Most car dealers who sell used vehicles must comply with the Federal Trade Commission's (FTC's) Used Car Rule. In fact, car dealers who sell, or offer for sale, more than five used vehicles in a 12-month period must comply with the Rule. Banks and financial institutions are exempt from the Rule, as are businesses that sell vehicles to their employees, and lessors who sell a leased vehicle to a lessee, an employee of the lessee, or a buyer found by the lessee.
The Used Car Rule applies in all states except Maine and Wisconsin. These two states are exempt because they have similar regulations that require dealers to post disclosures on used vehicles. The Rule applies in the District of Columbia, Puerto Rico, Guam, the U.S. Virgin Islands, and American Samoa.
This booklet defines the Rule's requirements, explains how to prepare and display the Buyers Guide, and offers a compliance checklist.
You must post a Buyers Guide before you display a vehicle for sale or let a customer inspect it for the purpose of buying it, even if the car is not fully prepared for delivery. You also must display a Buyers Guide on used vehicles for sale on your lot through consignment, power of attorney, or other agreement. At public auctions, dealers and the auction company must comply. The Rule does not apply at auctions that are closed to consumers.
Previously titled or not, any vehicle driven for purposes other than moving or test driving is considered a used vehicle, including light-duty vans, light-duty trucks, demonstrators, and program cars that meet the following specifications:
Exceptions to the Rule are:
A disclosure document that gives consumers important purchasing and warranty information, the Buyers Guide tells consumers:
If you conduct a used car transaction in Spanish, you must post a Spanish language Buyers Guide on the vehicle before you display or offer it for sale.
The Buyers Guide must be displayed prominently and conspicuously on or in a vehicle when a car is available for sale. This means it must be in plain view and both sides must be visible. You can hang the Guide from the rear-view mirror inside the car or on a side-view mirror outside the car. You also can place it under a windshield wiper. The Guide also can be attached to a side window. A Guide in a glove compartment, trunk or under the seat is not conspicuous because it is not in plain sight.
You may remove the Guide for a test drive, but you must replace it as soon as the test drive is over.
At the top of the Guide, fill in the vehicle make, model, model year, and vehicle identification number (VIN). Write in a dealer stock number if you wish.
On the back of the Guide, fill in the name and address of your dealership. Also fill in the name (or position) and the telephone number of the person the consumer should contact with complaints. You may use a rubber stamp or preprint your Guide with this information.
You may include a signature line on the Guide and you may ask the buyer to sign to acknowledge that he or she has received the Guide. If you opt for a signature line, you must include a disclosure near it that says: "I hereby acknowledge receipt of the Buyers Guide at the closing of this sale." This language can be preprinted on the form. The signature line and the required disclosure must appear in the space provided for the name of the individual to be contacted in the event of complaints after the sale.
State Law. In some states, use of the "As Is-No Dealer Warranty" Buyers Guide may be legally sufficient to eliminate implied warranties. In other states "as is" sales are allowed only if specific action is taken or certain language is used. For example, some states may require you to eliminate implied warranties by using special language and/or a document other than the Guide.
If you're not sure which version of the Buyers Guide you should use or if you have questions about state requirements, contact the FTC or your state Attorney General's office.
For a warranty to be considered "full:"
The warranty is considered "limited" if any of these conditions doesn't apply.
Fill in the percentage of parts and labor costs covered by the warranty in the spaces provided. If a deductible applies to repairs made under the warranty, put an asterisk next to the number and explain the deductible in the "systems covered/duration" section. For example, "*A $50 deductible applies to each repair visit."
There's one column to list the systems covered, and another to list the length of the warranty for each system. In the left hand column, you must specify each system that's covered by the warranty. The Rule prohibits the use of shorthand phrases such as "drive train" or "power train" because it's not always clear what specific components are included in the "power train" or "drive train."
In the right hand column, you must state the length of the warranty for each system. If all systems are covered for the same length of time, you may state the duration once.
If the manufacturer's warranty hasn't expired, you may disclose this fact by checking the box, "MANUFACTURER'S WARRANTY STILL APPLIES. The manufacturer's original warranty has not expired on some components of the vehicle,” in the Non-Dealer Warranties for this Vehicle section of the Buyers Guide.
If the consumer must pay to get coverage under the manufacturer's warranty, you may not check the "Warranty" box. Such coverage is considered a service contract. However, you may check the "Warranty" box if you pay for coverage from the manufacturer and the consumer doesn't have to pay anything more than the price of the vehicle to get the coverage. If you provide a warranty in addition to the unexpired manufacturer's warranty, explain the terms of your warranty on the Buyers Guide.
