The retail automotive industry is buzzing about the Federal Trade Commission’s recent proposed changes to regulations impacting federal advertising laws and prohibitions on unfair and deceptive dealership practices. The 37-page document outlines six key areas the agency would like to address:
- Full up-front pricing, costs and finance disclosures
- Sales process disclosures
- Add-on product benefits
- Bait & switch
- Surprise junk fees
- Record retention
The public commentary period closes on September 12, at which time the agency will evaluate the responses and make a final ruling. Industry associations – including NADA – requested an extension to the 60-day review period proposal, which the FTC declined.
The agency says it is responding to an increase in consumer complaints since the pandemic, noting more than 100,000 consumer complaints in each of the past three years regarding new and used motor vehicle sales. To put this in perspective. if we compare the FTC’s 100,000 complaints and their cited 17 million new vehicles sold each year, the number of complaints represents less than one percent of all new vehicle transactions. The bulk of these complaints hinge around alleged misleading dealership practices creating an environment where consumers pay for add-on products without knowledge or consent.
According to the FTC, the proposed rules would protect consumers and honest dealers by making the car-buying process clearer and more competitive. The proposal would also allow the Commission to recover money when consumers are misled or charged without their consent.
NADA challenged the proposed rules in July, stating that the agency’s justification for the rule changes is “woefully inadequate”, based on sloppy, inconsistent and unsupported data. Regardless of the pushback received, the FTC seems to be moving forward with these rules. So what can you do now?
While these regulations feel like the entire industry is being impacted by the actions of a few ‘bad actor’ dealerships, there are strategic efforts that upstanding, compliant dealerships can do now to make the best of this situation.
#1 – Get familiar with the proposal
This is not a situation where ‘ignorance is bliss.’ The FTC report clearly spells out the requested changes. Read the details and take a side-by-side review of the changes versus practices at your dealership.
#2 – Ask questions
If you do not speak your mind, you will not be heard. Submit your questions now before the comment period closes on September 12, 2022. Make sure your voice is heard and submit your questions here.
#3 – Follow the law
Follow already-established laws, such as:
- appointing a Compliance Officer,
- documenting your compliance processes,
- provide your sales and finance employees with compliance training,
- document that sales and finance compliance training occurred, and
- leverage already-outlined compliance processes, like rate deviation and declination forms.
#4 – Get assistance from experts
You are not alone and there are resources available to help. As your strategic business partner, EFG Companies has a trove of compliance training materials ease the impact of these changes, which you can view here.
Unsure about the state of compliance at your dealership? Click here to sign up for a Complimentary Compliance Assessment from EFG and download our FTC white paper.
EFG’s award-winning client engagement model and compliance training can give you the necessary tools to maintain profitable compliance. We bring a wealth of industry expertise and business acumen to drive value for our dealer clients. We’re not just your F&I provider – we are your business partner. Contact us today to learn more about our profitable solutions that can drive success for your business in 2022. #CustomerService #ValueSelling #Compliance