Shouldn’t they make it HARDER for car dealers to hide problems?

Ever buy a used car or know someone that did? Do you think the dealer should have tell you about problems they know about (think – rebuilt wrecks, flood vehicles)? The FTC is weakening the rule that applies to the information that car dealers must share with you, when they sell you a used car. A little background – the FTC created the administrative rule that requires car dealers to post a window sticker on every used car that is for sale.  This sticker is commonly referred to as the Consumer’s ‘Buyer’s Guide.’  It’s the window sticker you see (or should see) on every used car with the two big boxes that say “As Is” or “Warranty.” One of the boxes must be checked.  This information is important, because it becomes part of your contract with the dealership if you buy that vehicle. If a warranty is part of the deal, the dealer must tell you what it will cover, how long it will last, and what (if anything) you have to pay to get repairs completed under the warranty.

The FTC is now considering the first major changes to be made to the Buyers Guide form in decades.  The proposed changes (which can be found HERE) have caused much hand-wringing in the advocate community, including a group of advocates who issued a press release at the end of 2012, which highlighted some of the worst aspects of the new rule. 

(Editor’s Note: For instance, the new rule proposes that the Buyer’s Guide will say “ THE DEALER WON’T PAY FOR ANY REPAIRS,” which is what is referred to in the attorney biz as ‘untrue.’  That’s because no matter what the Buyer’s Guide says, if the dealer lies to you about some kind of defect that they know about, you can actually sue them and make them pay for the repairs. Unfortunately, the instruction in the new Buyer’s Guide is misleading and could cause some buyers to shy away from trying to get a dealer to fix a car in a situation where they knew about the repairs.)

In 2008, no less that 40 State Attorneys General sent a comment to the FTC, indicating that not only should the Buyer’s Guide not be reduced; but it should go FARTHER and include actual defects that the dealer knows about.

(Editor’s Note:  The President of the National Auto Dealer’s Association told NBC news that any requirement to tell a potential buyer about a used car’s defects “does not help consumers to require dealers to disclose information about a vehicle that may not be available to a dealer or that may not be accurate.”  In other words, “since any bad information about a used car might not be 100% accurate, we’ll just ignore everything we know about it.”) 

The FTC is still accepting comments on this new proposed rule until the end of the day tomorrow.  The public comment period has been extended once, already.  So, it’s quite possible that the FTC is taking the complaints about the proposed rule to heart. If you’re interested, you can actually complain online, here.  It will only take you a few minutes, if want to tell the FTC what you think. 

It’s clear that the new rule will give dealers the ability to hide defects and malfunctions that they know about.  While there are good and honest car dealers out there, this is an incentive to those dealers who don’t care about you, or your family, or other motorists on the roadway to conceal information from you and turn a blind eye as soon as you pull a car they know is riddled with defects off the dealership lot.

To read more about the problems with the proposed changes, visit the Americans for Financial Reform website

Posted by: Amy Wells

A Word about Credit Scores…and How to Protect Yours

As you probably know, your credit score plays a critical role in whether or not you’ll be offered credit, and if so, whether or not you’ll receive favorable terms. But did you know there a number of different scoring models? And what is ‘good’ to one lender, or for a particular type of loan, may be deemed ‘not so good’ by another. FICO is the most common scoring mechanism. FICO prepares a scoring model for each of the three major nationwide credit reporting agencies: Equifax, Experian, and Trans Union. As a general rule, these scores fall in a range from about 300 to 850. A score lower than 620 is generally considered a bad score (or what the industry refers to as a ‘poor credit risk’) While the most attractive terms (interest rates) are usually offered to consumers with scores over 720.

The Consumer Financial Protection Bureau, or CFPB, is the federal agency that will begin the oversight of the major credit bureaus in early 2013. A recent CFPB study  has found that the credit scores made available to you and I may significantly differ from the score provided to potential lenders. So even for the savvy consumer who educates herself prior to applying for credit, knowing her credit score might not tell her the whole story, if the potential lender is looking at an entirely different score.  This underscores the importance of monitoring your credit reports on a regular basis. And I do not suggest subscribing to a credit monitoring service. Do not waste your money. Most credit monitoring services are owned and/or operated by one of the ‘Big Three’ credit bureaus; and notably, most require you to sign away important legal rights when you agree to their terms of service. A lose-lose for you! You can monitor your reports FREE by obtaining a copy  from each of the ‘Big Three’ (Experian, Equifax and Trans Union) once per year.

If you discover errors, you should dispute this information right away. It is estimated that one in four reports has an error serious enough to cause a credit denial. Derogatory information on your credit report can also lead to other unsavory things, such as higher interest rates, decreased credit lines, and even employment turn downs.

And with identity theft topping the chart of consumer complaints to the Federal Trade Commission, it makes sense to be proactive. In most cases, the best thing you can do for yourself is locate a consumer-advocate or a non-profit agency to help you through the maze that is created by an error on your credit report or identity theft.  There is no shortage of good advice, if you find errors on your credit report. If you even think that you may be the victim of identity theft, don’t hesitate to get help.  The IRS has a great step-by-step resource for victims of ID theft.  In addition, there is a Non-profit agency in California, dedicated to helping victims of ID theft – no matter where they live in the U.S. – called the ID Theft Resource Center.     

 Posted by: Amy Wells