[Federal Register Volume 60, Number 233 (Tuesday, December 5, 1995)]
[Rules and Regulations]
[Pages 62195-62206]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-27553]



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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: Final rule.

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SUMMARY: The Commission announces that its review of the Used Car Rule 
(the ``Rule''), which was conducted pursuant to the Regulatory 
Flexibility Act (``RFA''), and the Commission's review program, has 
been completed. Having considered all of the issues raised during the 
comment period, the Commission is now issuing non-substantive 
amendments to the Rule. The Commission is making several minor 
grammatical changes to the Spanish language version of the Buyers 
Guide. Further, the Commission is amending the Rule to permit dealers 
to post Buyers Guides anywhere on a used vehicle, instead of requiring 
that they be posted on a side window, provided the Buyers Guide is 
conspicuously and prominently displayed and both sides can be easily 
read. Finally, the Commission is amending the Rule to allow dealers the 
option of obtaining a consumer's signature on the Buyers Guide, if 
accompanied by a disclosure that the buyer is acknowledging receipt of 
the Buyers Guide at the close of the sale.

DATES: The effective date of these non-substantive amendments will be 
January 4, 1996.

ADDRESSES: Requests for copies of the regulations and the notice of 
final, non-substantive amendments should be sent to Public Reference 
Branch, Room 130, Federal Trade Commission, 6th and Pennsylvania Ave., 
NW, Washington D.C. 20580.

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

SUPPLEMENTARY INFORMATION:

I. Introduction

    On May 6, 1994, the Commission, in accordance with the RFA's 
requirements, and its own program to review all its rules and 
guidelines periodically, published a Notice in the Federal Register 
soliciting comments on the Rule.1 The Notice solicited comments 
about the impact of the Rule generally, and whether it had had a 
significant economic impact on small entities,2 and, if so, 
whether the Rule should be amended to minimize any such impact. The 
Notice also sought comment on certain proposed changes to the Rule.

    \1\ 59 FR 23647 (May 6, 1994) (``the Notice'').
    \2\ 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.
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    The Commission received 26 comments in response to the 
Notice.3 These comments came from eight used car dealers; 4 
four Attorneys General; 5 four consumer protection groups; 6 
three trade associations; 7 one state government; 8 one radio 
station; 9 one national distributor of Buyers Guides; 10 one 
CPA firm that represents used car dealers; 11 and one 
consumer.12

    \3\ The comments were placed on the public record under category 
23 (Regulatory Flexibility Act Review Comments) of Public Record 
Docket No. P944202. References to the comments are made by means of 
the author and number of the comment and, when appropriate, the page 
of the comment. Two of the comments were consumer complaints that 
were inadvertently classified as comments. Although some comments 
were submitted shortly after the closing date of July 6, 1994, the 
Commission has included them in its analysis.
    \4\ Chuck Gould, J.O.A. Motors Ltd., B-03; Anonymous South 
Carolina dealer, B-04; Karl Kroeger, K&K Auto Sales, Inc., B-05; F. 
Whalen, B-06; Kenny Loveless, Northside Auto Sales, B-09; Mike 
Zibura, B-10; Lee S. Maas, Sun-West Audi, B-18; Duane H. Wallace, 
Town & Country Chevrolet Oldsmobile Inc., B-26.
    \5\ Alaska Attorney General, Bruce M. Botelho, B-01; Illinois 
Attorney General, Roland W. Burris, B-08; Iowa Attorney General, 
William L. Brauch, Assistant Attorney General, B-15; Washington 
Attorney General, Christine O. Gregoire, B-17.
    \6\ National Coalition for Consumer Education (``NCCE''), Carol 
Glade, Executive Director, B-12; Office of Consumer Credit 
Commissioner, Richard R. Woodward, Examiner, B-16; National Consumer 
Law Center (``NCLC''), B-23; National Association of Consumer Agency 
Administrators (``NACAA''), Lawrence A. Breeden, President, B-25.
    \7\ The National Independent Automobile Dealers Association 
(``NIADA''), B-07; the Texas Automobile Dealers Association 
(``TADA''), B-11; the National Automobile Dealers Association 
(``NADA''), B-19.
    \8\ Michigan Department of State, Jeff Villaire, Director, 
Dealer Division, Bureau of Automotive Regulation, B-14.
    \9\ WBBM Newsradio 78, Naomi Hood, Director, B-13.
    \10\ Reynolds & Reynolds, Joe Hurr, Director, Automotive Forms 
Marketing, B-20.
    \11\ Hundman & Woodward, Carl Woodward, C.P.A., B-21.
    \12\ Jay R. Drick, Esq., B-25. As indicated earlier, two of the 
comments were consumer complaints that were misclassified as 
comments. Warren and Irma Muncey, B-02; Sam A. Amato, B-22.
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II. The Regulation

    The Commission promulgated the Used Car Rule 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, 
1985.13 A violation of the Rule constitutes an unfair or deceptive 
act or practice under the FTC Act, and one who violates the Rule is 
subject to civil penalties of up to $10,000 per violation.

    \13\ Two states, Wisconsin and Maine, subsequently petitioned 
the Commission and received exemptions pursuant to section 455.6 of 
the Rule.
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    The Used Car Rule is primarily intended to prevent and to 
discourage 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 sellers to disclose on the Buyers Guide 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 certain other disclosures, including: a 
suggestion that consumers ask the dealer if a pre-purchase inspection 
is permitted; a warning against reliance on spoken promises that are 
not confirmed in writing; and 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 incorporated 
by reference into the sales contract and govern in the event of an 
inconsistency between the Buyers Guides and the sales contract.
    The public comments on the questions asked in the Notice and the 
additional information gathered during the reviews are discussed below.

III. Non-Substantive Amendments to Spanish Language Version of the 
Buyers Guide

    In the Notice, the Commission proposed two non-substantive 
amendments to the Rule involving the 

[[Page 62196]]
Spanish language version of the Buyers Guide, Section 455.5 of the 
Rule. The Commission received three comments favoring the changes and 
none in opposition.14 The Commission has thus determined to adopt 
the proposed amendments.15 The first 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 is amended to 
read: ``El vendedor no asume ninguna responsabilidad por cualquier 
reparacion * * *'' The second change appears in the ``Warranty'' 
(``Garantia'') section of the Buyers Guide. The word ``vendedo'' in the 
second full sentence is amended to ``vendedor.'' Consequently, the 
sentence is also amended to read ``Pida al vendedor una copia del 
documento * * *.''

    \14\ NIADA, B-7 at 1; TADA, B-11 at 3; NACAA, B-24 at 3.
    \15\ Dealers may use up existing stocks of the current version 
of the Spanish Buyers Guide.
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IV. Responses to the Federal Register Notice

Question One
    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?
    i. Summary of Comments. The comments from the eight dealers and the 
CPA firm (its clients are dealers) all favored rescinding the Rule. 
They stated that the Rule places an enormous burden on small 
businesses. Generally, these dealer comments 16 and the CPA firm 
17 contended that the consumer benefit derived from the Rule was 
not justified by the cost of displaying the form, and that consumers 
pay no attention to the Buyers Guide. None of these comments provided 
any specific information in support of their contentions.

    \16\ B-05 at 1; B-06 at 1; B-09 at 1; B-18 at 1; B-26 at 1.
    \17\ B-21. Henceforward, all references to the dealer comments 
will include this comment.
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    All of the other comments, including those from dealer trade 
associations, stated that the Rule is beneficial and that there is a 
continuing need for the Rule. Both NADA and NIADA reported that the 
Rule has helped avoid confusion regarding warranty coverage, and that 
the Buyers Guide is beneficial to both customers and dealers. Both NADA 
and NIADA stated that the costs associated with the Rule seem to be 
reasonable.18

    \18\ See, e.g., NIADA Comment, B-7 at 2.
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    NCCE noted that because young people and consumers with limited 
resources are the major purchasers of used cars, objective, reliable, 
point-of-sale information is essential to an effective consumer 
decision. The comment stated that the FTC Used Car Rule provides 
information to consumers that assists them in making a wise and well 
informed decision, stimulates comparison shopping, and stimulates the 
competitive spirit of our free enterprise system.19 Michigan's 
Department of State noted that the longer the Rule is in place, the 
more the public becomes aware of issues regarding warranty coverage and 
extended service agreements.20 NCLC and NACAA noted that the Rule 
allows consumers an opportunity to see what warranty protection is 
available and to compare warranty coverage among vehicles and 
dealers.21 The Iowa Attorney General noted that because motor 
vehicle designs are growing increasingly complex and repairs more 
expensive, warranty coverage is of increasing importance to motor 
vehicle purchasers.22 Consequently, the Rule provides the consumer 
with valuable information.

    \19\ B-12 at 1. The comment indicates that the Commission's 
objectives in promulgating the Rule have, in large part, been 
achieved.
    \20\ B-14 at 1.
    \21\ NCLC, B-23 at 1; NACAA, B-24 at 1-2.
    \22\ B-15 at 2.
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    ii. Discussion. In the original rulemaking, the Commission found 
that ``many used car dealers mislead consumers into believing that they 
have broad post-purchase warranty coverage when in fact consumers 
receive limited or no warranty protection * * *. In many cases dealers 
make verbal promises to repair defects after sale that are contradicted 
by final written contract terms * * *.'' 23 The Commission 
concluded that the ``practices are pervasive and among the chief 
sources of complaints received by various consumer protection 
organizations around the country.'' 24

    \23\ SBP, 49 FR 45692, 45702 (Nov. 19, 1984).
    \24\ Id.
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    Although the trade associations asserted that some of the 
aforementioned problems have abated, other comments suggested that some 
of these problems continue to occur. Used car complaints continue to be 
among the most frequent type of complaints received by consumer 
protection groups across the country,25 and the majority of these 
organizations suggested amending the Rule in ways they contend would 
provide even more protection to consumers.

