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Unless you want to risk massive fines, every sales rep in your dealership needs to understand the FTC Buyer’s Guide.
When a customer buys a pre-owned vehicle from your lot, the Used Car Rule requires you to give them a copy of the FTC Buyer’s Guide.
The Used Car Rule has been a mandatory car dealership regulation since 1985. The rule states that any dealer that sells more than five units in a year must not only display the FTC Buyer’s Guide form but also provide a copy to the consumer at the time of purchase.
The FTC Buyer’s Guide was created to help consumers make an educated decision by giving them essential purchasing and warranty information.
Every ten years since 1992 the Federal Trade Commission has followed a regulatory review process to make sure the guides and rules maintain their effectiveness in protecting consumers. The FTC finalized the most recent changes to the guide on January 27, 2017. By January 28, 2018, all dealers were required to stop using the outdated FTC Buyer’s Guide and replace them with the new, revised version. Maine and Wisconsin are the only states that don’t have to comply with the Used Car rule. They have their own set of similar state regulations that require dealers to post disclosures on vehicles for sale.
The revised FTC Buyer’s Guide may not look different, but there are seven notable changes.
- The description of an “As Is” sale.
- Boxes that dealers can check to indicate whether a third-party warranty covers a vehicle and if a service contract may be available.
- A box that dealers can check to indicate an unexpired manufacturer’s warranty applies.
- The FTC Buyers Guide’s list of major defects that may occur in used vehicles now includes airbags and catalytic converters.
- A statement that directs consumers to obtain a vehicle history report and to check for open recalls.
- A statement in Spanish advising consumers to ask for the Buyers Guide in Spanish when needed.
- A Spanish translation of the statement that dealers may use to obtain a consumer’s acknowledgment of receipt of the FTC Buyers Guide.
Dealers also have the option to have the client sign the Buyer’s Guide to acknowledge they have received all the necessary information to make an informed purchase.
If you decide to utilize the FTC Buyer’s Guide in this manner, you need to include the statement, “I hereby acknowledge receipt of the Buyer’s Guide at the closing of this sale.” According to the FTC’s information page, “The signature line and the required disclosure must appear in the space provided for the name of the individual to be contacted in the event of complaints after the sale.” The signature line helps you confirm the client’s receipt of the FTC Buyer’s Guide. You have proof for your next audit that your dealership does, in fact, comply with the Used Car Rule.
Sales meetings are the perfect place to update your staff on any new rules.
When regulations change, it’s imperative to update your sales team immediately to reduce the risk of compliance fines. It only takes a short amount of time to make sure everyone is on the same page and those few minutes can save you thousands of dollars. You use the FTC Buyer’s Guide every day, and it needs to be filled out correctly.
Dealerships that get caught failing to comply with the Used Car Rule could face substantial penalties of $41,484 per violation. That can add up fast and potentially put you out of business if you don’t take these regulations seriously.
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