,

Brake Systen whichever canes first

Steering Systen ' = ; __

Cooling System )

(1) SERVICE CONTRACT. A service contract Is available at an extra charge on this vehicle. Ask for detalles ag te

coverage, deductible, price, and exclusions. If you buy a service contract within 90 days of the time of sale, state

' law “Implied warranties” may give you additional! rights. .

PRE PURCHASE INSPECTION: ASK THE DEALER IF YOU MAY HAVE THIS VEHICLE INSPECTED BY YOUR

MECHANIC EITHER ON OR OFF THE LOT.

j SEE THE BACK OF THIS FORM for Important additional information, including a list of some major defects that

es may occur in used motor vehicles. —