What the FTC’s Proposals Mean on Auto Dealer Ads, F&I


FTC commissioners voted 4-1 Monday to go beyond federal advertising law and the federal ban on unfair and deceptive dealer practices.

“This proposed rule is another example of how the FTC is using the comprehensive set of tools Congress has granted us to protect Americans from deceptive or unfair practices,” the four supportive commissioners wrote, noting that This was the agency’s first dealer settlement since at least 2010.

The FTC said in its rulemaking notice that it has received more than 100,000 complaints each of the past three years regarding vehicle sales, maintenance, rentals, leasing, warranties and transactions. .

“It just sounds like [the FTC is] angry,” said Ryan Daly, who oversees 42 states as KPA’s F&I compliance district manager. bad light.”

Articulating the details could ultimately help dealers. “If there was a structured… ‘You can or can’t do this,’ it would be easier for dealers to follow,” Daly said.

According to Shannon Robertson, executive director of the Association of Finance and Insurance Professionals, an industry compliance and certification body, the proposed regulations go beyond existing federal law and provide more specificity. than the law that prohibits unfair and deceptive practices by dealers.

Robertson said good dealerships adopt practices that protect them in all scenarios and said his organization’s adherents would not be confused by the new rules for F&I presentations.

“For an AFIP-certified reseller, none of these changes are impactful or surprising if the reseller does things as we teach,” he said.

Other compliance experts and dealers saw a greater burden on dealers and consumers, with one — a former FTC regulator — noting that it appeared to upend contract law.

Among the new regulations being considered is one that requires dealers to produce an actual “offer price” for any vehicle they promote. This is actually the “out the door” price a dealership would charge to purchase the vehicle, not including government taxes and fees.

Dealers are also prohibited from misleading customers as to whether advertised terms are for a lease, include discounts not available to all, or for a vehicle that is not available.

Konrad Koncewicz, chief commercial officer of BurlingtonCars.com Auto Group in Vermont, said he supports the transparent advertising aspect of the proposal. “Rules like this make a lot of sense,” he said.

Koncewicz said his state has stricter disclosure requirements and advertising rules — but neighboring states do not.

“There are places that advertise crazy prices, maybe on a car [that] doesn’t even exist,” Koncewicz said.

Burlington Cars will try to tell customers it’s a fantasy. But only 10% of them come back and admit that his group was right. The other 90% visit the deceptive dealership and end up doing business there, he said.

Further FTC bans would target other “bait and switch” behaviors.

Any misrepresentation of “material information about or about a consumer’s finance application” and whether a transaction is final would be unlawful. The FTC would also prohibit dealerships from retaining “cash deposits or trade-in vehicles, charging fees, or initiating legal proceedings or any action if a transaction is not completed or the consumer does not wish to s ‘engage in a transaction’.

“It’s probably going to kill on-time deliveries,” said David Robertson, president of the Association of Finance and Insurance Professionals.

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