NADA Explains the Value of Dealer-Assisted Financing at FTC Roundtable

DETROIT, April 12, 2011 — NADA representatives highlighted the importance of dealer-assisted financing at an all-day roundtable that the Federal Trade Commission (FTC) conducted in Detroit to examine consumer protection issues related to five discrete areas of vehicle sales and leasing.

The roundtable and several others that the FTC is planning are designed to assist the agency in determining how, if at all, it should exercise the authority it will soon assume under the Dodd-Frank Wall Street Reform and Consumer Protection Act to issue rules prohibiting unfair and deceptive acts or practices (UDAP) by motor vehicle dealers under the procedures contained in the Administrative Procedures Act. (The FTC currently can only issue UDAP rules under the more robust procedures contained in the Magnusson Moss Federal Warranty Act.) NADA was represented on each of the panels by dealer, ATAE, and attorney representatives that specialize in each of the subject matter areas.

During the discussions, the NADA team – led by NADA Dealership Operations chairman and North Carolina Director Dave Westcott – made a compelling case that the problems identified by consumer group representatives on the panels are (i) not representative of the industry and therefore lack the prevalence necessary to justify the imposition of a new rule, and (ii) already may be addressed through an array of consumer remedies that exist under current federal and state law. Most importantly, the NADA representatives explained in detail the extraordinary benefits that optional dealer-assisted financing provides to millions of consumers, including how dealers’ access to multiple finance sources and their efficient pricing allows dealers to (i) routinely offer consumers very competitive rates and (ii) in many cases, secure financing for “unbanked” consumers who otherwise would not have the means to obtain the transportation necessary to secure employment.

"Even when dealer-assisted financing is not selected by consumers, its mere presence helps to create an intensely competitive market that significantly disciplines the rates that other finance sources will offer to consumers," said Andy Koblenz, NADA vice president of Legal and Regulatory Affairs.

In addition to the oral information supplied by the NADA representatives, NADA filed with the FTC preliminary written comments that summarize NADA’s arguments on these issues. NADA Regulatory Affairs will continue to monitor and respond to additional FTC activity concerning this initiative.

NADA's Regulatory Affairs Group coordinates its activities with NADA's Legislative Office on subjects of common concern, works closely with state and metro dealer associations, and regularly engages with other industry trade associations. Regulatory Affairs also prepares compliance-oriented guides, bulletins and articles and directly provides compliance advice to dealerships. For assistance, please call (703) 821-7040, fax (703) 448-5824, or email: regulatoryaffairs@nada.org.