NADA Responds to Call for More FTC Rules - Greater Cincinnati Automobile Dealers Association

NADA Responds to Call for More FTC Rules

In a letter earlier this month to Federal Trade Commission (FTC) Chairwoman Edith Ramirez, four U.S. senators — Richard Blumenthal (D-Conn.), Ed Markey (D-Mass.), Kirsten Gillibrand (D-N.Y.) and Dianne Feinstein (D-Calif.) — urged the FTC “to continue aggressively pursuing enforcement actions over … unscrupulous [auto] dealers and to additionally use its rulemaking authority to proactively curb the wide range of abusive conduct” that is “rife in the auto dealer industry.” The letter identified six practices that the FTC should address with new Unfair or Deceptive Act or Practice (UDAP) rules, ranging from engaging in “yo-yo” transactions (abusive spot deliveries) to “the packing of loans with a laundry list of add-ons.” 

In a Nov. 22 letter to Chairwoman Ramirez, NADA challenged the “erroneous and unsubstantiated assumptions” upon which the senators’ letter is based and described its call for new rules as “both unnecessary and imprudent.”  NADA’s letter explained that:

  1. rules that apply to an entire industry are only appropriate if the practices they seek to address are prevalent in the industry;
  2. any determination that a harmful practice is prevalent should be based on credible data and not anecdotes; 
  3. the FTC has repeatedly recognized the need for — and sought — credible data demonstrating that harmful practices are prevalent in the industry but has received none; and
  4. when harmful acts do occur, the FTC possesses ample authority to take enforcement action addressing them.

NADA further highlighted the extensive and ever-increasing regulatory duties with which dealers currently must comply and stated that imposing additional rules on honest small-business dealers only increases their regulatory burden without producing any corresponding benefit to consumers. NADA also met with the staffs of the senators who signed the letter to the FTC to present its concerns. At these meetings, the senate staffs were unable to identify any needed new rules. 

NADA’s letter supplements extensive oral and written comments (available here and here) that it presented to the FTC during the 2011-12 Motor Vehicle Roundtable process and more recent written comments (available here and here) that it filed with the FTC in response to the Auto Buyer Survey that it plans to conduct in the near future.

Wes Lutz

Chairman, Regulatory Affairs Committee