Founder and Managing Partner
As you have probably read, the Federal Trade Commission (FTC)’s new version of the Buyers Guide took effect on January 27, 2017. We recommend upgrading to the new version, which you can review at https://www.ftc.gov/tips-advice/business-center/guidance/buyers-guide-fillable-form. You are permitted to use the old version until January 27, 2018. But only if you have an existing supply of old forms and then only until that existing supply runs out, if before January 27, 2018. And if you are an “on demand” customer, you probably don’t have that option. The Buyers Guide is subject to several detailed formatting, use, and posting rules that exceed the scope of this article, but here are a few main issues to consider regarding its use:
Using the new Buyers Guide
Throughout this article, we will address the “As Is” version of the Buyers Guide that most California dealers use. Contact an experienced automotive attorney if you have questions about the “Implied Warranties Only” version of the Buyers Guide often used in states that do not allow “As Is” sales. The new version of the Buyers Guide separates dealer warranty coverage from warranties provided by manufacturers with separate check boxes for dealer and factory warranties. Although your staff needs to be trained in using the new version, it should be much easier to ensure that the correct boxes are checked as opposed to the former practice of adding lines of statutory text for manufacturer warranties. First, fill in the basic vehicle information (make, model, year, VIN), at the top of the form.
- If you are providing a dealer warranty, check the “Dealer Warranty” and “Limited Warranty” boxes and do not check the “As Is” box.
- Carefully review the written terms of the dealer warranty (which needs to be set out in a separate document provided to customers at the contract signing and upon request before sale), and accurately disclose what percentage of labor and parts will be paid for by the dealership during the warranty period.
- In the “systems covered” column (left side), describe each covered component, using the systems identified on the back of the Buyer’s Guide where applicable (e.g., engine, transmission & driveshaft, and differential). Do not use shorthand such as “drivetrain” or “powertrain,” which do not describe the specific components that are covered.
- Describe the warranty duration for each covered system in the “duration” column on the right (e.g., 3 months or 3,000 miles, whichever comes first).
- Note: a “Full Warranty” for a vehicle is incredibly rare and requires, among other things, covering all costs related to warranty service and all owners of the product during the warranty period. Thus, the “Limited Warranty” box should be checked.
- If you choose to disclose any manufacturer warranties (such disclosure is not required), check the appropriate box in the non-dealer warranties section and do not check the “As Is” box.
- Use the “Manufacturer’s Warranty…” box for a remaining original warranty; the “Manufacturer’s Used Vehicle Warranty…” box for a factory certified pre-owned vehicle; and the “Other Used Vehicle Warranty…” box for a non-manufacturer third party warranty.
- Avoid inserting any language that a factory warranty “may” apply and confirm factory coverage before checking these boxes.
- Any non-manufacturer third party vehicle warranty you offer should be reviewed by competent automotive counsel as there are several legal issues surrounding the use of such warranties.
- If there is no manufacturer or dealer warranty that applies to the vehicle and the transaction is truly an “as is” sale or lease, then the “As Is” box should be checked.
Review the guide to check that the “As Is” box is not checked if any of the other warranty boxes have been checked. If an optional service contract is available, you must check that box. On the reverse side include the contact information of your dealership and a current employee contact in the event of any complaints after the sale.
If you are using your remaining stock of the prior Buyers Guide, ensure that you are using the FTC’s revised language.
The new regulation authorizes dealers to use remaining stocks of the former version of the Buyers Guide for a one year period that ends on January 27, 2018 (a year from the new regulation’s effective date). If you will be using your remaining stock during this one-year window, it is important that you include new language from the FTC concerning the manufacturer’s warranty:
- If the vehicle is subject to an unexpired manufacturer’s warranty and you choose to disclose it, you must include the following statutory language in the Systems Covered section: “Manufacturer's Warranty still applies. The manufacturer's original warranty has not expired on the vehicle.”
- If you choose to disclose that the vehicle is subject to a factory certified pre-owned warranty, you must include the following language: “Manufacturer's Used Vehicle Warranty Applies. Ask the dealer for a copy of the warranty document and an explanation of warranty coverage, exclusions, and repair obligations.”