    \25\ For example, NACAA's comment notes that ``[a]uto sales 
consistently rank among the most numerous consumer complaints. In 
surveys of NACAA members conducted in 1992 and 1993, auto sales were 
in the top five complaint categories. A report issued by the Council 
of Better Business Bureaus revealed that in 1993 auto sales problems 
were the fifth most frequent complaint made to BBBs nationwide. NAAG 
has also released 1993 statistics which list automobiles (including 
sales and service) as the third largest category of complaints.'' B-
24 at 1.
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    No evidence was adduced during this review that contravenes the 
Commission's 1984 findings, and no persuasive reasons were advanced in 
the comments that would suggest that reconsideration is appropriate. 
The dealer comments favoring repeal of the Rule because it is 
burdensome are conclusory and contradicted by other comments. For 
example, Reynolds & Reynolds, a publisher of Buyers Guides, noted that 
the average cost of a Buyers Guide is 7.6 cents. It also noted that 
because the compliance costs are so small they are usually absorbed and 
rarely passed on to the purchaser.26 Accordingly, because the Rule 
is achieving its objectives and is cost effective, the Commission is 
retaining the Rule.

    \26\ B-20 at 1.
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Question Two
    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?
    The comments responding to this question are discussed category-by-
category below.

A. Disclosing Defects

    i. Summary of Comments. Many comments suggested general changes to 
the Rule to increase its effectiveness for consumers. Six comments 
recommended that the Rule require dealers to make written disclosure of 
known defects in all ``As-Is'' sales.27 Texas's Consumer Credit 
Commissioner suggested amending the Rule to inform consumers that ``As-
Is'' does not mean dealers can sell vehicles with material 
defects.28

    \27\ Alaska AG, B-01 at 1-2; Illinois AG, B-08 at 1; WBBM 
Newsradio, B-13 at 1; Michigan Department of State, B-14 at 1; 
Office of Consumer Credit Commissioner, B-16 at 1; NACAA, B-24 at 2-
3.
    \28\ B-16 at 1.
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    ii. Discussion. In the original rulemaking, after carefully 
considering the issue, the Commission decided not to require disclosure 
of known defects because it ``concluded that the known 

[[Page 62197]]
defects disclosure requirement will not provide used car buyers with a 
reliable source of information concerning a car's mechanical condition 
and that the provision would be exceedingly difficult to enforce.'' 
29 The Commission determined that the warranty and ``As-Is'' 
disclosures--along with the warnings about spoken promises and the pre-
purchase inspection notice--are effective remedies for the deceptive 
practices occurring in the used car industry.30 No new information 
was provided in this review on whether provisions requiring disclosure 
of known defects provide substantial information benefits in practice, 
nor did the Commission staff's independent review of available 
information contradict this determination.31 The only pertinent 
evidence regarding this issue relates to Wisconsin's experience with 
its statute.

    \29\ Id. at 45712.
    \30\ Id.
    \31\ For example, a literature search for economic research on 
``defects disclosures'' turned up two titles, one an FTC working 
paper, the other a dissertation from a student at the University of 
Wisconsin. The two studies both use data from the 1970's (pre-Used 
Car Rule SBP) and neither finds a beneficial effect of the 
disclosures on the used car market.
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    The SBP indicates that during the original rulemaking the 
Commission examined Wisconsin's experience with its used car rule, 
which requires dealers to inspect their cars and to disclose the 
results of the inspection. This examination revealed that 51% of 
Wisconsin consumers still ultimately experienced repair problems not 
identified at the time of purchase.32

    \32\ During the rulemaking, the Commission considered the 
results of a study conducted in Wisconsin, involving surveys of both 
dealers and consumers. See, e.g., SBP at 45712.
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    The Commission was aware of this information when it promulgated 
the Rule. There is no new evidence indicating that reliable information 
would be disclosed if such a provision were required or that efficient 
enforcement would be feasible. Based on the foregoing, the Commission 
has determined that changing its original position on defect 
disclosures is unnecessary.

B. Requiring Dealers To Keep Copies of the Buyers Guide and Requiring a 
Signature Line

    i. Summary of Comments. Both NACAA and the Iowa Attorney General 
suggested amending the Rule to require dealers to obtain a consumer 
signature on the Buyers Guide to ensure receipt of the document, and to 
retain copies of the signed Buyers Guide.33 Both contended that 
enforcement of the Rule would be easier because the absence of a signed 
Buyers Guide in the dealer's records would create the inference that no 
Buyers Guide was provided. Further, the dealer copy would be evidence 
of the warranty disclosures that were made. On the other hand, NCLC 
suggested that some dealers already have consumers sign the back of the 
Buyers Guide at the close of the deal in an attempt to cover themselves 
for failing to post Buyers Guides in vehicles earlier as required by 
the Rule.34 NCLC stated that such a requirement could undermine 
the intent of the Rule because signing a piece of paper, perhaps as 
part of signing a stack of papers at closing, does not prove that the 
Buyers Guide was posted on the vehicle, that the Buyers Guide was given 
to the consumer at an appropriate time, or that the buyer was apprised 
of the warranty terms.

    \33\ B-24 at 3; B-15 at 3-4.
    \34\ B-23 at 8-9.
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    ii. Discussion. In initially approving the form of the Buyers 
Guide, the Commission determined that ``a uniform method of disclosure 
will alleviate confusion and possible deception which might result from 
inconsistent versions of the Buyers Guide.'' SBP at 45709. 
Consequently, the Rule does not allow dealers to modify the format of 
the Buyers Guide. In response to dealer requests, however, staff has 
informed dealers, through informal staff opinion letters, that staff 
was not likely to recommend enforcement actions against a dealer asking 
for a consumer's signature on the back of the Buyers Guide.
    Allowing a signature to be obtained on the back of the Buyers Guide 
was permitted to assist dealers who wanted protection against consumer 
claims that they had failed to provide Buyers Guides, as required by 
law.\35\ From the dealers' perspective, one effective way to document 
that a Buyers Guide was received by a consumer is to obtain the 
consumer's signature and keep a copy of the signed Buyers Guide in 
their files. Thus, there is now considerable incentive for dealers to 
obtain signatures. Requiring a signature to be obtained appears 
unnecessarily burdensome.

    \35\ Although some dealers only give consumers the Buyers Guide 
at closing and do not post, Commission investigations reveal that 
some consumers claim that they were not provided with a copy of the 
Buyers Guide, when, in fact, they were.
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    The Commission also notes that the presence or absence of a 
signature on a Buyers Guide, by itself, does little to ensure that the 
Buyers Guide will be posted as required by the Rule. There is no 
benefit unless dealers also are required to keep signed copies, any 
omissions thereby demonstrating noncompliance. However, the Commission 
does not believe the benefits of a mandatory signing requirement along 
with a recordkeeping provision are likely to justify the costs those 
requirements would impose.\36\

    \36\ The issue of requiring dealers to maintain copies of the 
Buyers Guide was considered in the original proceeding. In an effort 
to minimize the Rule's recordkeeping requirements, the Commission 
decided not to require dealers to maintain copies. The primary 
thrust of the Rule was to provide pre-sale information about 
warranty coverage and to ensure that a copy of the Buyers Guide was 
given to the purchaser. The Commission concluded the Rule would 
achieve these results without a recordkeeping requirement. Dealers, 
of course, are free to maintain whatever records they believe are 
appropriate, and many in fact do keep copies. Further, recent 
legislation amending the Paperwork Reduction Act requires agencies 
to attempt to reduce the paperwork burden associated with their 
regulations. Adding a recordkeeping requirement would constitute a 
new paperwork burden.
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    Dealers, however, may want to obtain signatures and maintain copies 
of the Buyers Guide in their files. The Commission staff's enforcement 
advice permits this, but such advice is not necessarily widely known. 
The Commission, therefore, is amending the Rule to allow an optional 
signature line on the back of the Buyers Guide. To ensure that the 
customer's signature is not misused, and to put dealers on notice that 
obtaining a signature does not satisfy all of the Rule's requirements, 
the optional signature line is permitted only when accompanied by 
language in immediate proximity to the line stating: ``I hereby 
acknowledge receipt of the Buyers Guide at the closing of this sale.'' 
\37\

    \37\ Dealers are advised that the customer's signature will be 
viewed merely as an acknowledgement that the customer has received 
the Buyers Guide, which is only one of a dealer's duties under the 
Rule. The dealer is still responsible for ensuring that posting 
occurs when a vehicle is offered for sale. Further, the dealer has 
the responsibility to ensure that any warranty terms that the dealer 
and the buyer negotiate are reflected on the Buyers Guide, as 
required by section 455.3(a) of the Rule. This is a non-substantive 
amendment that does not require Magnuson-Moss rulemaking procedures, 
as specified in section 18 of the FTC Act, 15 U.S.C. 57a.
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C. Scope of the Rule

1. Private Sales
    NIADA suggested that the FTC require that everyone display a Buyers 
Guide in any used motor vehicle that is advertised for sale.\38\ This 
issue was thoroughly considered during the original rulemaking. As 
noted in the SBP, private parties generally do not offer warranties, 
and therefore, at least as to this issue, it is unlikely that there 
would be any misunderstandings. Also, 

[[Page 62198]]
enforcing the Rule in private sales would not be cost effective. NIADA 
offered no data that would contradict the findings in the SBP. Thus, 
the Commission has determined that a proceeding to amend the Rule to 
include private sales under the Rule is unnecessary.

