GNYADA 2019 Membership Directory & Services Guide

The FTC is actively monitoring dealers’ compliance with the Used Car Rule. In 2018, the FTC, working jointly with 12 partner agencies in seven states, conducted the first compliance sweep of car dealerships since the Rule was amended. Following the sweep, the FTC notified the inspected dealerships of the inspection results and indicated that dealerships not displaying the revised Buyer’s Guide can expect follow-up inspections to ensure that they have brought themselves into compliance. The Used Car Rule applies in all states except for a few states that have enacted their own state law provisions, such as Maine andWisconsin, that require notices with additional disclosures for used car sales. s Magnuson-Moss Warranty Act (MMWA) This is a federal law that requires manufacturers and sellers to disclose information about warranties given with the sale of a product. Awarranty is a statement or representation, express or implied, about the character or quality of the goods sold. Express warranties result from statements or affirmations made about a product that the buyer relies upon in deciding to purchase. The MMWA covers written express warranties. Implied warranties derive from state law and automatically attach to the vehicle from the sale, such as an implied warranty of merchantability, which is a promise the vehicle will perform in a manner fit for its usual and ordinary purposes. The MMWA requires any written warranty to be clearly and conspicuously labeled as “full” or “limited” and be described in a single, easy-to-read document and to state any qualifications to the warranty (such as the consumer performing scheduled maintenance) with the full warranty terms available. At minimum, the document must describe who is making the warranty; when the warranty begins and ends; what is covered and what is not; what the warrantor will do if there is a problem; and how the consumer can obtain warranty service. It must also indicate that the consumer may have additional rights under state law and contain the following specific disclosures: “This warranty gives you specific legal rights, and you may also have other rights which vary from state to state. Some states do not allow limitations on how long an implied warranty lasts, so the above limitation may not apply to you.”If a dealer sells the customer its own service contract within 90 days of the vehicle sale (as opposed to the consumer purchasing a service contract from a third party), the dealer cannot disclaim any implied warranties, but the duration of implied warranties can be limited under certain circumstances. A common misconception concerns the concept of a warranty versus an “extended warranty” or service contract. For a new car, a warranty is included in the vehicle price and it provides the customer a right from themanufacturer to obtain certain repair services that must be adequately described under MMWA. Manufacturer warranties do not cover aftermarket products such as dealer-added equipment. Some vehicle manufacturers permit transfer of unexpired warranties to subsequent purchasers, and state laws restrict or limit any charges that can be imposed for doing so. Used car dealers can also provide warranties for the vehicles they sell, but a dealer cannot charge a customer for a warranty; it must be included in the cost of the vehicle. If the customer pays separately for additional coverage or an “extended warranty,”that is a “service contract.” An“extended warranty”is somewhat of a misnomer. Any product that provides for repair or servicing of the vehicle after the original manufacturer’s (or seller’s) warranty expires and for which the customer pays an additional charge is generally deemed to be a “service contract,” not a warranty. Service contracts can be sold directly by the dealer or by a third party. They do not extend the manufacturer’s warranty obligation but give the consumer a contractual right against the seller of the service contract in the event of a breakdown or service need. Under MMWA and state law, a consumer’s legal rights and remedies will be different for warranties and service contracts.

2019 membership directory & services guide / hot topics PG 181

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