- If you choose to disclose a non-manufacturer third party warranty (which should be reviewed by counsel, per the former section), you must use the following language: “Other Used Vehicle Warranty Applies. Ask the dealer for a copy of the warranty document and an explanation of warranty coverage, exclusions, and repair obligations.”
After any of these statements, we recommend adding a single space and disclosing the following: “The dealership itself assumes no responsibility for any repairs, regardless of any oral statements about the vehicle. All warranty coverage comes from the warranty provided by the manufacturer.” That language should be revised in the rare case of a non-manufacturer third party warranty.
It is unclear whether or not dealers who print Buyers Guides on demand are required to switch to the new version of the Buyers Guide, since “remaining stock” of the previous version may refer only to pre-printed guides. For this reason, if you do not use pre-printed Buyers Guides, we recommend switching to the new Buyers Guide immediately.
Do not modify the Buyers Guide without authorization from legal counsel
The Buyers Guide is subject to especially strict formatting and content rules. Seemingly minor additions or deletions to the form language can result in huge penalties of up to $40,654, per violation and a criminal misdemeanor under California law, allowing the DMV to take administrative action against your license. All of this is in addition to potential consumer lawsuits for improper or deceptive disclosures. Any additions, deletions, or other changes to the form of a Buyers Guide should be reviewed by experienced automotive counsel.
Federal law explicitly allows (but does not require) dealers to include a signature line in the space provided for the person to be contacted in the event of complaints regarding the sale. This line must be proceeded by the following statutory language: “I hereby acknowledge receipt of the Buyers Guide at the closing of this sale.” An FTC attorney we spoke with informally agreed that placing this language and the signature line directly above the contact person section would be acceptable. But this practice has not been formally approved by the FTC, and may result in a violation. Legal counsel should review the formatting of a proposed signature line and the process of how it will be used before it is implemented, especially since many vendors have not yet drafted a version of the updated Buyers Guide that includes a signature line. Although it needs to be carefully drafted and implemented, a signature line is a useful way of ensuring that purchasers are reviewing and being provided with copies of Buyers Guides and it may be useful evidence if a consumer lawsuit alleges that a Buyers Guide was not provided.
Consider posting identical English and Spanish Buyers Guides on all vehicles
A Spanish Buyers Guide must be posted on a vehicle before any Spanish negotiations begin and many California dealers use Spanish in a significant number of their sales. The easiest way to ensure compliance here is to post identical Buyers Guides on all vehicles, ensuring that negotiations in Spanish do not begin before a Buyers Guide is posted. The FTC has issued a staff compliance guideline suggesting this for dealers who make a substantial number of sales to Spanish speaking customers, even if a majority of sales are made in English. These rules and this guidance have not changed with the new Buyers Guide (except for translated language updates), but this may be a useful reminder for dealers who have not yet begun to post both versions.
Ensure that Buyers Guides are prominently and conspicuously posted on all vehicles
As a final reminder, you still need to ensure that Buyers Guides are “prominently and conspicuously” displayed on all used vehicles (including demonstrators), with both sides “easily readable,” such as by hanging a guide from the rear-view or a side-view mirror, placing it under a windshield wiper, or attaching to a side window. Do not place guides in a glove box (or other compartment), trunk, under or on a seat. Buyers Guides can be removed for a test drive but must be returned immediately afterwards. To ensure compliance, we recommend selecting a uniform display mechanism for all Buyers Guides (e.g., posting them on the rear driver’s side window of all used vehicles in your inventory).
If you have questions, be sure to contact your knowledgeable auto dealer attorney. It is important to properly use this form to avoid regulatory enforcement actions.
 16 CFR § 455.2 is available at http://www.ecfr.gov/cgi-bin/text-idx?SID=7ca30126196465c40dc70b2a1d138434&mc=true&node=20161118y1.13
 16 CFR § 455.2(a)
 16 CFR § 455.2(f)
 16 CFR § 455.5
 FTC Staff Compliance Guidelines, 53 FR 17660
 16 CFR § 455.2(a)(1)