FTC Receives Flurry Of Comments As Dealers And Others Oppose New Car Dealer Rule

The Federal Trade Commission (FTC) received dozens of submissions from dealer trade associations, other industry participants, and members of Congress opposing the FTC’s proposed rules for dealers in connection with the advertising and sale of new cars in the run-up to the September 12, 2022 close of the public comment period for those rules, while consumer rights groups and a group of 17 state Attorneys General offered their support for the rule. 

Dealers, Other Industry Participants, and Some Lawmakers Oppose The Proposed New Rule

The National Automobile Dealers Association (NADA) led the charge for dealers nationwide, filing an extensive, 140-page letter with 23 exhibits detailing new car dealer opposition to the proposed new rule. In its opposition, NADA argued that the FTC had violated the rulemaking process and had failed to provide “adequate transparency or notice to the public” in announcing the proposed rule in June 2022. NADA also questioned whether the FTC had adequately documented the existence of “widespread misconduct” by new car dealers sufficient to justify the new rule and argued that the proposed new rule would violate the First Amendment rights of dealers. Numerous state dealer trade associations and dealers filed letters supporting NADA’s arguments.

Trade associations for participants in related industries also submitted comments, either voicing opposition to the FTC’s proposed new car dealer rule or arguing that the rule should be narrowed. The National RV Dealers Association, American Financial Services Association/Consumer Bankers Association, Consumer Credit Industry Association, and Service Contract Industry Council each submitted comments at the close of the public comment period. In addition to these trade groups, Rep. Glenn Thomson (R-PA) and six Republican U.S. senators submitted comments questioning the process by which the FTC was adopting the new rule as well as the wisdom of the rule, at least as drafted.

Consumer Protection Advocates And State Law Enforcers Voice Their Support

The FTC’s proposed new car dealer rule received equally vociferous support from consumer advocacy groups, state law enforcers, and others. A consortium of 12 consumer protection organizations led by the National Consumer Law Center (NCLC) filed a 92 page report in support of the proposed rule and argued that “[w]hile adopting the proposed rule will enable the FTC to provide much needed consumer redress, additional protections are necessary to incentivize fairness in these transactions, and to enable consumers to obtain their own relief.” According to the NCLC, these additional protections should include a 30-day cooling off period for add-on purchases and the use of a simplified, uniform, comprehensive, and legally enforceable “Offering Price” by dealers. A separate letter filed by the Attorneys General of 18 states urged the FTC to move forward with the proposed new car dealer rule and suggested the adoption of additional protections, including a requirement that new car dealers be required to pay of the liens on trade-in vehicles within 21 days.

The FTC previously announced in August 2022 that it had decided by a vote of 5-0 to decline requests to extend the public comment period past September 12, 2022. Since the expiration of the comment period, the FTC has not made any announcement as to how it intends to proceed with the new car dealer rule, except to say it will review all of the nearly 27,000 comments it received on the proposed rule.