FTC Releases Shopping Rule in Time for Holidays
The Federal Trade Commission (FTC) released a final rule related to vehicle shopping yesterday. AFSA and the Consumer Bankers Association (CBA) submitted a comment letter on the proposed rule in September 2022. We are pleased that a few of AFSA’s comments, mainly relating to the definition of “dealer,” were adopted in the final rule. At the same time we remain concerned that the final rule did not address many serious issues.
For example, the rule does not provide a safe harbor from Holder Rule liability for violations that vehicle finance companies cannot detect from the face of the retail installment sales contract or lease, creating unmanageable risk for vehicle finance companies. Instead, the FTC writes, “… Commission understands that dealers are often in the best position to ensure they have, in the first instance, obtained a consumer’s express, informed consent for charges, there are steps an assignee or other subsequent holder of the consumer credit contract, such as a third-party financing entity, can take to address concerns about contracts obtained without express, informed consent.”
AFSA’s letter also raised concerns that the FTC did not comply with the Administrative Procedures Act (APA) because there was insufficient support for the cost/benefit analysis, as well as a lack of consideration for how the rule would affect small businesses. It’s likely that the rule will be challenged. Lastly, the implementation period for the rule is too short. Dealers have only until July 30, 2024 to comply.
Overall, the rule will increase the time and tedium of vehicle sale and lease transactions, as well. As the National Automobile Dealers Association noted in its statement on the final rule, “This regulation is heavy-handed bureaucratic overreach and redundancy at its worst, that will needlessly lengthen the car sales process by forcing new layers of disclosures and complexity into the transaction.”
December 13th, 2023