    \38\ B-7 at 3.
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2. Demonstrators
    i. Summary of Comments. NADA suggested that Buyers Guides not be 
required on ``demonstrator'' vehicles, because such vehicles also are 
required to have a new car Monroney Label that cannot be removed until 
after the vehicle is sold at retail.\39\ The purpose of the Monroney 
label is to provide consumers with the manufacturers' suggested retail 
price for the vehicle, and a list of the optional equipment that comes 
with the vehicle. NADA believes that the Buyers Guide, when combined 
with the Monroney Label, confuses customers without providing 
additional useful information. It stated that all demonstrators are 
covered by factory new vehicle warranties, and manufacturers require 
dealers to review the warranty coverage of new vehicles with the 
customer at the time of delivery.\40\

    \39\ Under the Monroney Act, 15 U.S.C. 1231-33, new vehicles 
must display a document (called the Monroney Label) that contains 
the manufacturer's price, all optional equipment on the vehicle, the 
location of the dealer to whom the vehicle was shipped, and the 
Vehicle Identification Number of the car.
    \40\ B-19 at 2.
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    ii. Discussion. ``Demonstrator'' vehicles are considered ``used'' 
under the Rule because they have been driven for purposes other than 
test driving or moving.\41\ However, for purposes of the Monroney Act 
they are ``new'' because they have not been titled.\42\ In promulgating 
the Used Car Rule, the Commission expressly rejected defining whether a 
vehicle is new by virtue of titling laws.\43\ The Commission determined 
that the definition of a used vehicle should be consistent with the 
Commission's decision in Peacock Buick, Inc.\44\ The Peacock order 
prohibits the defendants from ``[r]epresenting * * * that any vehicle 
is new when it has been used in any manner, other than the limited use 
necessary in moving or road testing a vehicle prior to delivery of such 
vehicle to the customer.'' \45\

    \41\ See 16 CFR 455.1(d)(2).
    \42\ 15 U.S.C. 1231(d).
    \43\ In adopting the Rule, the Commission stated that ``many 
states, for the purpose of titling laws, identify as `new' vehicles 
for which title has not passed to a purchaser despite extensive use 
of the vehicle as a demonstrator model.'' SBP at 45707.
    \44\ 86 F.T.C. 1532 (1975).
    \45\ 86 F.T.C. at 1566.
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    Further, the rulemaking record reflected that used cars sold as 
demonstrators were subject to dealer oral misrepresentations. Thus, 
there was substantial justification on the record for including 
demonstrators within the scope of the Rule.\46\ Consequently, the 
Commission defined a ``used vehicle'' as ``any vehicle driven more than 
the limited use necessary in moving or road testing a new vehicle prior 
to delivery. * * *'' \47\ In adopting this definition, the Commission 
was aware that the term would cover demonstrators, and that the 
definition was broader than the definition employed in some states, 
which rely on titling to determine whether a vehicle is used. Because 
of the Commission's prior consideration of this issue and the fact that 
the Monroney Label does not serve the purposes the Buyers Guide was 
designed to address, the Commission has determined that amending the 
Rule's coverage of demonstrators is unnecessary.

    \46\ See SBP at 45707. Demonstrators include dealer-licensed 
vehicles that can have thousands of miles on them. These vehicles 
have only the period of new car warranty coverage that remains on 
the vehicle at the time of purchase, not the full manufacturer 
warranty that comes with the purchase of a new car. Thus, consumers 
may wish to negotiate with the dealer for additional warranty 
coverage.
    \47\ 16 CFR 455.1(d)(2).
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3. Salvage Vehicles
    Iowa's Attorney General suggested that the Commission amend the 
Rule to cover sales of vehicles on salvage or equivalent certificates 
of title.48 The Rule excludes from the definition of a ``used 
vehicle'' ``any vehicle sold only for scrap or parts (title documents 
surrendered to the State and a salvage certificate issued).'' 49 
Addressing this issue in the SBP, the Commission stated:

    \48\ B-15 at 3.
    \49\ 16 CFR 455.1(d)(2)(emphasis added).

    Insofar as a vehicle is sold for its parts and not as an 
operating vehicle, there appears to be no need to provide consumers 
with the kind of information customarily used to evaluate an 
automobile as a means of personal transportation. Accordingly, the 
definition of ``used vehicle'' specifically excludes those cars sold 
only for salvage.50

    \50\ SBP at 45707.

    Although the Iowa AG's comment does not discuss the reasons why the 
Rule should be extended to include salvaged vehicles, the Commission is 
aware that the sale of salvaged vehicles is viewed as a problem in some 
parts of the country. This occurs because unscrupulous individuals take 
advantage of state laws that do not require titling documents to show 
that a vehicle has been rebuilt from salvaged vehicles. These 
individuals obtain salvaged vehicles, restore them, and then transport 
them to a state that does not require the title to show that a vehicle 
has been salvaged. There, a clean title with no reference to the fact 
that a vehicle has been salvaged is obtained. The vehicle may then be 
taken to any state, even a state that requires a salvage disclosure, 
and be retitled and sold as a used vehicle without disclosing that it 
was a salvaged vehicle.
    The Used Car Rule, however, only addresses warranty coverage, not 
the source of car parts, which is the underlying issue with vehicles 
rebuilt from salvaged parts. Even if the Rule were amended to require 
Buyers Guides for such vehicles, consumers still would not have 
information about the vehicle's history. Further, because the vehicle 
could be sold ``As-Is'' or with a limited warranty of short duration, a 
Buyers Guide is unlikely to provide the desired protection for 
individuals purchasing vehicles rebuilt from salvaged parts.
    This problem is best addressed by the states or by federal 
legislation,51 and not by an amendment to the Rule. To the extent 
that consumers want or need to know that the vehicle they are 
purchasing is constructed from a salvaged vehicle or vehicles, the more 
appropriate and effective remedy would be uniform laws regarding the 
way salvage vehicles are required to be titled. For these reasons, the 
Commission has determined that it is unnecessary to amend the Buyers 
Guide to indicate that a vehicle has been salvaged.

    \51\ The Final Report of the Motor Vehicle Title, Registration, 
and Salvage Advisory Committee, submitted by a Presidential Task 
Force on February 10, 1994, proposes federalizing the definition of 
a salvage vehicle to prevent the practice of allowing salvage 
vehicles to be retitled in states that do not require disclosure on 
the title certificate that a vehicle is a salvaged vehicle.
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4. Leased Vehicles
    NCLC suggested that the Rule be amended to cover leased used 
vehicles.52 The comment, however, did not provide information 
indicating the leasing of used vehicles is particularly pervasive or 
fraught with the same types of problems the Commission found were 
associated with the sale of used cars. Other than NCLC's suggestion, 
there is no evidence on the record to suggest a need for the Commission 
to initiate a proceeding to amend the Rule. The Consumer Leasing Act, 
among other things, requires lessors to disclose in writing who is 
responsible for repairs and maintenance on the vehicle and 

[[Page 62199]]
whether warranties or service contracts are available.53 Pursuant 
to that Act, if a warranty is offered the complete terms must be set 
forth in writing. The Commission's research into the market for used 
leased vehicles indicates that most used vehicles that are leased come 
with warranties. Thus, lessors are required to provide the same type of 
information required by the Used Car Rule (although not via a window 
sticker format). Accordingly, the Commission has determined that the 
suggested change is unnecessary.

    \52\ B-23 at 3.
    \53\ 15 U.S.C. 1667 et seq.; see also 12 CFR 213.
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D. Amend Language That the Buyers Guide Controls in the Event of a 
Discrepancy

    i. Summary of Comments. NCLC suggested changing the language in 
Section 455.3(b) of the Rule, which incorporates the Buyers Guide into 
the written contract by reference and provides that the Buyers Guide 
controls in the event of any discrepancy. NCLC stated that the 
requirement that the Buyers Guide overrides any contrary provisions is 
too broad and might in some cases have the Buyers Guide override 
greater protections in the contract.54 NCLC preferred language 
saying that if there are contrary provisions in the contract, the 
provision that offers the greatest warranty protection to the consumer 
is applicable.55

    \54\ B-23 at 2.
    \55\ Id.
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    ii. Discussion. The purpose of the disclosure in Section 455.3(b) 
is to provide consumers with protection by allowing information to be 
considered that might otherwise not be considered under contract law. 
Specifically,

    By integrating the Buyers Guide within the ``four corners'' of 
the used car sales contract, the Commission intends that the Buyers 
Guide become part of the written agreement between buyer and seller, 
so that, in the event of disputes between buyers and sellers, the 
information on the Buyers Guide would fall outside the exclusions of 
the parol evidence rule of contract law.56

    \56\ SBP at 45710.

