Proposed used-car window stickers may not help consumers

by Eric Evarts, Consumer Reports

Currently, federally mandated window stickers on used cars specify warranty terms and inform consumers of their legal rights. Now those stickers are about to change, and consumer advocates say the new ones take a step backward.

The Federal Trade Commission (FTC), which has required the labels since 1988, is updating them to include a warranty selection for dealers to indicate whether a used car has any remaining factory warranty.

This sounds positive on the surface, addressing a frequent question for shoppers, but consumer advocates cite several problems with the new stickers. Much of the concern is focused on new language describing the “As-is, No Warranty” selection on the sticker. On an example sticker in the rule, the “As-is” checkbox is followed by this description: “The dealer won’t pay for any repairs. The dealer is not responsible for any repairs, regardless of what anybody tells you.”

This language flies in the face of fraud laws in all 50 states, says Rosemary Shahan, president of Consumers for Auto Reliability and Safety in California. This is misleading, because under state law, if dealers commit fraud and cheat car buyers, dealers may have to pay for repairs. Indeed, they may also be liable for refunds or even punitive damages, according to the National Association of Consumer Advocates. “The agency is giving consumers inaccurate, false, and misleading advice,” adds Shahan.

Stipulations that other warranty coverage, such as unexpired factory warranties or third-party warranties, be printed on the back of the form are considered problematic by some consumer groups, as well. “Nothing important should ever be printed on the back of a form,” Shahan says. “Nobody ever reads the back of forms.”

The FTC rejected consumer groups’ recommendation that auto dealers be required to disclose defects they already know about without any additional inspection; to check known databases of salvage and totaled cars; and to alert consumers if a car has been salvaged or seriously damaged.

Bill Underriner, chairman of the National Automobile Dealers Association, says the information in those databases is not always accurate or up to date, and that dealers don’t always have access to such information during the sales process. “The Used Car Rule Buyer’s Guide [window sticker]… has been very effective because it discloses information that … the dealer knows and controls. It does not help consumers to require dealers to disclose information about a vehicle that may not be available to a dealer or that may not be accurate,” Underriner says.

Steve Baker, the FTC’s Midwest regional director, says the concept is to encourage consumers not to rely on car dealers. “Consumers are better protected by getting their own inspection than relying on dealers.” He agrees that under state fraud and consumer protection laws, it is already deceptive for used car dealers not to disclose problems they’re aware of. He says the agency was just trying to simplify the language in the “As-is” clause, and “had no intention of rewriting the law.”

The FTC invites comments during the proposal’s public comment period, which runs through Feb. 11. Comments can be sent to:

Federal Trade Commission
Office of the Secretary, Room H-113 (Annex T)
600 Pennsylvania Avenue NW
Washington, DC 20580
or via the FTC website.