If you and the consumer negotiate changes in the warranty, the Buyers Guide must reflect the changes. For example, if you offer to cover 50 percent of the cost of parts and labor for certain repairs, but agree to cover 100 percent of the cost of parts and labor after negotiating with the customer, you must cross out the "50 percent" disclosure and write in "100 percent." Similarly, if you first offer the vehicle "as is" but then agree to provide a warranty, you must cross out the "As Is-No Dealer Warranty" disclosure and complete the "Warranty" section of the Buyers Guide properly.
If you offer a service contract for repairs, check the box next to the words "Service Contract." However, if your state regulates service contracts as the "business of insurance," you don't have to check this box. Check with your Attorney General or state insurance commissioner to find out if your state regulates service contracts as insurance.
You must give the buyer the original or a copy of the vehicle's Buyers Guide at the sale. The Guide must reflect all final changes. If you include a signature line on your Buyers Guides, make sure the buyer signs the Guide that reflects all final changes.
If you offer a written warranty, or if the manufacturer's warranty still applies, you also must comply with the Magnuson-Moss Warranty Act and other FTC Rules, including the "Warranty Disclosure Rule." The Warranty Act contains provisions that establish consumers' rights with respect to written warranties. For example, the Act prohibits you from eliminating implied warranties when you provide a written warranty.
The Warranty Disclosure Rule requires that you disclose certain information about the coverage of your warranty and consumers' rights under state law. This information must be included in a single document that is clear and easy to read.
The warranty information you provide on the Buyers Guide is not sufficient to meet the requirements of the Warranty Disclosure Rule. Therefore, your written warranty and the Buyers Guide must be two separate documents.
Another federal rule — the FTC's Rule on Pre-Sale Availability of Written Warranty Terms — requires that you display written warranties in close proximity to the vehicle or make them available to consumers, upon request, before they buy.
You also may be interested in A Businessperson's Guide to Federal Warranty Law. It explains the Magnuson-Moss Warranty Act, the federal law governing warranties on consumer products.
Split cost warranties are those under which the dealer pays less than 100% of the cost for a warranty repair. This type of warranty includes 50/50 warranties where the dealer pays 50% of the cost for a covered repair and the buyer pays the remaining 50%. Another type of split cost warranty is one under which the buyer pays a deductible amount and the dealer pays the remaining cost for the repair.
If you offer a split cost warranty that requires you to pay a percentage of the repair cost for covered repairs, you should include the following disclosures in your warranty document:
If your warranty requires buyers to pay a deductible, your warranty document should disclose the deductible amount and the details as to when and under what circumstances the deductible must be paid.
Dealers offering split cost warranties can require that buyers return to the dealer for warranty repairs. If your warranty includes this restriction, however, you should provide an estimate of the total repair cost before work is started. This will allow the buyer to decide whether to approve the repair or have the work done elsewhere.
You can download the Buyers Guide from the FTC's Business Center, or you can get Buyers Guides from business-form companies or trade associations. You also can generate them yourself on a computer. However, you must use the wording, type style, type sizes, and format specified in the Rule. You are not allowed to place any other wording or symbols (including logos) on the Buyers Guide. The Guides must be printed in 100% black ink on white paper cut to at least 11" x 7 1/4." These requirements cannot be modified in any way. You may use colored ink to fill in the blanks.
Ask yourself:
I hereby acknowledge receipt of the Buyers Guide
at the closing of this sale.
The information you see on the window form for this vehicle
is part of this contract. Information on the window form overrides
any contrary provisions in the contract of sale.
Dealers who violate the Used Car Rule may be subject to penalties of up to $51,744 per violation in FTC enforcement actions. Many states have laws or regulations that are similar to the Used Car Rule. Some states incorporate the Used Car Rule by reference in their state laws. As a result, state and local law enforcement officials may have the authority to ensure that dealers post Buyers Guides and to fine them or sue them if they do not comply.
If you have questions about the Used Car Rule, contact the FTC and request a free copy of the Rule or staff compliance guidelines for the Used Car Rule; both documents explain some aspects of the Rule in more detail.
The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
[Note: Edited January 2024 to reflect Inflation-Adjusted Civil Penalty Maximums.]
Updated as of: Feb 2019
PLEASE READ THE FOLLOWING CAREFULLY.
