Disclosure of Transaction Terms

Disclosure of Transaction Terms

Contract on Two Sides

To be sure that the consumer sees disclosures required by federal law, special provision is made for the case when the terms of the transaction are printed on both the front and back of a sheet or contract. In such a situation, both sides of the sheet must carry the warning: NOTICE: see other side for important information. Also, the page must be signed at the end of the second side.

Particular Sales and Leases

The Motor Vehicle Information and Cost Savings Act requires a dealer to disclose to the buyer various elements in the cost of an automobile. The act prohibits selling an automobile without informing the buyer that the odometer has been reset below the true mileage. A buyer who is caused actual loss by odometer fraud may recover from the seller three times the actual loss or $1,500, whichever is greater. There is a breach of this statute when the seller has knowledge that the odometer has turned at 100,000 miles but the seller then states that the mileage is 20,000 miles instead of 120,000. The Consumer Leasing Act of 1976 requires that persons leasing automobiles and other durable goods to consumers make a full disclosure to the consumer of the details of the transaction.

Although the statute imposes liability only when the seller knowingly violates the statute, it is not necessary to prove actual knowledge. For example, an experienced auto dealer cannot claim lack of knowledge that the odometer was false when that conclusion was reasonably apparent from the condition of the car.

Referral Sales

The technique of giving the buyer a price reduction for customers referred to the seller is theoretically lawful. In effect, it is merely paying the buyer a commission for the promotion of other sales. In actual practice, however, the referral sales technique is often accompanied by fraud or by exorbitant pricing. Therefore, consumer protection laws condemn referral selling in various ways. As a result, the referral system of selling has been condemned as unconscionable under the Uniform Commercial Code (UCC), and is expressly prohibited by the Uniform Consumer Credit Code (UCCC) which has been adopted by a number of states.