FTC receives flurry of comments as dealers and others oppose new car dealership rule | Seyfarth Shaw LLP

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The Federal Trade Commission (FTC) has received dozens of submissions from dealer trade associations, other industry participants and members of Congress opposing the FTC’s proposed rules for dealers in relation to advertising and the sale of new cars as the September 12, 2022 closing of the public comment period for these rules approaches, while consumer rights groups and a group of 17 state attorneys general have offered their support to Rule.

Dealers, other industry participants and some lawmakers oppose proposed new rule

The National Automobile Dealers Association (NADA) led the charge for dealerships nationwide, filing an extensive 140-page filing letter with 23 exhibits detailing new car dealers’ opposition to the proposed new rule. In its opposition, NADA argued that the FTC violated the rule-making process and 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 sufficiently 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 dealer rights. Numerous state dealer trade associations and dealerships have filed letters supporting NADA’s arguments.

Trade associations of participants in related industries also submitted comments, either expressing their opposition to the FTC’s proposed new rule for car dealerships or arguing that the rule should be tightened. The National Association of RV Dealers, American Financial Services Association/Consumer Bankers Association, Consumer Credit Industry Associationand Service Contract Industry Council each submitted comments at the end of the public comment period. In addition to these trade groups, Representative Glenn Thomson (R-PA) and six Republicans US Senators submitted comments questioning the process by which the FTC adopted the new rule as well as the wisdom of the rule, at least as written.

Consumer protection advocates and state law enforcement voice support

The FTC’s proposed new rule for car dealerships has received equally enthusiastic support from consumer advocacy groups, state law enforcement and others. A consortium of 12 consumer protection organizations led by the National Consumer Law Center (NCLC) filed a 92-page complaint report in support of the proposed rule and argued that “[w]Although passage of the proposed rule will allow the FTC to provide much-needed relief to consumers, additional protections are needed to encourage fairness in these transactions and to allow consumers to obtain their own relief. According to the NCLC, these additional protections should include a 30-day cooling-off period for follow-up purchases and the use of a simplified, uniform, comprehensive and legally enforceable “offer price” by dealers. A separate letter filed by the 18 state attorneys general urged the FTC to move forward with the proposed new auto dealership rule and suggested enacting additional protections, including a requirement that new auto dealerships pay liens on repossessed vehicles within 21 days.

The FTC before announcement in August 2022 that it decided by a 5-0 vote to deny requests to extend the public comment period after September 12, 2022. Since the comment period expired, the FTC has made no announcement on how it intends to proceed with the new car dealership rule, except to say it will consider all of the nearly 27,000 comments it has received on the proposed rule.

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