Federal Trade Commission Buyers Guide Rule

The Federal Trade Commission is a Federal agency that protects consumers by enacting laws that require businesses to disclose certain types of information to customers during every transaction. The Federal Trade Commission has a very important regulation that all dealers must follow called the Federal Trade Commission Buyers Guide Rule.

The Federal Trade Commission Buyers Guide rule is a Federal law that requires dealers to disclose whether or not they are offering a warranty on a vehicle before the test drive. You must disclose warranty information to all customers in advance of any selling activity. How do you properly disclose warranty information? Warranty information must be disclosed on a Federal Trade Commission Buyers Guide form. Free FTC Buyers Guides are downloadable at www.ftcbuyersguide.com. You may also purchase the forms at dealer auctions or through your state dealer license association. The downloadable forms available from www.ftcbuyersguide.com are great. You can print them, and then tape them to the window of your vehicles to stay fully compliant with this law. Many companies sell a pack of one hundred buyer’s guides for around fifty dollars. One advantage to the buyers guide packages you purchase is that most of them contain a double stick adhesive that allows you to place them in the window, take them down during a test drive, then place them back in the window when the test drive is completed. Some of the buyers guide packages also contain a ring at the top that allows you to hang the buyers guide from the rear view window, which can be quite convenient while still maintaining full compliance.

A Federal Trade Commission Buyers Guide must be displayed on every vehicle on your lot. This Federal law requires you to display the FTC Buyers Guide on cars, trucks, boats,
tractors, combines, RVs, trailers, jet skis, ATVs, and every other type of vehicle with the only exception being motorcycles. Motorcycles are the only vehicle that is exempt from this Federal law. If you have a trailer, you should place the FTC Buyers Guide in a water proof laminate package then attach it to the hitch or somewhere else on the trailer. On an ATV, you can hang it from the handlebar or attach it to one of the fenders. On an RV, you must display the buyers guide so that both sides are visible.

When you are completing the FTC Buyers Guide you must include the vehicle make, model, year, and vehicle identification number. The Federal Trade Commission requires the vehicle identification number on the buyers guide to match the vehicle identification number on the vehicle it is placed upon. The FTC does not allow a generic buyers guide form that can be used on different vehicles without an identifying VIN.

You must also inform your customers whether or not you are offering a warranty by checking one of the corresponding boxes on this form. If you are selling a vehicle without any type of warranty, check the “As Is No Warranty Box”. If you are offering any type of warranty, or if the vehicle is still covered under the remaining factory warranty, check the “Warranty” box. Never check the “As Is” box and the “Warranty” box, you may only check one. If you check the warranty box you will need to check the full or limited warranty box. You will also need to complete the systems covered section. If your warranty covers the drive train and engine you would enter “drive train and engine”. If you are offering a warranty you must also enter the duration of the warranty, such as 30 days, 60 days, or 90 days.

There are two types of FTC Buyers Guides. If your state allows you to sell vehicles “As Is” you will use the “As Is” buyer’s guide. Some states to not allow dealers to sell vehicles as is. In these states you must use a buyer’s guide that states “Implied Warranties Only”. Be sure to check with you state dealer license bureau to find out what type of buyers guide you will be required to use.

You must display the buyers guide before you offer the vehicle for sale. I always recommend posting the buyers guide as soon as it is driven onto your lot even if it is not yet in selling condition. At the time of the sale, you must have your customer sign the buyers guide, make a copy of the signed portion then keep a copy of the signed buyers guide in your files. Most of the buyers guides you purchase will have a tear off carbon copy that you can place in your files after the purchaser signs it. If you are using the downloadable buyer’s guides from www.ftcbuyersguide.com, you can have your customer sign the buyers guide, and then make a copy for your files while allowing the customer to take the signed original.
By having your customer sign the buyers guide, it shows the Federal Trade Commission that you have disclosed whether or not you are offering a warranty.
The Federal Trade Commission also requires you to post a Spanish Language buyers guide alongside the English Language buyers guide if a portion of your customers only understand Spanish. Spanish Language buyers guides are also available as free downloads at www.ftcbuyersguide.com.

It is very important for you to comply by this Federal law as soon as you become a licensed dealer. Very often the Federal Trade Commission does what is called “Buyers Guide Audits”. The FTC sends special agents into dealerships in every state of the country to conduct these buyers guide audits. One of these buyers guide audits was recently conducted in St. Louis. Federal Trade Commission Special Agents went to almost every dealership in the St. Louis metropolitan area to make sure each dealer was in compliance with this mandatory Federal law. Most of the dealerships were in compliance but they did find one dealer that had 21 cars on his lot with only 15 buyers guides displayed. The FTC gave the dealer 6 buyers guide violations for the 6 vehicles without buyer’s guides. For each of the 6 violations the dealer received a $1,000 fine for a total of $6,000 in Federal fines. The dealer had two vehicles that he had just purchased at an auction. These two cars were parked at the back of his lot facing away from the street and were not even for sale. The FTC gave him one violation for each of the cars because they were in his possession on the premises without the buyers guides prominently displayed. The really scary thing about these FTC Buyers Guide audits is that your first violation is only $1,000. If you have a second violation, whether it is tomorrow, next month, next year, or twenty years after your first violation, the fines jump up to $10,000 per violation. Ten vehicles on your lot with a second violation you would face Federal fines of $100,000! These Federal Trade Commission Special Agents have nothing to do with your state dealer license bureau. They come out of Washington DC to do inspections in all fifty states.

If you follow only one piece of information from dealertraining.org, be sure to post a Federal Trade Commission Buyers Guide on every single vehicle in your possession as soon as it rolls on your lot.

Be sure to consult with a qualified automobile dealer attorney if you have any questions about the FTC Buyers Guide rule.

 

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