The Federal Trade Commission's used-car rule goes into effect today, requiring dealers to equip cars with window stickers telling consumers who will pay for repairs after a sale.
The rule has been criticized by consumer advocacy groups because it does not include a controversial provision that would have required car dealers to disclose all known mechanical defects in the cars.
The "buyers guide" to be displayed on each car, and to be incorporated into the sales contract, must contain information such as:
* The terms of the warranty, including its duration, the systems covered and the percentage of repair costs the dealer will pay.
* A prominent statement of whether the dealer is selling the car "as is," and if so, a warning that the consumer must pay for any repairs needed after the purchase.
* A suggestion that the shopper have the car inspected by a mechanic before buying the car.
The required stickers will give buyers "up front and in writing, the most important information they need to know in buying a used car -- who will pay for repairs after the sale," Carol T. Crawford, director of the FTC's bureau of consumer protection, said yesterday at a press conference.
"This will allow shoppers to compare warranty coverage among cars and among dealers," Crawford said.
Consumers Union filed suit in January challenging the rule for not requiring dealers to disclose known defects in the cars they sell.
The FTC had included that requirement in an earlier version of the rule adopted in 1981. Congress vetoed the rule the following year, after intense lobbying by used-car dealers. But the Supreme Court ruled the veto unconstitutional in 1983, forcing the commission to pass a new rule.
Crawford said the FTC decided not to require disclosure of known defects because such information would provide only "illusory" protection. The provision "would encourage shoppers to rely on dealers' representations of the condition of the car," she said.
A dealer who has not inspected the car may be unaware of its problems and could say there were no "known" flaws. The disclosure requirement would "focus the buyer's attention on the dealer's state of knowledge rather than on who pays for repairs after the sale," Crawford said.
Mark Silbergeld, director of the Washington office of Consumers Union, said the commission could require disclosure of known defects plus a statement that "other defects may exist."
The Consumers Union suit, filed in the U.S. Court of Appeals for the District of Columbia, charges that the FTC unlawfully revoked the defects disclosure requirement.
The FTC "totally failed to show why consumers will not derive the obvious benefit of increased information" from such a requirement, Consumers Union argues. "It is unlawful to revoke the disclosure provision on the mere statement that its benefit will not outweigh its costs."
FTC Commissioner Patricia P. Bailey dissented in last year's 3-to-1 vote on the rule. She said that without the disclosure provision, the regulation would be little more than a consumer education campaign.
The new rule will affect about 89,000 used-car dealers across the country. Consumers spend about $60 billion a year, buying more than 10.5 million used cars from dealers, the FTC said.
The rule will not cover about 6.5 million people who sell their own used cars privately.
The rule covers passenger cars, light-duty trucks and vans.
Dealers who do not display the stickers face fines of up to $10,000 per day for each violation.