The NCLC comment envisions a situation where, for example, a written 
contract offers a warranty but the Buyers Guide is marked ``As-Is'' and 
then incorporated into the contract, negating or overriding the 
warranty described in the contract. Because the Rule states that the 
Buyers Guide controls, the consumer could, theoretically, be without 
recourse. However, the Commission has never encountered this problem, 
most likely because the Buyers Guide, if conforming to the Rule, should 
contain any extra protections set forth in the contract. In fact, the 
Rule places an affirmative duty on dealers to ensure that the Buyers 
Guide reflects the actual terms negotiated. Section 455.3(b) of the 
Rule states that the ``information on the final version of the window 
form is incorporated into the contract * * *'' (emphasis added),\57\ 
and section 455.4 states that ``[A]ny final warranty terms agreed upon 
* * * must be identified in the sales contract and summarized on the 
copy of the Buyers Guide given to the buyer.'' \58\ Accordingly, there 
will be no conflict where the dealer complies with the Rule. Where the 
dealer does not, and the Buyers Guide contains the ``As-Is'' statement, 
there usually will be ample evidence that this was not a ``final'' 
---------------------------------------------------------------------------
Buyers Guide reflecting the terms negotiated.\59\
    \57\ Section 455.3(a) states that the dealer must provide the 
buyer with a Buyers Guide containing all of the disclosures required 
by the Rule, ``and reflecting the warranty coverage agreed upon.''
    \58\ SBP at 45711 (emphasis added).
    \59\ Other documents generated in used car sales transactions 
also would be pertinent to a decision whether a Buyers Guide 
reflects the ``final version'' of the deal negotiated between the 
buyer and the dealer. For example, the Warranty Disclosure Rule 
requires that consumers be given written information regarding 
warranty terms and coverage. It also provides that written warranty 
terms become ``part of the basis of the bargain between the supplier 
and the buyer . . .'' 16 CFR section 701.1(c)(2) Thus, if warranty 
documents are considered part of the contract, and a Buyers Guide 
indicates that a vehicle was sold ``As-Is,'' the warranty documents 
would appear to be evidence that the Buyers Guide did not reflect 
the final deal, and the language in section 455.3(b) of the Rule 
would not be controlling.
---------------------------------------------------------------------------

    For these reasons, the Commission has determined that action to 
amend the Rule in this regard is unnecessary.
E. ``AS-IS'' Version of the Buyers Guide May Be Depriving Consumers of 
Oral or Implied Warranty Rights Under UCC or State Law
    i. Summary of Comments. NCLC recommended that the Commission 
clarify use of the word ``warranty,'' as used on the Buyers Guide. The 
comment notes that, under the UCC, oral express warranties may be given 
in an individual transaction, notwithstanding that written warranties 
are not provided.60 Consequently, NCLC believed that the term 
``As-Is No Warranty'' on the Buyers Guide is confusing, because, 
pursuant to the Rule's definition, the term ``No Warranty'' only means 
no written warranty.\61\ Therefore, NCLC contended the ``As-Is No 
Warranty'' notice on the Buyers Guide could conflict with UCC 
protections and mislead consumers into believing that any express oral 
warranty is voided when the dealer provides an ``As-Is No Warranty'' 
Buyers Guide.62 Moreover, NCLC contends that a dealer might make 
oral warranties which are recognized by state law, but later use the 
``As-Is No Warranty'' language on the Buyers Guide as evidence that no 
oral warranties had been offered.

    \60\ B-23 at 2.
    \61\ Under the Rule, ``warranty'' means ``any undertaking in 
writing, in connection with the sale by a dealer of a used vehicle, 
to refund, repair, replace, maintain or take other action with 
respect to such used vehicle and provided at no extra charge beyond 
the price of the used vehicle.'' NCLC noted that the definition is 
very similar to the one that appears in the Magnuson-Moss Warranty 
Act, 15 U.S.C. 2301(6)(B). See SBP at 45709 (``These subsections 
define the terms `warranty,' `implied warranty,' and `service 
contract' in a manner which conforms to the definitions of those 
terms in the Magnuson-Moss Warranty Act'').
    \62\ According to NCLC, the UCC allows dealers to disclaim 
implied warranties (i.e., sell a vehicle ``As-Is'' and still make 
statements about the car that create oral express warranties). B-23 
at 2.
---------------------------------------------------------------------------

    NACAA similarly stated that:

    In many jurisdictions, oral or written representations (other 
than [those found on] the ``Buyers Guide'') are enforceable. To 
remedy this conflict, the [R]ule should be changed to say that while 
dealers may not make any statements or take any actions that would 
be contrary to the disclosures required in Secs. 455.2 and 455.3, 
the ``Buyers Guide'' may not be used to disclaim any rights that 
consumers may be able to assert under state or local law* * 
*.63

    \63\ B-24 at 2.

    In addition, NCLC stated that the warranty section of the Buyers 
Guide should be changed. The comment pointed out that a warranty, as 
defined in Sec. 455.1(d)(5), is an undertaking in writing to refund, 
repair, replace, maintain, or take other action with respect to the 
vehicle.64 NCLC noted, however, that the form language written on 
the Guide speaks only in terms of repair. It does not appear to allow 
any option of refund, replacement, maintenance, or other action. NCLC 
suggested that the Buyers Guide be changed to reflect that these as 
well as other remedies are options.65

    \64\ B-23 at 8-9.
    \65\ Id.
---------------------------------------------------------------------------

    As a corollary to the foregoing discussion, several comments 
contended that the most frequently used version of the Buyers Guide--
having only ``AS-IS-NO WARRANTY'' and ``WARRANTY'' designations--
encourages dealers to sell cars without warranties. This version of the 
Buyers Guide provides dealers with two choices, either to give an 
express written warranty or to sell the car ``As-Is'' (with no express 
or implied warranties). An alternate ``Implied Warranties Only'' Buyers 
Guide is provided for in Sec. 455.2(b)(ii) for use in those states that 
prohibit ``As-Is'' sales.

[[Page 62200]]

    To remedy the problem, NCLC suggested that the Buyers Guide be 
revised to include an ``Implied Warranties Only'' section on the ``As-
Is'' version of the Buyers Guide.66 If this revision were adopted, 
the Buyers Guide would give dealers the option of checking one of three 
boxes: ``As-Is No Warranty,'' ``Implied Warranties Only,'' and 
``Warranty.'' The comments contended that most consumers do not know 
that implied warranties are available as a form of legal 
redress.67 If all versions of the Buyers Guide contained an 
``Implied Warranties Only'' provision, or at least alerted consumers 
that implied rights exist, consumers would be on notice that they may 
be forsaking possible legal redress to which they would otherwise be 
entitled but for the dealer's decision to sell the vehicle ``As-Is.'' 
Consumers then might attempt to negotiate a better warranty agreement 
with the dealer than an ``As-Is'' deal. Also, some dealers might even 
choose to offer implied warranties rather than use ``As-Is'' sales if 
they were given an easy choice and did not have to use a special form 
or make a substitution on the form. If their only choice is ``As-Is'' 
or an express warranty, NCLC contends, dealers nearly always choose to 
sell vehicles ``As-Is.'' 68

    \66\ NCLC also suggested amending the ``As-Is'' box on the 
Buyers Guide to include language that made clear that an ``As-Is'' 
sale precludes implied warranties. B-23 at 5.
    \67\ An implied warranty of fitness indicates that a car ``is 
reasonably fit for and adapted to the purposes for which it was 
purchased, i.e., a vehicle that will carry a driver and passenger 
with reasonable safety, efficiency and comfort.'' Berg v. Stromme, 
79 Wn.2d 184, 195, 484 P.2d 380 (1971). The Berg court uses the word 
fitness interchangeably with merchantability.
    \68\ B-23 at 8.
---------------------------------------------------------------------------

    Washington's Attorney General asserted that the Rule should only 
allow use of the ``Implied Warranties Only'' version of the Buyers 
Guide, because, given the choice to sell with a warranty or ``As-Is,'' 
dealers opt simply to check off the ``As-Is'' provision. The Washington 
State Attorney General stated that the ``As-Is'' provision may provide 
an unintended shield for some unscrupulous dealerships that fail to use 
required procedures for disclaiming implied warranties under Washington 
contract law. The comment stated that Washington consumers are not 
generally aware that, under Washington law, their waiver of the implied 
warranty of merchantability must be knowing and voluntary. Warranty 
terms or the absence of implied warranties must be the subject of 
explicit negotiations between the parties (written disclaimers are not 
enough). The Rule does not disclose preconditions to a valid disclaimer 
of implied warranties peculiar to Washington State Law.69

    \69\ B-17 at 2.
---------------------------------------------------------------------------

    ii. Discussion. The Buyers Guide focuses on written warranties 
because during the rulemaking the Commission found that oral promises 
made during used car sales were frequently contradicted by the written 
documents, and that the parol evidence rule operated to exclude the 
admissibility of oral promises contradicted by a written 
contract.70 In the SBP, the Commission recognized that ``As-Is'' 
purchases could operate to exclude other contractual rights. The 
Commission stated that:

    \70\ See UCC 2-202.

consumers purchasing ``as-is'' but relying on contradictory oral 
promises are stripped of the protection afforded by either express 
or implied warranties and, at the same time, have no legal recourse 
against the dealer because prior or contemporaneous oral statements 
that contradict final written contract terms are generally not 
---------------------------------------------------------------------------
legally binding.71

    \71\ SBP at 45698 (footnote omitted).

