Markets Wired

An Arkansas auto dealer and its owners have agreed to pay a $90,000 civil penalty to settle Federal Trade Commission charges that they failed to display a “Buyers Guide” on used vehicles offered for sale, as required by the FTC’s Used Car Rule.

In March 2014, the FTC charged Abernathy Motor Company, Wesley Abernathy and David Abernathy with violating the Rule, which is designed to ensure that consumers have important purchasing and warranty information when shopping for a used car.

The Buyers Guide informs consumers:

• whether the vehicle comes with a warranty and, if so, whether it is a “full” or limited warranty;
• which systems are covered by the warranty and its duration;
• if it is a limited warranty, what percentage of the cost for covered parts and labor the dealer will pay for; or
• whether the car is sold with no written or implied warranty (“As Is”); and
• whether the car is sold with no written warranty, but with implied warranties. (Some states and Washington, D.C. do not allow dealers to sell cars without implied warranties.)

The Rule also provides that the Buyers Guide becomes a part of the sales contract and overrides any contrary provisions in the contract.

In addition to the $90,000 civil penalty, under the proposed final order, Abernathy Motor Company and its owners are prohibited from misrepresenting material facts about used vehicles offered for sale, including mechanical condition, the terms of any warranty offered, and that there is a warranty when a vehicle is sold without one. They are also barred from failing to disclose, before a sale, material terms and conditions, including that a used vehicle is sold without a warranty if none is offered, and the terms of any warranty.

The proposed order also requires the defendants to display prominently a properly completed Buyers Guide on used vehicles, with all of the disclosures required by the Used Car Rule and reflecting the warranty coverage, and to include this statement in sales contracts: “The information you see on the window form for this vehicle is part of this contract. Information on the window form overrides any contrary provisions in the contract of sale.” For sales conducted in Spanish, the defendants are barred from failing to provide the same information in Spanish.

The Commission vote authorizing the staff to file the proposed stipulated order for permanent injunction was 5-0. It was filed in the U.S. District Court for the Eastern District of Arkansas, Jonesboro Division.

To learn more, read the FTC publication A Dealer’s Guide to the Used Car Rule.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.