Final answer:
Federal law does not prohibit used cars from being sold 'as is'; the FTC's rules require that factual claims in advertising must be true, aligning with the principle of 'caveat emptor'.
Step-by-step explanation:
The statement that federal law prohibits a used car from being sold 'as is' is false. The Federal Trade Commission (FTC) allows for used cars to be sold 'as is,' though it does monitor factual claims about a product's performance and prohibits outright untrue facts. This is part of the overarching principle of caveat emptor, which means 'let the buyer beware.' The FTC enforces guidelines that advertisers must adhere to, ensuring that while advertising may contain certain exaggerations for effect, any presented claims that are stated as facts must be true and verifiable.