    To address this problem, the Commission sought to put consumers on 
notice that they should be wary of oral promises. Immediately under the 
words ``Buyers Guide,'' on both forms of the Buyers Guide, is the 
following language: ``IMPORTANT: SPOKEN PROMISES ARE DIFFICULT TO 
ENFORCE. ASK THE DEALER TO PUT ALL PROMISES IN WRITING. KEEP THIS 
FORM.'' In addition, the ``As-Is'' box contains the following 
statement: ``YOU WILL PAY ALL COSTS FOR ANY REPAIRS. The dealer assumes 
no responsibility for any repairs regardless of any oral statements 
about the vehicle.'' The warnings on the Buyers Guide and its 
admonition to put all promises in writing help consumers by giving them 
information they can use to ensure they have enforceable rights. Thus, 
the changes suggested by NCLC (e.g., to revise the ``As-Is No 
Warranty'' title to ``As-Is No Written Warranty'') are not necessary. 
Such changes could lead to more uncertainty and disputes about warranty 
coverage. The Commission continues to advise that consumers get any 
promises in writing, rather than trying to prove later that a dealer 
orally promised to make repairs.
    NCLC also suggested that the Buyers Guide be revised to reflect 
that options other than repair are available. However, repair is the 
most common remedy offered by dealers. Dealers, of course, are free to 
offer other options on the Buyers Guide, if they choose. Further, the 
Buyers Guide does not take the place of the warranty documents that 
dealers must provide pursuant to rule 701. The Buyers Guide refers to 
these documents in the ``Warranty'' box on the Buyers Guide: ``ASK THE 
DEALER FOR A COPY OF THE WARRANTY DOCUMENT FOR A FULL EXPLANATION OF 
WARRANTY COVERAGE, EXCLUSIONS, AND THE DEALER'S REPAIR OBLIGATIONS.''
    NCLC also suggested reformatting the Buyers Guide to include ``As-
Is,'' ``Implied Warranties Only,'' and ``Warranty'' sections on the 
same Buyers Guide. The purpose would be to increase consumer awareness 
of implied warranty rights and the likelihood that implied warranty 
rights could be negotiated. There is no evidence that suggests, 
however, that including ``Implied Warranties Only'' as a third option 
on the Buyers Guide would encourage consumers to negotiate for warranty 
coverage more than they presently do, as NCLC suggests. Nor is there 
any evidence that supports the assertion that dealers would choose this 
option over the ``As-Is'' option if it were displayed on the Buyers 
Guide.
    Comments such as the Washington Attorney General's indicated a 
desire to alert consumers that implied warranties exist. Others 
suggested adding language that categorically states that implied 
warranties are unavailable in ``As-Is'' sales.72 The ``Warranty'' 
section of the Buyers Guide contains the following language: ``UNDER 
STATE LAW, `IMPLIED WARRANTIES' MAY GIVE YOU EVEN MORE RIGHTS.'' The 
existing language alerts consumers that the other option to an ``As-
Is'' sale is one with a warranty, and that, along with an express 
warranty, the buyer may receive even more rights (implied warranties) 
under state law. Similarly, amending the ``As-Is'' portion of the 
Buyers Guide to state that implied warranties are never available in an 
``As-Is'' transaction would likely create confusion in states such as 
Washington, where implied warranties must be knowingly waived.73 
Further, such language would misstate the law when a service contract 
is sold with a vehicle.74

    \72\ NCLC, B-27 at 5.
    \73\ See also discussion relating to Part IV, Question 5, infra.
    \74\ The Buyers Guide states: ``IF YOU BUY A SERVICE CONTRACT 
WITHIN 90 DAYS OF THE TIME OF SALE, STATE LAW `IMPLIED WARRANTIES' 
MAY GIVE YOU ADDITIONAL RIGHTS.''
---------------------------------------------------------------------------

    Although some consumers are not aware that implied warranties are 
available under state laws, many states permit ``As-Is'' sales and do 
not require disclosures or preconditions to such sales. The problem 
presented by the 

[[Page 62201]]
Washington Attorney General is somewhat unique insofar as it pertains 
to implied warranties, and might be addressed more effectively under 
state law. For the foregoing reasons, the Commission has determined to 
take no action on the suggested change.

F. Private Right of Action

    i. Summary of Comments. NCLC and Jay Drick suggested that the 
Commission create a private right of action for violation of the 
Rule.75 NCLC noted that currently, a consumer has a cause of 
action for violations of the Magnuson-Moss Warranty Act, but no 
equivalent cause of action for violations of the Rule.76 These 
comments suggested that the Rule state that a violation of the Rule is 
a violation of the Magnuson-Moss Act, which affords a private legal 
remedy in both state and federal courts. NCLC stated that, if 
necessary, the language of the Magnuson-Moss Warranty Act could be 
amended to make this clear. According to these comments, a private 
right of action for violation of the Rule would increase dealers' 
accountability for violating the Rule.77

    \75\ B-23 at 1-2, B-25 at 1 (a consumer and attorney).
    \76\ B-23 at 1.
    \77\ B-23 at 1-2, B-25 at 1. Mr. Drick contends the rule should 
allow for enforcement by private attorneys in state courts. B-25 at 
1.
---------------------------------------------------------------------------

    ii. Discussion. The actual value of a private cause of action for 
buyers against dealers for violating the Used Car Rule is unclear. It 
would be difficult for consumers to prove and quantify the injury or 
damages sustained as a consequence of a Rule violation for failing to 
post a Buyers Guide or for some other violation of the Rule.78 In 
enforcing compliance with the Rule, the Commission has relied on 
injunctions and civil penalties to stop violations and provide 
deterrence.

    \78\ Consumers who have disputes with dealers about warranties 
generally already have recourse to the courts to resolve their 
disputes, and such disputes normally will involve resolving who 
should be responsible for making repairs. For example, section 
110(d) of the Warranty Act allows consumers to bring suits on their 
own behalf for a warrantor's failure to honor warranties or service 
contracts, or to comply with any other obligation under the Act. 
Under the law, actions generally will be brought in state courts. If 
a complaint alleges at least $50,000 in damages the action may be 
filed in federal court.
---------------------------------------------------------------------------

    Even if a private right of action would be useful, the Commission 
has no apparent authority to create one. There is no private right of 
action for violation of any FTC rule promulgated under the Magnuson-
Moss Act. In addition, federal courts consistently have held that there 
is no private remedy under the FTC Act.79

    \79\ The Circuit Court for the District of Columbia, in Holloway 
v. Bristol-Myers Corp., 485 F.2d 986, 988-89 (D.C. Cir. 1973), and 
other federal courts have held there is no implied private right of 
action under the FTC's franchise disclosure rules. In Freedman v. 
Meldy's Inc., 587 F. Supp. 658, 662 (E.D. Pa. 1984)., the court 
reached its decision despite the FTC's contention that the courts 
should recognize private rights of action under the Franchise Rule. 
Citing Justice Rehnquist's opinion in Cannon v. University of 
Chicago, 441 U.S. 677, 718 (1978), the Freedman court stated: 
``Congress may, if it wishes, give effect to the apparent desire of 
the FTC that private rights of action be afforded litigants under 16 
CFR Secs. 436.1-438.10. The FTC may express, as it has, its opinion 
that private rights of action should be provided, but the 
Commission's opinion cannot supplement or supply the requisite 
Congressional intent.'' 587 F. Supp. at 662.
---------------------------------------------------------------------------

    For the foregoing reasons, the Commission is taking no action on 
the recommendation.
Questions Three, Four, Seven, Eight, Nine, and Eleven
    Questions 3, 4, 7, 8, and 9 all deal generally with the costs and 
burdens that may be associated with the Rule. Consequently, they are 
addressed together to avoid repetition. Question 11 is also included in 
this section because it deals with the number of small firms that are 
affected by the Rule.
Question Three
    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?
Question Four
    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?
Question Seven
    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?
Question Eight
    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?
Question Nine
    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?
Question Eleven
    How many used car dealers have under $11.5 million in annual sales?
    i. Summary of Comments. No comment furnished any information about 
how many dealers have sales under $11.5 million, which is how a small 
used motor vehicle dealer is defined by the Small Business 
Administration. Based on the Commission's experience in conducting 
inspections and investigations, the Commission believes that the 
overwhelming majority of independent used car dealers have annual sales 
under $11.5 million, and thus are small entities for purposes of the 
RFA analysis. Franchised dealers that sell used cars, in contrast, are 
likely to have annual sales in excess of $11.5 million, but their sales 
figures would include new car as well as used car sales.
    Only a few comments addressed whether changes to the Rule--short of 
rescinding the Rule altogether 80--would reduce the costs imposed 
on small and large firms. TADA contended that requiring a Spanish 
Buyers Guide to be posted on every used vehicle in addition to the 
English Buyers Guide, where sales are conducted in Spanish, is 
burdensome to dealers, and it therefore recommended that dealers be 
permitted to provide a Spanish Buyers Guide to the consumer only when 
the transaction is being consummated.81 NIADA suggested that the 
burdens related to compliance are greater for small dealerships because 
larger dealerships have more personnel to assist in the preparation and 
processing of paperwork related to car sales.82 

