[Federal Register Volume 59, Number 87 (Friday, May 6, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-10937]


[[Page Unknown]]

[Federal Register: May 6, 1994]


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FEDERAL TRADE COMMISSION
16 CFR Part 455

 

Regulatory Flexibility Act and Periodic Review of Used Motor 
Vehicle Trade Regulation Rule

AGENCY: Federal Trade Commission.

ACTION: Request for public comments.

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SUMMARY: The Federal Trade Commission (the ``Commission'') is 
soliciting comments on the Used Motor Vehicle Trade Regulation Rule 
(the ``Used Car Rule'' or ``Rule''). Specifically, the Commission is 
requesting comments about the overall costs and benefits of the Rule 
and its overall regulatory and economic impact as a part of its 
systematic review of all current Commission regulations and guides. 
Additionally, in accordance with the Regulatory Flexibility Act, the 
Commission is soliciting comments and data on whether the Used Car rule 
has had a significant economic impact on small entities, and if it has, 
whether the Rule should be amended to minimize any such economic impact 
on small entities. The Commission also is soliciting comments on two 
nonsubstantive amendments the Commission proposes to make to the 
Spanish language version of the Buyers Guide.

DATES: All comments and data should be received by the Commission no 
later than July 5, 1994.

ADDRESSES: Comments and data should be sent to Secretary, Federal Trade 
Commission, Washington DC 20580. Submissions should be identified as 
``Used Car Rule--``Review Comment.''

FOR FURTHER INFORMATION CONTACT:
George Brent Mickum IV, Attorney, Federal Trade Commission, Division of 
Enforcement, Bureau of Consumer Protection, Washington, DC 20580, (202) 
326-3132.

SUPPLEMENTARY INFORMATION:

I. Background

    The Commission promulgated the Used Car Rule, 16 CFR part 455, 
under the authority of the Federal Trade Commission Act, 15 U.S.C. 41 
et seq. (``FTC Act''), and the Magnuson Moss Warranty Act, 15 U.S.C. 
2309, on November 19, 1984. 49 FR 45692 (1984). The Rule became 
effective on May 9, 1985. Any violation of the Rule constitutes an 
unfair or deceptive act or practice under the FTC Act, and is subject 
to civil penalties of up to $10,000 per violation.
    The Used Car Rule is primarily intended to prevent oral 
misrepresentations and unfair omissions of material facts by used car 
dealers concerning warranty coverage. The Rule provides a uniform 
method for written disclosure of warranty information on a window 
sticker called the ``Buyers Guide.'' The Rule requires clear disclosure 
on the Buyers Guide of the basic terms and conditions of any warranty 
offered in connection with the sale of a used car, including the 
duration of coverage, the percentage of total repair costs to be paid 
by the dealer, and the exact systems covered by the warranty.
    The Rule also requires other disclosures that must be printed 
directly on the Buyers Guide, including:
    (1) A suggestion that consumers ask the dealer if a pre-purchase 
inspection is permitted;
    (2) A warning against reliance on spoken promises that are not 
confirmed in writing; and
    (3) A list of fourteen major systems of an automobile and the major 
problems that may occur in these systems. The Rule also provides that 
the Buyers Guide disclosures are to be incorporated by reference into 
the sales contract, and are to govern in the event of an inconsistency 
between the Buyers Guide and the sales contract. When used car dealers 
conduct sales in the Spanish language, Spanish language Buyers Guides 
are required.

II. Rule Reviews

    The Regulatory Flexibility Act, 5 U.S.C. 601 et seq. (the ``RFA''), 
requires that the FTC conduct a periodic review of rules that have or 
may have a significant economic impact on a substantial number of small 
entities. In addition, as part of its oversight responsibilities, the 
Commission has determined to review rules and guides periodically. See 
59 FR 2955 (Jan. 20, 1994). Both reviews will seek information about 
the costs and benefits of the Commission's rules and guides and their 
regulatory impact. The information obtained will assist the Commission 
in identifying rules and guides that warrant modification or 
rescission.
    The purpose of the RFA review is limited to determining whether the 
Rule should be continued without change, or should be amended or 
rescinded, consistent with the state objectives of applicable statutes, 
to minimize any significant economic impact of the Rule upon a 
substantial number of small entities. For the purpose of the RFA 
review, a ``small entity'' is a used motor vehicle dealer with less 
than $11.5 million in annual sales, as defined by the Small Business 
Size Standards, 13 CFR 121.601. The purpose of the Commission's 
periodic review is to solicit comment on issues relating to the 
operation of the Rule. This review is not limited to the Rule's impact 
on small entities, but encompass all affected entities.

