AGs Weigh In on FTC Proposed Rule to Protect Consumers in Motor Vehicle Transactions

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  • AGs from 16 states, the District of Columbia, and the Hawaii Office of Consumer Protection submitted comments in response to the FTC’s Notice of Proposed Rulemaking concerning its proposed Motor Vehicle Dealers Trade Regulation Rule (Proposed Rule). The AGs commended the FTC’s comprehensive review of the motor vehicle marketplace in preparing the Rule, and noted that “[h]istorically, complaints regarding motor vehicle purchases have comprised a significant portion of the consumer complaints we receive.”
  • The Proposed Rule would prohibit motor vehicle dealers from making certain misrepresentations in the course of selling, leasing, or arranging financing for motor vehicles; require accurate pricing disclosures in dealers’ advertising and sales discussions; require dealers to obtain consumers’ express, informed consent for charges; prohibit the sale of add-on products or services that do not benefit consumers; and require dealers to keep records of advertisements, customer transactions and other information for 24 months following the transaction, among other things.
  • In addition to expressing support for the Proposed Rule, the AGs suggested certain enhancements, including requiring dealers to disclose a vehicle’s offering price in writing in all circumstances (including anticipated government charges); requiring dealers to provide written disclosures and obtain written consumer consent before purchase of any optional add-on features; providing additional guidance to dealers on what constitutes a “benefit” with respect to add-ons and whether the test for making this determination is subjective or objective; and extending the required recordkeeping period to the length of the vehicle loan contract rather than 24 months. The AGs also recommended an outright ban on allowing consumers to leave a dealership with a vehicle before financing is finalized and assigned; setting a time limit for dealers to pay off any lien on a traded-in vehicle; and requiring disclosure when a starter interrupt device is installed and advance notice prior to shutoff.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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