[[Page 62202]]
NADA stated that the Rule is meeting the objectives of the law and is 
not a substantial burden on small dealers.83 Iowa's Attorney 
General noted that the costs associated with Rule compliance are 
minimal and are passed on to the consumer.84 However, Iowa's 
comment also stated that larger firms are better able to absorb the 
costs of compliance. Reynolds & Reynolds noted that the costs of 
compliance include the costs of the form and the time required to fill 
them out properly. These costs differ from small firms to large firms 
because a larger firm most likely can take advantage of volume 
purchases and afford a computer to print out the form, while a smaller 
dealer would be more likely to purchase Buyers Guides in smaller 
quantities and fill them out by hand.85

    \80\ For example, two comments from independent dealers 
contended that the Rule and the posting requirement place an 
unnecessary burden on dealers. They stated the Rule creates extra, 
and unneeded, steps in processing a vehicle sale transaction. No 
quantification for the assertion was provided, however. B-03 at 1, 
B-26 at 1. One of the dealers also noted that virtually every car in 
his area is sold ``As-Is'' and that most consumers in the area are 
aware of the practice. Instead of posting Buyers Guides, he 
suggested posting one large sign on the lot stating: ``Unless a 
specific warranty is provided in writing, all used vehicles for sale 
at this dealership are sold As-Is; the buyer will pay all costs for 
any repairs.'' B-03 at 2.
    \81\ B-11 at 2. TADA asserted that in cities with large Spanish-
speaking populations where dealers conduct a large percentage of 
sales in Spanish, the Rule requires each vehicle to have two Buyers 
Guides, one in English and another in Spanish.
    \82\ B-7 at 2. NIADA noted that filling out the Buyers Guide and 
attaching it to the car is just another part of the logging-in 
procedure. With regard to the differing costs between large and 
small firms, the trade association noted that both size firms need 
to fill out a certain number of forms for each vehicle they sell. 
The larger dealers have more employees to do the job.
    \83\ B-19 at 1.
    \84\ B-15 at 6.
    \85\ B-20 at 2.
---------------------------------------------------------------------------

    The majority of the comments that responded to these questions, 
however, contended that the burdens or costs associated with compliance 
are minimal.86 For example, Reynolds & Reynolds reported that used 
car dealers can purchase Buyers Guides for an average cost of 7.6 
cents.87 While Reynolds & Reynolds believes the costs are so 
minimal that they are not passed along to the consumer, NIADA stated 
that they are.88

    \86\ See, e.g., B-20 at 1.
    \87\ B-20 at 1. See also NIADA, B-07 at 2. Buyers Guides may be 
purchased in packets of 250 for $21.00.
    \88\ Id. NIADA also noted that labor costs are associated with 
compliance, but did not quantify those costs.
---------------------------------------------------------------------------

    Two comments from Attorneys General addressed whether the burdens 
and costs of the Rule would be similar to those incurred under ordinary 
and prudent business practice. The Iowa Attorney General noted that the 
Used Car Rule imposes no costs other than those a prudent dealer would 
incur regardless of the Rule.89 The Washington Attorney General 
stated that the burdens or costs should be similar to those that would 
be incurred by prudent businesses.90

    \89\ B-15 at 6.
    \90\ B-17 at 4. But stricter compliance with Washington law on 
the disclaimer of implied warranties could increase the costs of 
repair or recision to dealers who market unmerchantable vehicles.
---------------------------------------------------------------------------

    In terms of benefits, Iowa's Attorney General noted that the Rule 
has undoubtedly benefited both the manufacturers and dealers by 
fostering competition regarding warranty coverage.91 The comments 
generally suggested that the Rule also has eliminated many disputes 
regarding oral representations made by dealers concerning warranty 
coverage.92 For example, Reynolds & Reynolds noted that the Rule 
removes the question as to whether or not a specific vehicle has a 
warranty.93 Compliance with the Rule virtually assures that 
consumers are aware of available warranty coverage, and therefore 
consumers are significantly protected against dealer 
misrepresentations.94

    \91\ B-15 at 4.
    \92\ See NIADA Comment, B-7 at 4-5.
    \93\ B-20 at 1.
    \94\ B-15 at 4.
---------------------------------------------------------------------------

    ii. Discussion. Based on the information obtained in response to 
the Notice, the Commission has concluded that the costs and burdens 
associated with Rule compliance are not substantial. Although the costs 
or burdens of complying with the Rule may be marginally greater on 
smaller dealers that have fewer employees than larger dealerships, the 
costs associated with compliance are still quite small. The cost for 
Buyers Guides averages 7.6 cents per form, and other costs associated 
with the Rule (i.e., filling out the Buyers Guide and posting them), 
although not quantified, were represented as minimal and reasonable. At 
the same time, the comments contended that there are benefits from Rule 
compliance. Accordingly, the Commission has determined that no changes 
are needed to reduce the costs of the Rule on small businesses.
    Further, although compliance with the Rule may be more burdensome 
and costly to dealers who frequently conduct sales transactions in 
Spanish, TADA's proposed solution (elimination of the requirement to 
post Spanish Buyers Guides) contravenes the Commission's rationale for 
the posting requirement.95 Providing a Buyers Guide at the time of 
sale is insufficient to protect against the unfair and deceptive 
practices the Rule was designed to deter. By requiring posting, the 
Rule affords buyers an opportunity to comparison shop. Accordingly, the 
Commission has decided to take no action.

    \95\ The Commission originally considered requiring Buyers 
Guides to be translated into several dozen languages. However, 
``[t]he evidence in the [rulemaking] record indicates that, besides 
English, Spanish is the language most frequently used during used 
car sales transaction.'' SBP at 45711 (footnote omitted). Thus, the 
Rule requires the window form and the content disclosures to be in 
Spanish, if the sale is conducted in Spanish. Dealers who conduct 
transactions in both English and Spanish may post both versions of 
the Buyers Guide.
---------------------------------------------------------------------------

Question Five
    Does the Rule overlap or conflict with other federal, state, or 
local laws or regulations?
    i. Summary of Comments. In terms of ``overlap,'' NCLC stated: There 
really is no overlap with state consumer protection laws (unfair and 
deceptive acts and practices statutes) because not all states' laws 
cover all violations of the Used Car Rule. The Used Car Rule itself 
merely effectuates a claim under a deceptive practices act in some 
states, by declaring certain conduct to be unfair or deceptive, which 
may then be prohibited by the state law.96

    \96\ B-23 at 5.
---------------------------------------------------------------------------

    NIADA stated, however, that there may be possible overlap with 
Texas's Deceptive Trade Practices Act.97 Iowa's Attorney General 
noted that the Rule overlaps with the Iowa Consumer Fraud Act, Iowa 
Code 714.16, to the extent that the Consumer Fraud Act requires that 
sellers of merchandise not fail to disclose material facts with the 
intent that others rely on the omission.98 Although the two 
overlap, Iowa believed it presents no problem to either the Commission 
or the State of Iowa in the enforcement of the Rule or the Iowa 
Consumer Fraud Act.99

    \97\ B-07 at 5.
    \98\ Warranty coverage on a motor vehicle is considered to be a 
material fact under Iowa law.
    \99\ B-15 at 5.
---------------------------------------------------------------------------

    Alaska's Attorney General believed there is a ``gap'' in the Rule 
that has been addressed in state court decisions.100 TADA noted 
that the Rule's definition of a ``used vehicle'' and the State of 
Texas's definition cause problems because the Commission's definition 
of ``used vehicle'' is much broader than that of some states, including 
Texas.101 According to TADA this causes confusion and 
misunderstanding as to when a vehicle is required to display a Buyers 
Guide.102

    \100\ The ``gap'' relates to the Rule's failure to require 
dealers to disclose known defects. The AG asserts that the common 
law of most states requires disclosure. See, e.g., Patton v. McHone, 
822 S.W.2d 608 (Tenn. App. 1991). B-01 at 1.
    \101\ See also discussion at Part IV, Question 2, B, 2-3, supra, 
regarding the difference between the Rule's definition of a ``used 
vehicle,'' and the state law definitions.
    \102\ B-11 at 2.
---------------------------------------------------------------------------

    NACAA stated that the Rule conflicts with some state laws by 
providing that the language in the Buyers Guide overrides contrary 
provisions in the contract of sale.103 The Washington 

[[Page 62203]]
State Attorney General's Office also noted that the Commission's ``As-
Is'' version of the Buyers Guide does not accurately reflect Washington 
contract law on valid disclaimer of implied warranties, thus creating a 
conflict.104

    \103\ B-24 at 2, citing section 455.3(b) of the Rule. NACAA also 
contended that the provision may be used by dealers to disclaim 
promises of greater warranty protection in oral or written form. 
This issue was addressed in the discussion at Part IV, Question 2, 
E, supra .
    \104\ B-17 at 3. See also discussion at Part IV, Question 2, E, 
supra.
---------------------------------------------------------------------------

    ii. Discussion. The comments indicated that to the extent there is 
any overlap between the Rule and state law, it is generally not a 
significant problem. The ``conflict'' noted by the Washington Attorney 
General has been addressed by the Commission staff in correspondence 
with the Attorney General. As was explained in the staff's letter, the 
purpose of the posted Buyers Guide is to show consumers what warranty 
coverage a dealer is offering. The Rule also requires the dealer to 
provide the buyer with a copy of the Buyers Guide showing the final 
warranty coverage agreed to. If, under Washington State law, an ``As-
Is'' sale has not been properly consummated, the final version of the 
Buyers Guide should note that the car is being sold with implied 
warranties.105 Because the Used Car Rule does not conflict with 
state consumer protection statutes in any significant way, there is no 
need for Commission action.

