In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act authorized the Federal Trade Commission (FTC) to write regulations for auto dealers using a standard, more efficient rulemaking process. After 12 years, the FTC is finally exercising this power with a proposed rule published today that takes aim at a range of auto sales, financing, and leasing practices.
The proposed rule, which is built off of the FTC’s research and enforcement work in the auto market, names certain misrepresentations that dealers would be prohibited from making, such as misrepresentations about when a car sale is final, add-on products, and pricing. The proposal also sets out a list of disclosure requirements for dealers including a vehicle’s actual “offering price,” bans worthless add-on products, and requires dealers to keep records of its marketing materials and consumer transactions. The FTC also asks 49 pointed questions about its approach to curbing unlawful dealer practices, suggesting it would consider stronger protections if the public so urges.
Determining the finality of a car sale is important to prevent yo-yo financing, a practice where dealers will let buyers take a vehicle home, believing the transaction is complete, only to call them back by claiming “the financing fell through” and having them sign new, often less favorable terms. This is the subject of a petition for rulemaking that National Association of Consumer Advocates joined by Consumer Federation of America and other consumer groups submitted to the FTC in April.
Currently, the proposed rule is not the FTC’s final word on auto dealer practices yet. For the next 60 days until September 12, 2022, the public has the opportunity to submit comments to the FTC to inform the final regulations. Car buyers and advocates who want to help clean up the auto market should make their voices heard. Sharing real-life examples of their experiences with crooked dealer practices is the best and easiest way to get involved. If you have ever had a bad experience buying a car, share your story with the FTC today.