The FTC can grant an exemption to a state which petitions the Commission and demonstrates that it has existing laws that apply to the same transactions as the FTC’s rule and that provide consumers an overall level of protection equal to or greater than that provided by the FTC’s rule.452 Maine and Wisconsin have been granted exemptions.453
The FTC Used Car Rule requires that each used car offered for sale454 contain, prominently and conspicuously on the vehicle so that both sides are readily readable, a “Buyers Guide,” also known as a window sticker. The Guide may be removed during a test drive, but must be returned immediately thereafter.455 The Buyers Guide must be displayed even if the car is sold “as is.”456
The Buyers Guide must provide the following information:
The dealer must use the appropriate Buyers Guide and check the appropriate boxes disclosing the nature of the warranty coverage:
Proving that the dealer did not display the Buyers Guide on the car that the consumer bought can be tricky.496 Once the consumer raises this claim, the dealer may put window stickers on all the cars in the lot and claim that it was standard practice that every car, including the consumer’s, have a window sticker.
The Buyers Guide must be amended if negotiations or subsequent events alter the warranty coverage.498 For example, if the seller “enters” into a service contract, the Magnuson-Moss Warranty Act prohibits disclaimers of implied warranties. The amended Buyers Guide must then be given to the consumer upon the final sale.499
The Buyers Guide must be given to the consumer upon sale,500 and must be incorporated by reference into the contract, using specific language, overriding any contrary provisions in the contract.501 The disclosure that the Buyers Guide is incorporated into the contract must be conspicuously displayed,502 and it is a violation of the rule if it is included only in the fine print boilerplate of the contract.503
When a sale is conducted in Spanish, the Buyers Guide and the contract language disclosures must be available in both Spanish and English.506 If a dealer offers to sell vehicles to a substantial number of consumers who speak Spanish and others who speak English, and its staff is trained to conduct sales in both languages, the dealer should display both an English and a Spanish Buyers Guide before the vehicle is offered for sale.507 The English-language Buyers Guide must also include a s
The FTC Used Car Rule does not preempt stricter state law requirements for the sale of used cars.514 The rule does not affect state laws that require special language or a separate form to make an effective “as is” sale.515 Dealers must comply with stricter state law requirements.516 The rule does not override state laws that limit or prohibit the sale of used cars “as is.”517
The conspicuousness and effectiveness of a disclaimer is affected by the dealer’s compliance with the FTC Used Car Rule.149 The failure to provide the consumer with a Buyers Guide or place the Buyers Guide language in the sales agreement should indicate that the disclaimer was not sufficiently disclosed.150 The failure to provide a Buyers Guide is also relevant to whether the disclaimer is unconscionable and whether it is in good faith.
State statutes may provide additional warranty rights, providing minimum warranties in used car sales that cannot be waived or disclaimed.
Hawaii, Massachusetts, Minnesota, New Jersey, New York, Rhode Island, and the Virgin Islands have enacted used car lemon laws somewhat akin to new car lemon laws.160 Section 15.5.4, infra, looks at other state laws that provide statutory warranties or other minimum standards for used cars, but whose structure does not qualify them a
Used car lemon laws generally apply only to “used motor vehicles” sold by “dealers” to “consumers.”165 The Massachusetts statute also has provisions that apply to vehicles sold by private parties.166 New York’s statute covers leases as well as sales, but the other statutes explicitly apply only to sales.167 When a used car is sold at a retail auto auction, a separate New York law forbids “as is” clauses and requires the auctioneer to disclose the i
Used car lemon laws require that the dealer give the consumer a warranty upon the sale of a covered car. The duration of the mandatory warranty is dependent both on time and on the vehicle’s mileage, and varies from state to state.188 All seven jurisdictions provide that the term of the warranty is extended by any time period during which the motor vehicle is with the dealer for warranty repairs and typically also while repair services are unavailable because of a war, invasion or strike, fire, flood or other natural disaster.
The required warranty may specify that the dealer will make the repair itself or arrange and make payment for prompt repair by another, or reimburse the consumer for the reasonable costs of repairing the failure of any “covered part” that substantially impairs the car’s value or safety or use.
Used car lemon laws generally provide that if a dealer fails to give the consumer the required written warranty, the dealer is deemed to have provided the warranty as a matter of law.196
To invoke used car lemon law remedies, the consumer must give the dealer notice of the defect. The notice need not be in any particular form, specify that the dealer breached its warranty, or make any claim for damages. However, written notice of all defects and symptoms is prudent. When a curbside or other dealer is difficult to locate in order to give the required notice, the consumer need only make a reasonable effort.205
The Hawaii, New York, and Rhode Island lemon laws require that the dealer either refund the purchase price when a defective used car cannot be repaired,216 or offer a comparably priced vehicle as a replacement, with any price adjustment as agreed between the parties.217 The consumer is not obligated to accept a replacement car and may insist on a refund.218
Violations of the FTC Used Car Rule violate the FTC Act. Although there is no private right of action under the FTC Act for a violation of an FTC rule,518 the FTC interprets a violation of the rule as an unfair and deceptive practice. The rule also specifies certain used car sales practices that are unfair or deceptive. Consequently, a violation of the FTC rule should also be a state UDAP violation.519
A violation of the Used Car Rule should violate the Magnuson-Moss Warranty Act, which authorizes private actions for damages and attorney fees.524 The Magnuson-Moss Warranty Act requires the FTC to enact a used car rule,525 and the Used Car Rule specifies that it was promulgated pursuant to both the FTC Act and the Magnuson-Moss Warranty Act.526
There are a number of bases upon which to cancel a used car sale. Used and even new car lemon laws enacted in some states allow used car purchasers to obtain a complete refund or obtain a replacement vehicle.550 Contracts also can be canceled based on fraud or misrepresentation. In general, consumers will not have to prove knowledge or intent as part of their misrepresentation claim when the remedy is cancellation even when they must prove those elements to recover damages.551
The FTC Three Day Cooling-Off Rule and analogous state home solicitation laws allow the consumer to cancel for any reason within three business days, even if the car is sold “as is.”554 The rule and state laws do not apply to most car sales because those sales take place at the seller’s principal place of business.
In addition to providing some substantive protections for buyers, the Magnuson-Moss Warranty Act enhances buyers’ remedies for breach of warranty.