FTC Rules on Used Cars Ignored, Group Says

Most automobile dealers in California are violating a Federal Trade Commission rule that requires them to post a sign on each used car spelling out who is responsible for repairs, a statewide consumer advocacy group said Thursday.

A sampling of 1,602 used cars found that 35% did not display a “buyer’s guide,” which the FTC’s “used car rule” has required since May, 1985, said California Public Interest Research Group, or CalPIRG.

Only 32 of the 136 dealers surveyed in 12 cities displayed the buyer’s guides on all cars surveyed, and only 19 of them had correctly completed buyer’s guides on all cars, the study found.

“Most dealers are in some way violating federal law,” said Randall Terrell, a spokesman for CalPIRG.

“We would like to see the FTC enforce their own regulations,” said Terrell, who coordinated CalPIRG’s study. “We would like to see consumers aware of their rights and the responsibility of dealers under the law.”

The buyer’s guide is to be displayed in a side window of a used car being sold by an automobile dealer. It must say whether the car or any of its parts is under warranty or if the car is being sold “as is” with the buyer taking responsibility for all repairs. Dealers who do not display the buyer’s guide can be fined up to $10,000 a day for each violation.

Used cars sold by private parties are not required to display a buyer’s guide. Private individuals sold about 8 million of the nearly 18 million used cars sold nationwide in 1985, the latest year for which statistics are available, according to J. D. Power & Associates, a Westlake Village consulting firm. Used-car sales totaled about $80 billion, the company said.

Terrell said the existing FTC used car rule is a weaker version of an earlier proposal that would have required dealers to reveal any known defects in a used car. “Dealers are failing to fully meet even this minimal requirement for disclosure of information,” he said.

An FTC spokeswoman said the agency “would expect the policy to be partly self-enforcing,” but added that “we certainly intend to follow up on any information that we get” concerning a lack of compliance with the used car rule.

Carl Brakensiek, a spokesman for the 1,000-member Independent Automobile Dealers Assn. of California, said he was not surprised by CalPIRG’s findings because an FTC survey last year in Los Angeles and San Diego found that 90% of the dealers were violating the rule.

“We are a long way from full compliance,” Brakensiek said. “I view (CalPIRG’s findings) as an improvement.

“We fully support the FTC window sticker,” he added. “We wish the FTC had even more enforcement staff to encourage compliance because the buyer’s guide is a valuable guide for car buyers.”

On a national level, “there is no question that there is non-compliance with the rule,” said Charlie Tupper, executive vice president of the National Independent Automobile Dealers Assn. in Irving, Tex. Although the group had opposed the rule before it became law, he said, now “it’s something that we urge our members to do because the penalties are stiff.”