The Costco Auto Program is operated in the United States by Affinity Auto Programs, Inc., doing business as “Costco Auto Program” (“CAP”, “we”, “us” or “our”), which is an independent company, not an affiliate of Costco Wholesale Corporation (“Costco”).
This document sets out those terms and conditions (the "Agreement") under which we allow you ("you", "your") to use our website ("Website"), whether you do so just to find out about us and our services or to provide us with information in order to participate in the Costco Auto Program or in any other activities through the Website.
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THIS AGREEMENT LIMITS THE LIABILITY OF COSTCO AUTO PROGRAM, DISCLAIMS CERTAIN WARRANTIES, GRANTS YOU A LIMITED LICENSE AND GIVES THE COSTCO AUTO PROGRAM CONTROL OVER THE INFORMATION YOU ELECT TO PROVIDE TO US. ALL PERSONAL INFORMATION PROVIDED BY INDIVIDUALS ALSO BECOMES SUBJECT TO THE COSTCO AUTO PROGRAM'S PRIVACY POLICY https://www.costcoauto.com/privacy.aspx DO NOT USE THE WEBSITE OR PROVIDE US WITH ANY PERSONAL INFORMATION IF YOU DO NOT AGREE TO THESE TERMS,
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2. Agreement May Change
We may change any of the terms or conditions of this Agreement from time to time without notice. You should revisit the Website periodically to review the terms and conditions of the then-current Agreement. Any revisions to this Agreement are effective once posted on or accessible from or through the Website.
3. Definitions
Many of the words and phrases in this Agreement have specific meanings so we have provided those for you to read:
“Agent” means any person who provides Personal Information to the Costco Auto Program in any manner on behalf of another individual.
“CAP Service(s)” means any one or more of the services or benefits offered by the Costco Auto Program from time to time; which may include a referral to a participating CAP dealer, issuance of a dealer parts and service coupon, or issuance of an authorization number to register to participate in an OEM promotion or any other service or benefit offered by the Costco Auto Program.
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“Guest” means an individual who submits information to the Costco Auto Program to participate in one of more of the CAP Services. A Guest may access the Website as a Visitor on a different occasion without disclosing information or requesting a CAP Service. A Guest may provide certain Personal Information personally and/or directly, or they may use instruct an Agent or representative to do so.
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“Visitor” means anyone who visits the publicly available parts of our Website, but who is not asked to provide information related to a request to use one or more of the CAP Services. Visitors can access information from the Website's publicly available areas without creating an account or otherwise submitting information about themselves. However, by using the Website, Visitors agree to accept all of the terms and conditions of this Agreement. A Visitor may not utilize a CAP Service and cannot request to access the Data.
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You agree that you will follow all of the rules, requirements and regulations set forth by CAP from time to time. Those rules, requirements and regulations are currently as set out in this Agreement. These rules, requirements and regulations will apply to any use of the Website and access to the Data and will apply to you whether you are a Guest, Visitor or Agent.
You agree and confirm that:
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9. Prohibited Activities
You will not use the Website for any purpose that is unlawful or prohibited by this Agreement.
In addition to, and without limiting, any other prohibitions set out in this Agreement, you may not do any of the following when accessing, using or interacting with the Website:
10. Relationship
You agree that by using the Website or by submitting personal information on your own or a Visitor or Guest's behalf, you and CAP are not entering into:
11. Withdrawal of access for cause
This Agreement grants no rights, only privileges and permission. You agree that CAP, in its absolute discretion, will be the sole judge of whether you have breached any provision of this Agreement and that any privileges or permission granted to you under this Agreement may be revoked, suspended or terminated by CAP at any time without notice.
12. Waiver
You acknowledge that the Internet and websites accessed by you are inherently dangerous and subject to computer, system and network failure as well as malicious human activity. While CAP will take such steps as are reasonable in the circumstances to maintain the security of this Website and the Data and your privacy and confidentiality with respect to information you provide, you agree that you use this Website completely at your own risk and that in no event shall CAP be held liable for any loss or damages, however caused, except as expressly provided in this Agreement, even if caused by the negligence or reckless behavior of CAP.
