In 2022, the Federal Trade Commission (FTC) introduced its Motor Vehicle Dealers Trade Regulation Rule. This aimed to combat deceptive dealership practices and restrict certain financial and insurance (F&I) coverages and other vehicle add-ons.
If the proposed Motor Vehicle Dealers Trade Regulation Rule becomes law, it will bring in a series of changes in the disclosure and consent process for F&I products and non-manufacturer vehicle add-ons. This bill requires more clarity in dealerships’ statements when it comes to financing, and dealerships will be compelled to provide customers with a true “offering price” for any promoted vehicle, among several other changes.
Critics of the proposal have argued that it adds extra paperwork and costs to consumers and small business dealers during the buying process. The Center for Automotive Research presented data suggesting that if the FTC’s original rule goes into effect, it would increase the vehicle purchase time by two hours.
In response to these concerns, Senators Jerry Moran and Joe Manchin launched the “FTC Redo Act,” which seeks to revamp the original FTC proposal. This new plan would make it so that regulators will need to seek out feedback from both the public and industry leaders before finalizing any rule. They must also conduct consumer testing and cost-benefit analyses prior to applying a rule. These measures are designed to hold them accountable, ensuring the laws they create aren’t redundant and align with the needs of the people.
The National Automobile Dealers Association (NADA) has been a vocal supporter of this new bill. They claim the original FTC proposal failed to complete basic regulatory safeguards. NADA is actively advocating for more members of Congress to support this bill.
This updated bill carries the potential to help build trust between customers and dealerships. With increased transparency in the rule-making process and data-driven information leading these changes, customers can feel more secure. By having more accountability and specificity in the law, it makes it much easier for dealer groups to adhere to the rules.