    \105\ See staff Opinion Letter to Robert F. Manifold, Division 
Chief, October 12, 1989.
---------------------------------------------------------------------------

Questions Six and Ten
    Since the Rule was issued, what effects, if any, have changes in 
relevant technology or economic conditions had on the Rule?
    How many used vehicles (as defined by Section 455.1(d)(2) of the 
Rule) are sold annually in the United States?
    i. Summary of Comments. The number of used cars sold annually is 
much larger now than when the Rule was promulgated.106 Based on 
information NADA submitted, franchised dealerships accounted for nearly 
10 million used car sales in 1993 (9,836,800) and NIADA reported 
another 16 million sales were made by independent dealers. NIADA's 
information indicated that 25.9 million used vehicles were sold by 
independent and franchised dealers in 1992.107 Franchised dealers 
report that the biggest part of both their profit and their volume is 
coming from their used, not new, vehicle sales. ``New car dealers sold 
more used vehicles than new for the first time in 1989, and since then 
relative used-car volume has grown steadily.'' 108

    \106\ In the original rulemaking, the Commission noted that in 
1979, ``two of every three cars sold in the United States were used. 
Consumers in that year spent $66.7 billion, including the value of 
trade-ins in purchasing 18.5 million used cars from all sources.'' 
SBP at 45695.
    \107\ B-7, see attachment to comment entitled ``Used Car 
Sales.'' Other sources indicate that the dollar amount of used car 
sales covered by the Rule reached $281.5 billion in 1993 and $289.2 
billion in 1994. See Used Gold Reference Guide, Chapter 7, p. 3, CNW 
Marketing Research, Bandon, Oregon, 1994.
    \108\ Id.
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    NIADA noted that economic conditions within the industry have 
improved, but was unable to quantify whether the changed conditions 
have had an impact on the Rule. Other comments noted changes in the 
relevant technology and/or economic conditions that may have affected 
the Rule. For example, NCLC noted a significant increase in the leasing 
of new and used cars in support of its recommendation that Buyers 
Guides be posted on leased vehicles. NCLC also pointed to the 
proliferation of computers and copying machines within the industry, 
concluding this should make it easier for dealers to comply with the 
Rule.109 Reynolds & Reynolds noted that many computer systems have 
the ability to print the form for a dealer, thereby reducing time/
energy demands upon dealers to fill out the Buyers Guide.110 
Another comment noted that car manufacturers have done a better job of 
conveying warranty information and covered systems to dealers.111

    \109\ B-23 at 5.
    \110\ B-20 at 2.
    \111\ Id.
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    The Iowa Attorney General noted that since vehicles are more 
complex than ever, repair costs have increased. The Washington Attorney 
General noted that both the demand for and price of used vehicles have 
been driven up because new cars are becoming increasingly 
expensive.112 Thus, warranty coverage is more important to 
consumers than ever before, and the need for the Rule is greater than 
in the past.113 Similarly, most of the comments said there was a 
continuing need for the Rule because of the size of the industry.

    \112\ B-17 at 3.
    \113\ B-15 at 5.
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    ii. Discussion. The economic changes in the industry--the growth in 
used car sales, the increased prices of used cars,114 and the 
rising cost of repairs--make warranty coverage an important 
consideration in a sales transaction. The changes addressed in the 
comments demonstrate that the reasons for promulgating the Rule 
continue to exist. At the same time, the comments noted that 
technological changes have made it easier for dealers to comply with 
the Rule.

    \114\ According to CNW Marketing Research, the average sales 
price for a used car sold by a franchised dealer was $11,820, and 
$6,835 for an independent dealer, in 1994.
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Question Twelve
    Should the Rule's requirement that the Buyers Guide be posted in a 
side window of a used vehicle, as set forth in Section 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?
    i. Summary of Comments. The comments generally supported modifying 
the Rule as suggested. NADA recommended that the Rule afford some 
flexibility in the placement of the guide, allowing it to be placed 
elsewhere than in a side window. NCCE suggested that enforcement focus 
on the availability and accessibility of the information ``and not on 
the trivial aspects of the regulation such as location of the 
information.'' 115

    \115\ B-12 at 2.
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    One consumer protection group noted that if there are no side rear 
windows, the Buyers Guide should be placed in the front window.116 
One Attorney General supported the modification, noting that the Rule 
should allow for dealers to post the Buyers Guides in the rear windows 
of pick-up trucks and other vehicles lacking side rear windows to offer 
the dealers some flexibility.117 The Michigan Secretary of State 
supported the amendment permitting the posting of Buyers Guides in 
other than the side window as long as the guide is prominently 
displayed and both sides can be readily viewed by a purchaser.118 
Other comments also supported the proposed modification of the 
Rule.119

    \116\ B-23 at 6-7.
    \117\ B-15 at 5.
    \118\ B-14 at 1.
    \119\ B-17 at 5, B-19 at 2, B-20 at 2.
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    ii. Discussion. The Commission is amending the Rule to delete the 
side window posting requirement.120 Dealers instead will be 
required to post Buyers Guides prominently and in plain sight anywhere 
on the vehicle as long as both sides are accessible. This amendment 
affords dealers greater flexibility in posting Buyers Guides on all 
vehicles, not just pickup trucks or vehicles without side windows. For 
example, 

[[Page 62204]]
dealers could hang Buyers Guides from the rear view mirror or place 
them under the windshield wipers or hang them from exterior side view 
mirrors. These options allow consumers to view the Buyers Guide easily. 
Putting Buyers Guides in glove boxes or on the floor or in the trunk 
will not satisfy the requirement that the Buyers Guide be in plain 
sight and conspicuous.

    \120\ Because this amendment does not change the substantive 
rights afforded by the Rule or significantly affect the obligations 
of dealers, the Commission has concluded that section 18, 15 U.S.C. 
57a, rulemaking proceedings are unnecessary to issue this amendment.
---------------------------------------------------------------------------

Question Thirteen
    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?
    i. Summary of Comments. Some comments recommended that the Buyers 
Guide should be maintained in its present form.121 Others stated 
that the format of the Buyers Guide should be changed, but none 
provided empirical evidence in support of their assertions. For 
example, Reynolds & Reynolds suggested allowing the Buyers Guide to be 
merged with other required forms. It stated that the Buyers Guide could 
be combined with the state lemon laws and refund rights acts forms. The 
result would be a form with larger dimensions. While the combined form 
would be higher priced, the overall cost of complying with the multiple 
laws would be lowered.122

    \121\ Iowa Attorney General, B-15 at 7.
    \122\ B-20 at 1. Reynolds & Reynolds suggested that additional 
information could be printed on the form (i.e., standard warranty 
coverage) in order to save dealers from having to fill out a new 
form for each vehicle. There is, however, no prohibition against 
pre-printing information on the Buyers Guide.
---------------------------------------------------------------------------

    Both NADA and NIADA recommended that the Rule allow some 
flexibility in the format requirements of the Buyers Guide.123 
Specifically, NIADA suggested that reducing the size requirement of the 
Buyers Guide to 7'' x 5'' would be useful because it would minimize the 
window blockage in compact cars and pickup trucks, and thus reduce what 
it termed a driving safety hazard.124 NIADA contended that the 
present Buyers Guide contains much empty space ``that could be 
eliminated without destroying the eye catching qualities it now has.'' 
125 NIADA also suggested putting the dealer's name and address on 
the front of the Buyers Guide so that the entire form could be easily 
filled in using an office computer printer. In addition it suggested 
that the language ``RECEIPT OF ORIGINAL COPY ACKNOWLEDGED'' and a 
signature line be placed on the front of the Buyers Guide.

    \123\ The Rule requires that the Buyers Guide conform to the 
exact wording, type style, type size, and format specified by the 
Rule. See Section 455.2(a)(2) of the Rule. Among other things, the 
Rule specifies that the form must be printed on white stock no less 
than 11 inches high by 7\1/4\ inches wide. NADA stated that while 
the Buyers Guide does an adequate job of communicating information 
to consumers, ``[t]here needs to be more flexibility regarding the 
size, typeface, additions, etc. to the form.''
    \124\ B-7 at 3. The Rule provides that Buyers Guides may be 
removed during test drives. But, some commenters claim that removing 
Buyers Guides for test drives and re-posting them afterwards is 
burdensome.
    \125\ Id.
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    NCLC, along with Iowa Attorney General,126 opposed changing 
the format of the Buyers Guide, stating:

    \126\ B-15 at 7.

