A group of 17 Democratic lawmakers in the United States is urging the Federal Trade Commission (FTC) to finalize new consumer protections for car buyers, despite objections from auto dealers who claim that these rules would raise the cost of purchasing a vehicle.
In June 2022, the FTC proposed a set of regulations that would ban fees and bait-and-switch advertising tactics commonly used by dealers.
The proposed rules would also require dealers to disclose key information to consumers, such as the true “offering price” and details about optional add-on fees.
The FTC believes that these rules would save consumers both time and money and promote fair competition among honest dealers.
Senators Ed Markey, Ron Wyden, Cory Booker, Brian Schatz, Elizabeth Warren, Richard Blumenthal, and Representative Pramila Jayapal, among others, penned a letter to the FTC, calling for strong regulatory protections for car buyers.
They highlighted the widespread consequences of unfair and deceptive practices by motor vehicle dealers and emphasized the need for reforms.
The lawmakers urged the FTC to mandate that dealers provide a legally enforceable “Offering Price,” which would include all pre-installed and mandatory add-on products.
They also called for regulations that would specifically prohibit misleading representations by dealers.
One of the concerns raised by the lawmakers was the inclusion of unnecessary add-on fees, such as “nitrogen-filled” tires that offer no additional benefits compared to regular air-filled tires.
They also criticized dealers for inflating the cost of vehicles by including mandatory and price-inflated add-ons, creating confusion and uncertainty about the final price for consumers.
However, the National Automobile Dealers Association voiced opposition to the FTC proposal, stating that it would disrupt the sales process for millions of consumers and thousands of small businesses.
They criticized the proposal as premature, legally deficient, factually inaccurate, and confusing for both consumers and dealers.
The FTC estimated that the proposed rules would generate $29.7 billion in net consumer benefits over a 10-year period.
However, CAR’s analysis found that these rules would actually cost consumers $38.1 billion over the same period and lead to longer sales transactions.
The Alliance for Automotive Innovation, representing major automakers such as General Motors, Toyota Motor, and Volkswagen, also expressed concerns about the FTC plan.
They cautioned against excessive regulation and micromanagement of the sales experience, warning that it could have negative consequences for both consumers and the industry.
Earlier, six Republican senators criticized the FTC proposal, arguing that it would confuse customers, lengthen transaction times, limit consumer choice, increase paperwork, and impose burdensome recordkeeping requirements.
As the debate continues, the FTC faces pressure from both lawmakers advocating for stronger consumer protections and industry representatives expressing concerns about potential negative impacts.
The finalization of the rules will have significant implications for car buyers and dealers alike.