New Used Car Disclosure Rules

On November 10, the FTC issued new rules regarding used car sales.  See 16 CFR 455.

The new rule improves disclosures for service contracts and unexpired manufacturer warranties, increases Spanish language disclosure information, and adds air bags and catalytic converters to the sticker’s list of major defects that can occur.  The rule also changes the language on the sticker describing an “as is” sale. The old language merely stated that “[t]he dealer assumes no responsibility for any repairs regardless of any oral statements about the vehicle.” The language the FTC initially proposed in its new rule as a replacement would have been even more unclear: “The dealer is not responsible for any repairs, regardless of what anybody tells you.” After opposition from consumer groups, the language is now changed to “The dealer does not provide a warranty for any repairs after sale.” Since the Rule prohibits the dealer from making an “as is” disclosure when there is a warranty under state law, this is an accurate statement.

Nonetheless, there are various ways to challenge an “as is” disclaimer.  For example:

  • 1. A car sold “as is” still has a warranty of good title–that the transfer is rightful, and that the car is delivered free from liens–unless excluded by specific language or by circumstances that give the buyer reason to know that the seller may not have clear title.
  • 2. Express warranties generally cannot be disclaimed.
  • 3. Federal law provides that a dealer that “makes any written warranty” or “enters into a service contract” cannot sell a car “as is.”
  • 4. Many states have used car lemon laws that may limit “as is” sales and provide strong consumer remedies. States also may have minimum standards for used cars.
  • 5. State vehicle inspection laws also may provide a remedy even in an “as is” sale where the vehicle does not pass inspection.
  • 6. State deceptive trade practices statutes apply to oral or written misrepresentations or the failure to disclose defects or a wreck, flood, or other salvage history, even where a vehicle is sold “as is.”
  • 7. The federal odometer statute, including $10,000 minimum damages and attorney fees applies, despite the “as is” sale, to odometer misrepresentations, mis-disclosures or tampering.
  • 8.  There are also common law fraud and other claims that may assist a consumer stuck with a faulty vehicle.

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