    It is important to keep the Buyers Guide at its current size and 
not to make it smaller. It must be prominent in order to be noticed 
by consumers so that the buyer can negotiate with the dealer over 
the terms on the Buyers Guide and know exactly what is provided in 
terms of warranties. Some of the type on the back of the Buyers 
Guide, indicating systems to check, is already very small.127

    \127\ B-23 at 4.

    ii. Discussion. The Commission has decided not to modify the 
present size or format of the Buyers Guide. The only argument for 
reducing the size of the Buyers Guide is that the current size of the 
Buyers Guide may present a safety hazard during test drives. It is 
difficult to imagine that dealers would forego the option of 
temporarily removing Guides during test drives, if a true safety hazard 
existed. However, if such a hazard existed, it seems unlikely that 
reducing the dimensions of the Buyers Guide to 5'' x 7'' would 
significantly lessen the hazard. The Commission's amendment to allow 
conspicuous posting anywhere in the vehicle is likely to better address 
this issue than reducing the size of the Buyers Guide.
    The Commission requested empirical evidence to support any proposed 
modifications to the size or format because, during the original 
rulemaking proceeding, considerable effort was expended to design a 
form that communicates information effectively to consumers. To 
evaluate the effectiveness of the Buyers Guide during the rulemaking, a 
series of copy comprehension tests were conducted. According to the SBP 
for the Rule, the results of the copy testing were incorporated into 
the final design of the Buyers Guide that the Commission adopted in May 
1981.128 Although the copy testing was done on prior versions of 
the Buyers Guide, which differed from the Buyers Guide now in use, 
those comprehension tests were relevant to the design of the revised 
format the Commission adopted in 1984. Based on those tests, certain 
changes to the Buyers Guide were implemented which carried through to 
the current version.129

    \128\ SBP at 45709. The Commission announced the earlier version 
of the rule in 46 FR 41328 (1981). The 1981 Buyers Guide included 
information about the condition of major mechanical and safety 
systems of the car, which the Commission decided to omit in 1984.
    \129\ For example, based on the testing, the Commission 
increased the type size of the warning against relying on spoken 
promises, and prefaced it with the bold-face heading, ``Important.''
---------------------------------------------------------------------------

    Further, the size of the Buyers Guide was the subject of comments 
filed in response to the Commission's July 31, 1984 Federal Register 
Notice soliciting comment on a Baseline Study of the Rule and the 
Commission's tentative decision to adopt a revised rule. For example, 
NADA requested that the size of the form be reduced from 12 inches high 
by 7\1/4\ inches wide to 6 x 8 inches. Following its review, the 
Commission concluded that the format and type size required by the Rule 
would easily fit onto a 7\1/4\ x 11 sheet. Therefore, to avoid 
unnecessary costs, the Commission revised the Rule to require a form no 
smaller than 11 inches high by 7\1/4\ inches wide. The Commission 
rejected NADA's proposal to reduce the form to the 6 x 8 size because 
the type sizes required by the Rule would have to be reduced to fit on 
the smaller sheet, making the Buyers Guide difficult to read. The final 
Rule the Commission published required a Buyers Guide no smaller than 
11 inches high by 7\1/4\ wide.130

    \130\ 16 CFR 455.2(a)(2).
---------------------------------------------------------------------------

    Under these circumstances, the Commission has determined not to 
change the format of the Buyers Guide without copy testing or other 
reliable information showing that a reduced or revised Buyers Guide 
would be as easy to read and comprehend as the current Buyers Guide. 
For example, taking out the white space, as NIADA suggests, could 
reduce the effectiveness of the Buyers Guides. The empty space on the 
Buyers Guide was planned to make information stand out and to avoid 
making the form a jumble of information. For the same reasons, the 
Commission is also rejecting the suggestion that the format of the 
Buyers Guide be modified to incorporate other required forms.131

    \131\ Recent Commission research also suggests that the 
consolidation of labels may result in information overload. See 
Report to Congress by the Federal Trade Commission, Study of a 
Uniform National Label for Devices that Dispense Fuel to Consumers, 
pp. 27-30 (Oct. 1993). 

[[Page 62205]]

---------------------------------------------------------------------------

    Further, the Commission is rejecting the suggestion to modify the 
Buyers Guide to include dealer information and a signature line on the 
front of the Buyers Guide. NIADA noted that computer pre-printing of 
the Buyers Guide requires turning the page over in order to print the 
information. The actual burden of having to turn over the Buyers Guide 
to pre-print the information is quite small. Further, dealers may use 
an ink stamp to put this information on the back side. Both of these 
methods--ink stamp or turning the Buyers Guide over and pre-printing 
the information--are inexpensive ways of complying with the 
Rule.132

    \132\ The issue of obtaining consumer signatures was addressed 
earlier in this notice. See Part IV, Question 2, B, supra.
---------------------------------------------------------------------------

Question Fourteen
    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?
    i. Summary of Comments. One consumer suggested that the information 
be on one side only, and that a signature line be included so that the 
customer has a chance to read it and know he is entitled to a 
copy.133 This consumer also suggested that the Buyers Guide be 
modified to have check boxes for the selling dealer to disclose whether 
or not the dealer has attempted to repair any item on the vehicle in 
any way, and a section for the dealer to list specifically what 
components or systems were found by the inspection to be in need of 
repair and yet were not repaired by the dealer, plus their anticipated 
costs.134 NACAA noted that the Buyers Guide should be revamped to 
provide a checklist of symptoms and causes for auto problems, and state 
more strongly that consumers should have those items independently 
checked before committing themselves to a used car purchase.135 
Washington's Attorney General suggested that the Buyers Guide note that 
the Cooling-Off Rule does not apply to used car sales. Reynolds & 
Reynolds suggested that a customer signature box be added to the form's 
back to ensure that the purchaser has received warranty information (or 
the lack thereof) and has acknowledged it.136

    \133\ Jay Drick, B-25 at 1-2.
    \134\ B-25 at 1.
    \135\ B-24 at 3.
    \136\ B-20 at 2.
---------------------------------------------------------------------------

    ii. Discussion. The Commission has concluded that adding additional 
information to the Buyers Guide, such as a warning that the Cooling-Off 
Rule does not apply, is unnecessary.137 The format of the present 
Buyers Guide achieves the Rule's objectives, and thus, for the reasons 
previously discussed throughout this notice, the Commission is leaving 
the format of the Buyers Guide essentially unchanged.138

    \137\ 16 CFR 429. The Cooling-Off Rule does not apply to the 
sale of vehicles, nor any other goods and services, offered at a 
seller's place of business. It also does not apply to sales of 
vehicles at auctions provided that the seller has a permanent place 
of business.
    \138\ See discussion at Part IV, Question 2, B, supra.
---------------------------------------------------------------------------

V. Regulatory Flexibility Act Review

    Based on its review of the record, the Commission has concluded 
that the Rule has not had ``a significant economic impact on a 
substantial number of small entities'' affected by the Rule.139 As 
previously discussed, the comments indicate that the costs associated 
with Rule compliance are minimal. The record also suggests that these 
costs generally would be borne by a reasonably prudent business anyway.

    \139\ 5 U.S.C. 603-605. The Commission received no information 
regarding the number of dealerships with annual sales of $11.5 
million or less. But, the Commission's experience is that most 
independent used car dealers have annual sales less than $11.5 
million and therefore are small entities for purposes of the RFA.
---------------------------------------------------------------------------

VI. Conclusion

    The comments and the Commission's experience indicate that the Rule 
is working and achieving its objectives, while imposing only minimal 
costs on used car dealers. For the reasons discussed above, however, 
the Commission is amending the Spanish Buyers Guide and amending the 
Rule to permit dealers to post Buyers Guides prominently and in plain 
view in all used vehicles being offered for sale (rather than on a side 
window). The Commission also is amending the Rule to permit dealers to 
put a signature line on the back of the Buyers Guide, if accompanied by 
a specific disclosure.

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).

Text of Amendments

    For the reasons set forth in this document, pertinent sections of 
the Used Car Rule, 16 CFR Part 455, are amended as follows:

PART 455--[AMENDED]

    The authority citation for part 455 continues to read as follows:

    Authority: 88 Stat. 2189, 5 U.S.C. 2309; 38 Stat. 717 as 
amended; 15 U.S.C. 41 et seq.

    2. Section 455.2(a)(1) is revised to read as follows:


Sec. 455.2  Consumer sales--window form.

    (a) * * *
    (1) The Buyers Guide shall be displayed prominently and 
conspicuously in any location on a vehicle and in such a fashion that 
both sides are readily readable. You may remove the form temporarily 
from the vehicle during any test drive, but you must return it as soon 
as the test drive is over.
* * * * *
    3. Further, Sec. 455.2 is amended by adding paragraph (f) to read 
as follows:


Sec. 455.2  Consumer sales--window form.

* * * * *
    (f) Optional Signature Line. In the space provided for the name of 
the individual to be contacted in the event of complaints after sale, 
you may include a signature line for a buyer's signature. If you opt to 
include a signature line, you must include a disclosure in immediate 
proximity to the signature line stating: ``I hereby acknowledge receipt 
of the Buyers Guide at the closing of this sale.'' You may pre-print 
this language on the form if you choose.
* * * * *
    4. Further, the first page of the sample Spanish language Buyers 
Guide (``GUIA DEL COMPRADOR'') appearing at the end of section 455.5 is 
revised to read as follows:


Sec. 455.5  Spanish language sales.

* * * * *

BILLING CODE 6750-01-P

[[Page 62206]]
[GRAPHIC][TIFF OMITTED]TR05DE95.000


    By direction of the Commission.
Donald S. Clark,
Secretary.

[FR Doc. 95-27553 Filed 12-4-95; 8:45 am]
BILLING CODE 6750-01-C