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NADA Urges FTC to Withdraw Proposed Sweeping New UDAP Rule Affecting Motor Vehicle Dealers 

Published September 13, 2022

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2021 NADA Board Member Michael Alford

Michael Alford

2022 NADA Chairman - North Carolina

On Monday, NADA filed its extensive and comprehensive formal comments in response to the Federal Trade Commission’s (FTC) proposed rule that would impose a wide range of unwarranted and ill-advised new duties and restrictions on motor vehicle dealers.

NADA’s comments explained that the proposed rule is based on (i) flawed assumptions, (ii) inadequate research, (iii) the lack of input from key stakeholders, (iv) no apparent coordination with federal and state agencies that impose similar mandates, (v) the absence of any consumer testing of the proposed mandates, and (vi) no attempt to conduct a meaningful analysis of the likely costs and benefits of the proposed rule to consumers and small business automobile dealers. NADA further explained that the rule violates both federal law and the FTC’s own procedures for issuing UDAP rules. Most significantly, NADA explained that the FTC’s initiative would dramatically and negatively transform and complicate the process for consumers to purchase and finance new and used cars and trucks, and similarly complicate the process of purchasing and financing voluntary protection products like extended service contracts and GAP Waiver.

Despite these unprecedented shortcomings, “the Commission has dropped onto the marketplace an unannounced NPRM that lacks any semblance of a responsible rulemaking that is the product of due diligence,” NADA’s comments explain. “It lacks critical stakeholder input, essential consumer testing, and needed coordination with other federal agencies and state governments. It asks a range of questions but then shuts off the ability of the public to answer them. It fails to support its need or properly measure its effect. It ignores requirements imposed by the Constitution, federal statutes, other federal agencies, and even the Commission’s own rules. In short, it unfortunately fails at every level.”

“We therefore urge the Commission to withdraw the NPRM. Being proactive to protect consumers is laudable, but it must be the result of an informed process. NADA encourages the Commission to work with it and other stakeholders to achieve this result.”

Dealers can find more information about the FTC’s proposed rule and NADA’s engagement on this critical issue at https://www.nada.org/nada/issues/ftc-proposed-rulemaking-auto-retail. Questions can be directed to regulatoryaffairs@nada.org.

Sincerely,

Mike Alford
NADA Chairman

Jeff Weber
Chairman, Regulatory Affairs Committee

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