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Dan Bennett, Vice President of Government Relations Sep 1, 2022 11 min read

NADA LETTER CAMPAIGN TO COUNTER ANTI-DEALER BIAS NEEDS YOU

WE NEED YOUR VOICE!  

THE FTC HAS PROPOSED RULES TO IMPOSE ADDITIONAL BURDENSOME & COSTLY REGULATIONS ON DEALER ADVERTISING, SALE, AND FINANCE PRACTICES. 

FTC COMMENT PERIOD ENDS SEPTEMBER 12, 2022 

On June 23, 2022, the Federal Trade Commission (FTC) proposed a new rulemaking that, if implemented as written, would alter drastically dealer advertising, sale, and finance practices.

NADA & NHADA are seeking your help to counter this proposed rule.

The deadline for submitting comments is September 12, 2022.

We need your immediate help to show the FTC what we already know

The retail automotive market is efficient, transparent, evolving, and not systemically flawed. We are meeting the individual needs of the overwhelming majority of our customers.

The FTC’s comment deadline is September 12, 2022. The FTC denied NADA’s request for an extension of the public comment period for the proposed new rules. Thus, time is of the essence.

We need your help to balance the public record at the FTC. We are seeking comments from dealership employees and customers. The comments can be digital or handwritten. 

Dealer employee comments: We urge dealers to launch a letter-writing campaign for your employees ASAP.
Attachment 1A shows how to file digital or written comments. The goal is to document the dealership’s commitment to customer satisfaction and warn the FTC that the new rules will confuse customers and lengthen the sales process.
Attachment 1B provides key messages for impactful letters.

Customer Letters: You see satisfied customers in your service lanes and showrooms every day. Those very same satisfied customers, if asked at dealerships, could weigh in with the FTC and provide a more balanced public record.
Attachment 2A will help your employees raise the idea of sending comments to the FTC with customers.
Attachment 2B provides some examples of customer letters.

We include the below FTC background details to provide context as to the NADA “ask” in its recently unveiled letter-writing campaign, based on an email from NADA chairman Mike Alford to all NADA member dealers on Friday, August 26, entitled, Urgent Need to File Grassroots Comments with the FTC Before September 12, 2022.

In the proposed rulemaking, (quoting from the FTC materials) the FTC is seeking comment on proposed measures that would:

  • Ban bait-and-switch claims: The proposal would prohibit dealers from making a number of deceptive advertising claims to lure in prospective car buyers. This deal deception can include the cost of a vehicle or the terms of financing, the cost of any add-on products or services, whether financing terms are for a lease, the availability of any discounts or rebates, the actual availability of the vehicles being advertised, and whether a financing deal has been finalized, among other areas. Once in the door or on the hook, consumers face the fallout of false promises that don't pan out.
  • Ban fraudulent junk fees: The proposal would prohibit dealers from charging consumers junk fees for fraudulent add-on products and services that provide no benefit to the consumer (including “nitrogen-filled” tires that contain no more nitrogen than normal air).
  • Ban surprise junk fees: The proposal would prohibit dealers from charging consumers for an add-on without their clear, written consent and would require dealers to inform consumers about the price of the car without any optional add-ons.
  • Require full upfront disclosure of costs and conditions: The proposal would require dealers to make key disclosures to consumers, including providing a true “offering price” for a vehicle that would be the full price a consumer would pay, excluding only taxes and government fees. It would also require dealers to make disclosures about optional add-on fees, including their price and the fact that they are not required as a condition of purchasing or leasing the vehicle, along with disclosures to consumers with key information about financing terms.

The proposed rule would prohibit motor vehicle dealers from making certain misrepresentations in the course of selling, leasing, or arranging financing for motor vehicles; require accurate pricing disclosures in dealers' advertising and sales discussions; require dealers to obtain consumers' express, informed consent for charges; prohibit the sale of any add-on product or service that confers no benefit to the consumer, and require dealers to keep records of advertisements and customer transactions. The full proposed rulemaking is available here.

The FTC press release regarding this proposed rulemaking can be found here.

The FTC issued the proposed rule on a 4-1 vote, which means one of the two Republicans on the five-member commission voted to approve it. The majority’s joint statement can be found here. The dissenting statement can be found here.

The FTC rulemaking notice includes a preliminary regulatory analysis estimating that the net economic benefit of the rule would be more than $29 billion over ten years. After the Commission reviews the comments received, it will decide whether to proceed with issuance of a final rule.

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