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From Antitrust Law Daily, November 10, 2016

FTC updates used car rule, seeks comment on contact lens rule

By Jeffrey May, J.D.

The FTC is updating its "Buyers Guide" window sticker for used car sales as part of amendments to the "used car rule." The used car rule is intended to prevent oral misrepresentations and unfair omissions of material facts by used car dealers concerning warranty coverage. The rule amendments, which were announced today, will take effect January 27, 2017. Dealers will be permitted to use their remaining stock of Buyers Guides for one year after the effective date of the amended rule. The Commission also announced today that it is seeking public comment on proposed amendments to its Contact Lens Rule.

Buyers Guide. Used car dealers are required to display a Buyers Guide on used cars offered for sale. The Guide discloses whether the dealer is offering to sell a used car "as is" (without a warranty), or with a warranty. If the sale is with a warranty, the Guide discloses the terms and conditions, including the duration of coverage, the percentage of total repair costs the dealer will pay, and the vehicle systems the warranty covers. In states that do not permit "as is" used car sales, dealers must use an alternative Guide that discloses whether the sale is with a warranty or with implied warranties only.

The Commission is revising the Buyers Guide by:

  • changing the description of an "As Is" sale;
  • placing boxes on the face of the Buyers Guide that dealers can check to indicate whether a vehicle is covered by a third-party warranty and whether a service contract may be available;
  • providing a box that dealers can check to indicate that an unexpired manufacturer’s warranty applies;
  • adding air bags and catalytic converters to the Buyers Guide’s list of major defects that may occur in used vehicles;
  • adding a statement that directs consumers to obtain a vehicle history report and to check for open recalls. The statement also instructs consumers to: visit ftc.gov/usedcars for information on how to obtain a vehicle history report; and visit safercar.gov to check for open safety recalls;
  • adding a statement, in Spanish, to the English-language Buyers Guide, advising Spanish-speaking consumers to ask for the Buyers Guide in Spanish if the dealer is conducting the sale in Spanish; and
  • providing a Spanish translation of the statement that dealers may use to obtain a consumer’s acknowledgement of receipt of the Buyers Guide.

In addition to the changes to the Guide, there are related rule amendments.

Contact lens rule. Separately, the FTC has proposed amending its contact lens rule in an effort to increase compliance with the rule’s automatic prescription release requirement. When a prescriber completes a contact lens fitting, the rule requires the prescriber to automatically provide the patient with a complete copy of the contact lens prescription, and to verify or provide the prescription to authorized third parties. The Commission is considering an amendment to require contact lens prescribers to obtain a signed acknowledgement after releasing a contact lens prescription to a patient, and to maintain it for at least three years.

In an effort to conform the rule to the language of the Fairness to Contact Lens Consumers Act, the Commission has proposed to amend Section 315.5(e) of the rule, which prohibits sellers from altering a contact lens prescription, to remove the words "private label." Notwithstanding this prohibition, a seller may substitute for private label contact lenses specified on a prescription, "identical contact lenses that the same company manufactures and sells under different labels."

The language of the Act clearly permits substitution in cases where the same contact lenses are manufactured by the same company and sold under multiple labels to individual providers, according to the agency. The current language set forth in Section 315.5(e) of the rule could be read to limit such substitution to instances where private label lenses are listed on the prescription and the seller wishes to substitute brand name lenses.

The FTC rejected a suggestion that the rule be amended to impose a requirement of medical necessity in order for a prescriber to prescribe a private label lens for which no name-brand equivalent existed.

Comments on the proposed amendments to the contact lens rule must be received on or before January 30, 2017.

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