III. Request for Comment

    The Commission solicits comment on the following questions and 
requests that any factual data (e.g., economic and accounting 
information, statistical analysis, surveys, studies, etc.) upon which 
submitted comments are based be included with the comments.
    1. Is there a continuing need for the Rule?
    a. What benefits has the Rule provided to purchasers of the 
products or services affected by the Rule?
    b. Has the Rule imposed costs on purchasers?
    2. What changes, if any, should be made to the Rule to increase the 
benefits of the Rule to purchasers?
    a. How would these changes affect the costs the Rule imposes on 
firms subject to its requirements?
    3. What significant burdens or costs, including costs of 
compliance, has the Rule imposed on firms subject to its requirements?
    a. Has the Rule provided benefits to such firms?
    4. What changes, if any, should be made to the Rule to reduce the 
burdens or costs imposed on firms subject to its requirements?
    a. How would these changes affect the benefits provided by the 
Rule?
    5. Does the Rule overlap or conflict with other federal, state, or 
local laws or regulations?
    6. Since the Rule was issued, what effects, if any, have changes in 
relevant technology or economic conditions had on the Rule?
    7. What significant burdens or costs, including costs of 
compliance, has the Rule imposed on small firms subject to its 
requirements?
    a. How do these burdens or costs differ from those imposed on 
larger firms subject to the Rule's requirements?
    8. To what extent are the burdens or costs that the Rule imposes on 
small firms similar to those that small firms would incur under 
standard and prudent business practices?
    9. What changes, if any, should be made to the Rule to reduce the 
burdens or costs imposed on small firms?
    a. How would these changes affect the benefits of the Rule?
    b. Would such changes adversely affect the competitive position of 
larger firms?
    10. How many used vehicles (as defined by Sec. 455.1(d)(2) of the 
Rule) are sold annually in the United States?
    11. How many used car dealers have under $11.5 million in annual 
sales?
    12. Should the Rule's requirement that the Buyers Guide be posted 
in a side window of a used vehicle, as set forth in Sec. 455.2(a)(1) of 
the Rule, be modified to allow posting in a different location (for 
example, in the rear window of a pickup truck or other vehicle without 
side rear windows), as long as the Buyers Guide is conspicuous and both 
sides may be readily viewed?
    13. What changes to the format of the Buyers Guide should be 
considered in order to reduce compliance costs or burdens? Would such 
changes have any detrimental effect on the benefits provided by the 
Rule? Is there any empirical or other evidence to support opinions that 
such changes would or would not have a detrimental effect on benefits?
    14. What changes to the format of the Buyers Guide should be 
considered in order to increase its benefits? What effect would such 
changes have on the costs or burdens imposed by the Rule? Is there any 
empirical or other evidence to support opinions that such changes would 
or would not increase costs or burdens?

IV. Non-Substantive Amendments to the Rule

    The Commission also solicits comment on two non-substantive 
amendments the Commission proposes to the Rule involving the Spanish 
language version of the Buyers Guide, Sec. 455.5 of the Rule. The first 
proposed change is grammatical: The ``As Is'' (``Como Esta-Sin 
Garantia'') section of the Buyers Guide reads ``El vendedor no asume 
ninguna responsabilidad por cualquier las reparaciones * * *'' 
(emphasis added). This language will be amended to read: ``El vendedor 
no asume ninguna responsabilidad por cualquier reparacione * * *'' The 
second suggested modification appears in the ``Warranty'' 
(``Garantia'') section of the Buyers Guide. The word ``vendedo'' in the 
second full sentence will be amended to read ``Pida al vendedor una 
copia del documento * * *.''

List of Subjects in 16 CFR Part 455

    Motor vehicles, Trade practices.

    Authority: The Regulatory Flexibility Act, 5 U.S.C. 601 et seq. 
(1980).

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 94-10937 Filed 5-5-94; 8:45 am]
BILLING CODE 6750-01-M