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THE COSTCO AUTO PROGRAM DOES NOT WARRANT THAT THIS WEBSITE WILL OPERATE ERROR-FREE OR THAT IT AND ITS SERVER OR SERVERS ARE OR WILL BE FREE OF COMPUTER VIRUSES, TROJAN HORSES, OR OTHER HARMFUL CONTENT, DEVICES OR PROGRAMS. THIS WEBSITE AND ITS CONTENT AND MATERIAL, AND ACCESS TO THE DATA, ARE ALL PROVIDED ON AN "AS IS, WHERE IS", AND "AS AND WHEN AVAILABLE" BASIS WITHOUT ANY REPRESENTATIONS, GUARANTEES, CONDITIONS OR WARRANTIES OF ANY KIND. TO THE FULLEST EXTENT PERMITTED BY THE LAW, THE COSTCO AUTO PROGRAM DISCLAIMS ANY AND ALL CONDITIONS AND WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING THE CONDITION OR WARRANTY OF MERCHANTABILITY AND THE CONDITION OR WARRANTY OF FITNESS FOR ANY PARTICULAR PURPOSE. THE COSTCO AUTO PROGRAM MAKES NO WARRANTY OR REPRESENTATION OF NON-INFRINGEMENT. THE COSTCO AUTO PROGRAM FURTHER MAKES NO WARRANTIES OR REPRESENTATIONS CONCERNING THE ACCURACY, RELIABILITY, COMPLETENESS, OR TIMELINESS OF THE DATA ACCESSED BY USE OF THE WEBSITE.
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THIS AGREEMENT DOES NOT EXCLUDE OR LIMIT CAP’S LIABILITY (IF ANY) FOR DEATH OR PERSONAL INJURY CAUSED BY CAP’S NEGLIGENCE, FRAUD, FRAUDULENT MISREPRESENTATION OR ANY MATTER WHICH IT WOULD BE ILLEGAL FOR CAP TO EXCLUDE OR ATTEMPT TO EXCLUDE CAP’S LIABILITY.
SOME JURISDICTIONS DO NOT ALLOW LIMITATIONS ON IMPLIED WARRANTIES OR EXCLUSION OF LIABILITY FOR CERTAIN TYPES OF DAMAGES; AS A RESULT, ONE OR MORE OF THE ABOVE LIMITATIONS OR EXCLUSIONS MAY NOT APPLY TO YOU.
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17. Events Outside our Control
CAP will not be liable or responsible for any failure to perform, or delay in performance of, any of our obligations under this Agreement that is caused by events outside our reasonable control. CAP’s performance will be deemed to be suspended for the period that any such event continues, and we will have an extension of time for performance for the duration of that period or such longer period as we may reasonably require. We will use our reasonable efforts to end the event or to find a solution by which our obligations may be performed despite the event.
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19. Evidence
Computer records stored in reasonably secure conditions by CAP with respect to the Data, the Website and your access to them will be accepted as conclusive evidence of your conduct, communications and dealings with the Data and the Website. Computer records will be deemed to be stored in reasonably secure conditions if systematically recorded on a durable and inalterable medium, including a write-protected disk, tape, CD or DVD or similar medium, or, if upon an alterable medium, upon reasonable proof that such record has not been altered.
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You agree that any breach by you of this Agreement will not be fully compensable in damages and you therefore agree that CAP shall be entitled to immediate equitable, injunctive and other similar relief against you without notice and without the necessity of proving damages or the likelihood of damages.
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CAP grants to you a non-exclusive, limited and revocable license to download and view the content available on this Website on your computer for the purposes stated in this Agreement and no other purposes.
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If you send any communications, comments, questions, suggestions, or related materials to us by any method of communication suggesting or recommending changes to the Website, any CAP Service or any product, services or materials offered through the Website or that you would like to see offered through the Website (“Feedback”) then:
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CAP may assign this Agreement to any affiliate or any third party at any time. You may not assign this Agreement or any rights or benefits offered to you by CAP. This Agreement shall remain personal between you and CAP.
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This is the entire agreement, contract and understanding between you and CAP and supersedes any prior terms and conditions, agreement or understanding between you and CAP.
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You agree that (i) CAP has no control over the content or performance of any website linked to or from this Website, (ii) CAP expresses no opinion concerning the content or performance of any such linked website, and, (iii) CAP shall not be held liable or responsible for the content or services of any such linked website. CAP provides all such links for your convenience only; they are not an endorsement or referral by CAP. You access and use those linked sites at your own risk. Those linked sites may have terms of use and privacy policies different from ours, and those terms and policies will apply to your activities on those sites.
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28. Modifications and Updates
We may from time to time add new features to the Website, remove existing features from the Website, or otherwise modify the Website, the CAP Services and any of the products, services and content made available through the Website (including their functionality, “look-and-feel”, universal resource locators and software components), all without notice to you or any liability to you.
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