The FTC has proposed a new rule regulating motor vehicle sales/financing and is seeking public comment. The rule is intended to increase transparency in motor vehicle sales by: (i) requiring dealers make certain disclosures regarding vehicle price, add-ons, and payments; (ii) prohibiting certain misrepresentations in the sales process and considering them to be unfair deceptive, or abusive acts or practices: (iii) charging consumers for add-ons that don’t provide a “benefit” to the consumer, for example, nitrogen filled tires, or GAP insurance plans when loan-to-value ratios wouldn’t provide a benefit; (iv) sets a procedure for the dealer to present a cash price of the vehicle without add-ons to the consumer in writing and requires the consumer to expressly decline purchasing the vehicle without the add-ons if they choose any purchase any add-ons; (V) sets recordkeeping procedures for dealers.
The rule also includes an anti-waiver provision stating consumers would not be able to waive any of the requirements the rule sets forth. Finally, the rule addresses conflict with state regulation and provides that if a state law offers greater protection the proposed rule would not conflict with the state law.
This is an expansive and significant proposed rule that could potentially create compliance pitfalls for auto financing transactions.
To read the proposed rule, please visit this link.