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FEA TURE

NADA Challenges the

FTC’s New Advertising

and F&I Rules

By ADT Staff

The National Automobile Dealers But NADA reports this research does not
Association (NADA) has challenged the contain statistically significant data found
Federal Trade Commission's (FTC’s) in quantitative research. The research
proposed rules on dealership advertising involved interviews with just 38 borrowers
and finance and insurance. who bought new or used vehicles in the Previous examples of such research by the
Washington, D.C., area. Federal Reserve Board and the FTC found
NADA claims the disclosures disclosures confused consumers agencies
are unsupported, sloppy and The FTC claims over 50 enforcement sought to help.
actions also justify the new rule. These
inconsistent in regulating actions targeted "matters involving NADA finds the rules also
the industry, while the FTC misleading motor vehicle advertising, fail to capture the entire
believes the proposals are solid, financing paperwork falsification, 'yo-yo' industry, suggesting they apply
backed by research, studies and financing, deceptive and unfair add-on only to the franchised and
fees, discrimination, and privacy and data
past enforcement actions. security issues,” according to the FTC. independent dealerships over

which the FTC has jurisdiction,
The agency's justification for the rule But only three claims actually involved
changes is "woefully inadequate," Paul voluntary protection products which not independent dealerships
Metrey, NADA senior vice president of comprise the bulk of FTC's proposed rules. regulated by the Consumer
regulatory affairs told Automotive News. Financial Protection Bureau
Regulation is meant to fill a hole in the The FTC also cited operations with other
law, but in this case, "it's things they can go law enforcement agencies that produced (CFPB). This means the FTC
after" already, he said. 246 punitive actions. But these numbers made the new rules without
are inflated, according to NADA. conducting joint rule-making
The FTC maintains their research shows
bait-and-switch tactics and junk fees in NADA will examine the costs the with the CFPB.
the industry. The FTC can target such proposed regulation would impose upon
tactics under the Truth in Lending Act and dealerships. The FTC puts this figure at The FTC maintains enforcement and
other prohibitions to unfair and deceptive $1.36 billion to $1.57 billion over a decade. research supported its proposal.
practices.
Andrew Koblenz, NADA executive vice NADA seeks to extend the public comment
But others say these concerns are president of legal and regulatory affairs, window, which opened Wednesday, July 13,
unwarranted. For instance, NADA has criticized the FTC's estimate of the to September 12. n
estimates 42 million new and used vehicles corresponding benefit to society over that
were sold to consumers in 2021, while time. The agency forecast $31.08 billion
Cox Automotive puts that number at 34.2 to $36.34 billion in gains from consumers
million. When compared to either sales needing three fewer hours to shop for a DID YOU KNOW?
tally, auto complaints add up to less than vehicle, with an hour valued at $22.20. The last day of
half a percent of all transactions. summer 2022 is
NADA has called the source of that three-
The FTC also drew upon comments from hour calculation into question. NADA Friday, September 23.
qualitative research conducted in 2017 to maintains the FTC hasn't studied the
draft the proposed rules. effectiveness of its proposed solutions.