New Rules on Used Cars Sales Go in Effect Today : Dealers Must Tell Who Is Responsible for Repairs, Give Warranty Details
Starting today, used car dealers must tell buyers who will pay for repairs after a car is purchased and must specify on window stickers whether the automobile is being sold “as is,” the government said Wednesday.
The disclosures are required under a hard-fought Federal Trade Commission rule that applies to the 10.5 million cars, light-duty trucks and vans sold each year by the nation’s 89,000 used car dealers.
The window stickers, in addition to giving the details of any warranties and service contracts on the vehicles, also will contain consumer advice, including warnings to obtain all promises in writing.
Carol T. Crawford, director of the FTC’s bureau of consumer protection, told a news conference that it was “a particularly happy day for us” because consumers will be told “up front and in writing the most important thing they need to know when buying a used car--and that is, who will pay for repairs after the sale?”
Attached to Sales Contract
The stickers will be attached to the sales contract and will be treated as legal documents, Crawford said, adding that dealers who do not display the stickers can be fined $10,000 a day for each violation. Sales by individuals are not covered by the rule.
Crawford estimated that the regulation could save consumers $400 to $1,500 in repairs on used cars sold for $4,000 to $6,000. She said “the most prevalent problem” in the $60-billion-a-year used car industry has been that dealers would make verbal promises to repair cars after sales and then fail to do so, leaving buyers without legal recourse.
But consumer groups charged that the rule, which is substantially less stringent than one originally proposed, will not adequately protect buyers.
Evan Johnson, an attorney for the Washington-based Center for Auto Safety, said the FTC “worked on this for 10 years and all they came up with was a little sticker. They should have been able to come up with that overnight.”
He asserted that “any semi-responsible dealer” should already disclose warranty provisions in writing and that it will be “difficult to catch the fly-by-nighters” because the FTC will rely mainly on consumers to report violations.
Other Provisions Sought
Consumer activists had fought for provisions that would have required dealers to inform buyers of actual defects in the vehicles, but the “known defects” rule--strongly objected to by used car dealers--was adopted by the FTC in 1981. It was never put into effect, however, because of congressional objections. The provision was dropped last year when the commission voted instead to adopt the less restrictive regulation.
Still critical of that action, Rep. James J. Florio (D-N.J.), chairman of the House Energy and Commerce subcommittee on commerce, transportation and tourism, said Wednesday that the agency had “emasculated” the rule and is “in effect saying to the dealers: ‘You may know about a cracked engine block, but you don’t have to tell the buyer about it.’ ”
Similarly, Mark Silbergeld, director of the Washington office of the Consumers Union, declared that the FTC “had no rational basis” for not sticking with a known-defects requirement. “I don’t think they can scare up one,” added Silbergeld, whose group has filed suit over the commission’s reversal.
Called ‘Deceptively Attractive’
But Crawford called the known-defects rule a “deceptively attractive proposal” because it is not in the dealer’s interest to disclose defects about a car when he is trying to get the best price for it.
