New Rules Set on Disclosure in Auto Leases
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Beginning New Year’s Day, consumers thinking of leasing a car, truck or van will know in clear, specific terms what it will cost, instead of being confused by the unfathomable prose of current leases that can disguise dealer fraud. After lengthy delay, new Federal rules take effect requiring dealers to spell out basic information about the costs and other terms of leasing, allowing consumers to compare different leases or decide that they might be better off buying a vehicle. In the last five years, the proportion of vehicles under lease has doubled. Leases now cover 35 percent of the 15 million cars and trucks delivered to customers this year. The figure is even higher for luxury cars, up to 70 percent for some models. The Government action comes in response to rising dissatisfaction about the murkiness of most leases, which have not been standardized or been required to include even certain basic information, like a vehicle’s initial value. Some customers have fallen prey to dealer abuses like failing to be credited for down-payments, trade-ins or rebates. ”A lot of people felt they got ripped off,” said Jodie Z. Bernstein, director of the Bureau of Consumer Protection at the Federal Trade Commission, where the Government today introduced new consumer information on leasing, available on the World Wide Web at www.ftc.gov/ bcp/conline/pubs/alerts/lease.htm. Under the new requirements, a dealer must tell customers the total amount to be paid over the period of the lease and must itemize all charges on the lease. Monthly payments and other charges have long been disclosed but these, as well as the new information, are now required to be presented together in a large box at the top of the lease in a way that is decipherable with minimum study. Currently, lease terms can be scattered throughout the document. The new disclosure requirements, under amendments to the Consumer Leasing Act administered by the Federal Reserve Board and enforced by the trade commission, were drafted in September 1996 and refined this year to be effective Oct. 1. Implementation was delayed three months so the industry could program computers and educate sales personnel and others. Consumer groups were generally pleased by the new disclosure rules, although several complained that dealers or manufacturers still were not required to disclose a percentage rent charge, which is akin to interest. While more than a dozen states, including New York, had created their own disclosure rules for leases, they must now adopt the standard Federal format. They are free, however, to require supplemental information of their own. The new rules cover used cars as well as new ones, and other leases, for such things as furniture, so long as the term is for more than four months. Real estate is not covered. More : query.nytimes.com |