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NHADAJul 14, 20221 min read

FTC Proposes Rule to Impose New Duties and Restrictions on Dealers

Recently, the FTC (Federal Trade Commission) proposed a rule that would impose a wide range of new duties and restrictions on motor vehicle dealers. The draft rules came out this week and can be found HERE.

The Federal Trade Commission proposes banning finance and insurance coverage and physical vehicle add-ons “that provide no benefit” and requiring expanded disclosure and consent on such optional products — including a list of prices online.

It also is considering requiring dealerships to produce a true “Offering Price” for any specific vehicle they promote. It’s effectively the “out-the-door” price the dealership would charge to purchase the vehicle, not counting any government taxes and fees.

Dealerships also are prohibited from misleading customers on whether the terms they advertise online are for a lease, include rebates not available to all, or that involve a vehicle that isn’t available.

It is anticipated that this added regulatory burden on dealers would cost the industry at least $1.4 billion over the next 10 years and, of course, drive-up prices for consumers and make the car-buying process longer and more difficult. On top of that, many of the issues addressed in the proposed rule are already covered by regulations currently in effect.

The FTC has provided the public 60 days to respond to the proposed rule after it is published in the Federal Register. The National Auto Dealers Association and the National Independent Auto Dealers Association will be providing a comprehensive and detailed response to the proposal, which will defend the highly competitive and pro-consumer benefits of the optional, dealer-assisted financing model, and show that, in fact, the FTC’s proposal is likely to harm consumers.