Final answer:
The FTC Used Car Rule ensures that warranty terms are stated on the Buyer's Guide, enforcing transparent sale practices and adherence to the 'caveat emptor' principle. Sellers may provide warranties or service contracts, which involve agreements to repair or replace items. False advertising claims about products are prohibited.
Step-by-step explanation:
Under the Federal Trade Commission (FTC) Used Car Rule, the terms of the warranty are critically important and must be clearly stated on the Buyer's Guide. This rule is designed to enforce accurate representation and prevent deceptive practices in the marketing and sale of used cars. By law, dealers are required to disclose whether the vehicle is being sold with a warranty, the terms of that warranty, and if service contracts are available. The rule also embodies the principle of caveat emptor, which means 'let the buyer beware,' encouraging buyers to understand the terms of sale and warranties before making a purchase.
It's essential for buyers to be aware that the FTC checks factual claims about a product's performance to some extent. Language or images that are exaggerated or ambiguous might be allowed as long as they are not outright false. Untrue "facts" are strictly prohibited in advertising and warranties. Sellers may offer warranties or the option to purchase service contracts, which typically include an agreement to repair or replace goods over a certain period.