The Federal Trade Commission, given expanded rule-writing authority over auto dealers last year, said it will look into the extent to which dealerships deceive and exploit consumers.

The agency’s informal public roundtables, to begin April 12 in Detroit, will try to determine “what consumer-protection issues, if any, exist that could be addressed through a possible rule-making or other initiatives,” the FTC said yesterday, reported Automotive News.

The discussions will focus on possible deception in vehicle financing and leasing, including in loan terms, interest rate markups and upfront charges, and “packing” of add-ons into payment quotes and contracts, the agency said.

The FTC also will look into whether dealers discriminate against customers based on race, nationality, religion or gender, and try to exploit military personnel or their families, said the agency’s 16-page filing in the Federal Register.

Dealer-arranged financing “can be a complicated, opaque process and could potentially involve unfair or deceptive practices,” the FTC said.

Several participants

The roundtables will include regulators, industry participants and consumer advocates, the agency said. After the Detroit roundtable, two to four more will be held around the country, the agency said.

The National Automobile Dealers Association said today it has been invited to participate.

“NADA will present a strong case that dealer-assisted financing increases access to, and decreases the cost of, credit for car buyers,” said Gary Reynolds, chairman of NADA’s regulatory affairs committee.

He added: “Additionally, dealer representatives will highlight both the actions of dealers and NADA to increase financial literacy among consumers as well as our long-standing and ongoing efforts to promote regulatory compliance among franchised dealers.”

The sweeping financial-regulation legislation enacted last year authorized the FTC to use the same rule-making procedures for dealers as other federal agencies typically use.

This reduced the time needed for FTC rule-making to about a year from what often took seven years. Consumer advocates said the lengthy process has discouraged FTC rule-making.

Can't be 'more illegal'

NADA spokesman Bailey Wood said many of the practices the FTC will look at are already illegal under federal or state law.

“You can’t make them any more illegal than they already are,” he said.

New-car dealers ranked fifth and used-car dealers ranked 10th among all sectors in the number of consumer complaints to the Better Business Bureau in 2009, the most recent year for which statistics are available.

During congressional debate on the legislation last year, the Pentagon cited a number of abuses by dealers against military service members and their families. A Pentagon survey found that 72 percent of 659 counselors and attorneys on military installations had counseled service members in the past six months on deceptive practices involving auto financing.

The FTC, like state agencies, also oversees enforcement of consumer-protection laws involving dealers.

As part of last year’s legislation, the Consumer Financial Protection Bureau was created to oversee financial institutions that provide financing to car buyers. Dealers were exempted from supervision by the agency.