Does Anybody Really Know What “As Is” Means?

Dealers frequently sell used cars without any warranties. When they do, they are required to check a box next to this statement on the Buyers Guide:

AS IS – NO WARRANTY

YOU WILL PAY ALL COSTS FOR ANY REPAIRS. The dealer assumes no responsibility for any repairs regardless of any oral statements about the vehicle.

The existing “as is” statement above has been in place since the Used Motor Vehicle Trade Regulation Rule was adopted in 1984. In December 2012, the Federal Trade Commission announced that, as part of its systematic review of all of the agency’s rules and guides, it was seeking public comments on proposed changes to the Buyers Guide. One of the proposed changes involved the “as is” statement. The FTC proposed changing the statement to read:

AS IS – NO WARRANTY

THE DEALER WON’T PAY FOR ANY REPAIRS. The dealer is not responsible for any repairs, regardless of what anybody tells you.

The FTC received nearly 150 comments on its proposed changes. In response, it recently issued a supplemental notice of proposed rulemaking. In the supplemental notice, the FTC recognized that commenters “uniformly” objected to the original proposed changes to the “as is” statement. Among other reasons, the commenters found that the proposed statement “obscure[d] the meaning of ‘As Is,’ ” “potentially changed its meaning,” or “misstate[d] the law and consumers’ rights.” With regard to this last objection, the supplemental notice indicated that one commenter asserted that the proposed language runs contrary to case law, which provides that an “as is” sale does not prevent a buyer from claiming that the dealership engaged in fraud.
As a result of the objections, the FTC proposed to modify the explanation to state:

AS IS – NO WARRANTY

THE DEALER WILL NOT PAY FOR ANY REPAIRS. The dealer does not accept responsibility to make or to pay for any repairs to this vehicle after you buy it regardless of any oral statements about the vehicle. But you may have other legal rights and remedies for dealer misconduct.
The supplemental notice states that the revision is “intended to make the statement easier to read and to improve consumer understanding, but is not intended to change the statement’s meaning,” which is “to indicate that a dealer disclaims responsibility for implied warranties that might otherwise arise by operation of state law.”

The supplemental notice also listed four other formulations of the “as is” statement, suggested by Consumers for Auto Reliability and Safety, the Iowa attorney general, the North Carolina attorney general, and the East Bay Community Law Center. Among those formulations are statements advising the buyer that he or she may have legal rights if the dealer “concealed problems with the vehicle or its history” or “misrepresents the vehicle’s condition or engages in other misconduct.” The FTC invited comments on the modification that it suggested in the supplemental notice and on the alternative formulations proposed by the four commenters noted above.

So, if my math is correct, we’ve seen at least seven different “as is” statements – the one currently in effect, two different ones proposed by the FTC, and four more proposed by commenters. If the purpose of the “as is” statement is to make sure that the consumer understands the ramifications of buying a car “as is,” it would help if there was collective agreement as to what the “as is” language means.

Nevertheless, since the FTC has made clear that it intends to revise the “as is” statement merely to clarify the existing language but not to change its meaning, it is likely that courts will not abandon existing case law that was based on the old language. Therefore, dealers who sell used cars “as is” should understand that fraudulent oral representations made by a dealer’s representative to the buyer about the condition or history of a car in order to induce a sale will still be actionable.
And that’s likely true regardless of what wording the FTC adopts.

Shelley B. Fowler is a Managing Editor of CARLAW, HouseLaw, PrivacyLaw, and Spot Delivery. Shelley can be reached at 410-865-5406 or by e-mail atrfowler@hudco.com.

Copyright (c) 2014 CounselorLibrary.com LLC. All rights reserved.  This article appeared in Spot Delivery(r). Reprinted with express permission fromCounselorLibrary.com.