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Let the FTC Know About Used Car Financing

Federal Trade Commission Seeks Public Input on Used Car Buying Experience


Let the FTC Know About Used Car Financing

The FTC is seeking public comment on used and new car dealer financing.

(c) FTC

How is the used car buying experience for you? The Federal Trade Commission is seeking the public's input on new and used car buying from dealerships through April 1, 2012. Don't be left out. Let your feelings be known.

The FTC explained in a news release that this part of its ongoing project to gather information on consumers' experiences in the sale, financing and leasing of motor vehicles at dealerships. Interested in submitting a comment on the topic? You have until April 1 to submit comments online.

The FTC held three roundtables around the country in 2011 exploring consumer protection issues related to the sale, financing, and leasing of the vehicles consumers most often use - cars, SUVs, and light trucks. It's from these hearings that new regulations could be developed.

Charles Harwood, deputy director for the Bureau of Consumer Protection, said at the onset of the Washington roundtable, " In response to regulatory changes made by the Dodd- Frank Act, the FTC scheduled a series of public roundtables to hear about consumer-protection issues that may crop up when vehicles are purchased or financed or released. At our first roundtable in Detroit last April we discussed consumer experiences in buying a vehicle, focusing especially on prime and subprime consumer experiences, interest rates and markups, consumer privacy in connection with payment and locator devices, spot delivery, contract add-ons, and vehicle title problems following dealer bankruptcies. Our second roundtable, in San Antonio, Texas, in August focused on the experiences of military consumers when buying and selling motor vehicles and how this process may differ from the experiences of nonmilitary consumers. We also discussed consumers' financial literacy as well as fair lending issues that may be associated with dealer-assisted financing."

Based on the press release that was sent out, it appears that the particular focus of the hearings was on financing. The FTC attempted to walk the middle of the road when it said, at first, that dealership financing "may provide benefits for many consumers, such as convenience, special manufacturer-sponsored programs, access to a variety of banks and financial entities, or access to credit otherwise unavailable to a buyer."

Then the other shoe fell. It's convenience that has long been behind the success in dealer financing. After all, most people get worn down by the sales process and are just as happy to sign the dotted line to get down with things instead of doing their homework. That may be why the feds declared, "Dealer-arranged financing, however, can be a complicated, opaque process and could potentially involve unfair or deceptive practices."

Although the public comment period will close on April 1, this will not affect the opportunity for public comments on any future motor vehicle initiatives the FTC undertakes. More information on this topicwill be posted as it becomes available.

This is an important topic that consumers should become involved in for their own good. The Ford Windstar recall is one issue that comes to mind where some used car dealers knowingly sold what they knew to be defective products.

As a reminder, the Federal Trade Commission has strict guidelines on the sale of used cars designed to protect consumers. That's one of the reasons that some used car dealers on craigslist will pose as private sellers to avoid having to follow the regulations.

Here is what the FTC says on its used car advice web page: The Federal Trade Commission's (FTC) Used Car Rule requires dealers to post a Buyers Guide in every used car they offer for sale. This includes light-duty vans, light-duty trucks, demonstrators, and program cars. Demonstrators are new cars that have not been owned, leased, or used as rentals, but have been driven by dealer staff. Program cars are low-mileage, current-model-year vehicles returned from short-term leases or rentals. Buyers Guides do not have to be posted on motorcycles and most recreational vehicles. Anyone who sells less than six cars a year doesn't have to post a Buyers Guide.

The Buyers Guide must tell you:

  1. whether the vehicle is being sold "as is" or with a warranty;
  2. what percentage of the repair costs a dealer will pay under the warranty;
  3. that spoken promises are difficult to enforce;
  4. to get all promises in writing;
  5. to keep the Buyers Guide for reference after the sale;
  6. the major mechanical and electrical systems on the car, including some of the major problems you should look out for; and
  7. to ask to have the car inspected by an independent mechanic before you buy.

Comments in paper form should be mailed or delivered to: Federal Trade Commission, Office of the Secretary, Room H-113 (Annex V), 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC requests that any comment filed in paper form near the end of the public comment period be sent by courier or overnight service, if possible, because U.S. mail in the Washington area and at the Commission is subject to delay due to heightened security precautions. Not quite sure why FedEx is less of a security threat than regular mail but best to follow FTC guidelines.

Here is some more advice from the FTC that could come in handy when filing a complaint against a dealer: "The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC's online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad.

By the way, the FTC's website provides free information on a variety of consumer topics. Like the FTC on Facebook and follow it on Twitter. Yep, the same agency that protects you against used car dealers apparently plays Farmville, too.

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