AFSA Supports NADA FTC Challenge
Earlier this week AFSA filed an amicus brief supporting the National Automobile Dealers Association’s (NADA) challenge to the FTC’s “Combating Auto Retail Scams Trade Regulation Rule.” The rule creates an assortment of new requirements and prohibitions regarding misrepresentations, mandated disclosures, add-on product charges, and recordkeeping for dealers. Violation of these new provisions is deemed “an unfair or deceptive act or practice.”
AFSA did significant outreach at the time the rule was proposed and finalized, and some of AFSA’s comments were adopted in the final rule. However, there are still many serious issues with the rule. As AFSA represents the interests of financial institutions that, as acknowledged in the FTC’s rulemaking analysis, finance approximately 70% of vehicle purchases nationwide, supporting the challenge to the rule is important. AFSA is very grateful to Husch Blackwell for their excellent work in writing the brief and for their support of the association. AFSA members support reasonable regulation that protects consumers and allows markets to function, and they strive to ensure compliance with the various statutes and rules that apply to them.
This rule is not a reasonable regulation. AFSA states in its brief that the FTC failed to consider the substantial costs of this rule on the auto finance industry, an industry inextricably intertwined with the sale of vehicles by dealers. This rule would increase the costs of compliance, enforcement, and litigation. Ultimately, these costs incurred by financial institutions will, in turn and of necessity, be passed on to and borne by consumers, reducing the availability of credit. The FTC did not examine these costs or address them in its cost-benefit analysis of the rule. The FTC’s failure to consider these costs makes the rule arbitrary and capricious, and the rule should be vacated.
March 28th, 2024
