As we discussed back in December, the Federal Trade Commission is in the process of updated the Used Car Rule, which helps protect consumers who are purchasing used vehicles and which hasn’t been updated since 1995. The FTC recently announced that it is extending the comment period for the proposed revisions to March 13, 2013.
The waters have receded from Hurricane Sandy, but damaged cars will likely be flooding the used car market. On behalf of the Consumer Financial Protection Bureau, Holly Petraeus outlines what consumers should do to protect themselves before they buy a used car. The full list can be found on the CFPB website, but includes looking for water or mud marks on the engine, in the glove box, and in the wheel wells; turning on the air conditioning and heater and sniff for mildew; checking wires for brittleness; and buying a vehicle history report.
The Federal Trade Commission is proposing changes to the Used Car Rule, which protects consumers by mandating that used car dealers prominently disclose whether or not the car comes with a warranty, and the provisions of that warranty. According to the FTC’s press release, the Used Car Rule has been in effect since 1985 and was last modified in 1995.
The FTC is proposing changes to the sticker mandated by the Used Car Rule, called the Buyers Guide. The proposed changes include adding a statement urging potential buyers to obtain vehicle history information (such as via CarFax), including catalytic converters and airbags to the systems included in the Buyers Guide, and including checkboxes on the back of the Buyers Guide that will enable dealers to quickly communicate the type of warranty that comes with a vehicle.
In a related action, the FTC finalized a new provision of the Used Car Rule that makes corrections to the Spanish version of the Buyers Guide.
The U.S. Environmental Protection Agency announced that Hyundai and Kia will change the fuel economy estimates for most of their 2012 and 2013 vehicles. Consumer complaints prompted and EPA audit, which discovered that there were discrepancies between their test results and the information provided by the auto manufacturers. According to an EPA press release, “The mileage on most vehicle labels will be reduced by one to two mpg, and the largest adjustment will be six mpg for the Kia Soul.” The mileage estimates were overstated on over one million vehicles in North America.
The Detroit News reported that current and former owners of affected Hyundai and Kia models will receive debit cards with amounts commensurate with the extra gas money spent due to the actual lower gas mileage of the vehicles, plus 15 percent. According to the article, “Hyundai said a typical owner of a vehicle in Florida driving 15,000 miles a year could get an $88 refund this year, in addition to future refunds for as long as they own the car.”
In the aftermath of Hurricane Sandy, used car buyers on the Eastern seaboard and beyond need to be double- and triple-check the vehicle histories of cars they may be interested in. As reported by the New York Times, car insurance companies are receiving record numbers of water damage claims. Because salt water is particularly harmful to electrical systems and air bags, many of the insured vehicles will be deemed total losses. The problem is, the cars don’t appear to be damaged. The result? Many nefarious individuals will purchase the vehicles at salvage auctions, and then try to “scrub” the titles and sell them in other states.
According to the Times article, there are more consumer protections available today than, say, following Hurricane Katrina. Insurers are now required to register vehicles deemed total losses with the National Motor Vehicle Title Information System. There are two primary ways consumers can check to see whether the vehicle they’re considering has been flood-damaged. First, http://www.vehiclehistory.gov provides data from the National Motor Vehicle Title Information System. Second, Carfax offers a free flood-checking service at http://www.carfax.com/flood.
If you’re in the market for a used car in the next year, it is worth your while to have the vehicle you’re considering checked out by a mechanic. Ask him or her to specifically look for signs of flood damage.