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FTC to Review Dealers' Treatment of Military Customers

June 30, 2011
2 min to read


WASHINGTON - The U.S. Federal Trade Commission will examine whether dealerships try to exploit military personnel and their families in the second of a series of public roundtables on dealer practices.


The roundtable will take place Aug. 2-3 in San Antonio, the FTC said in a statement on its Web site.

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Roundtable topics include "motor vehicle sales and financing issues pertaining to military consumers, fair lending and financial literacy," the statement said.


The FTC was given streamlined authority to adopt standards for dealer-assisted financing under financial reform legislation enacted last year, reported Automotive News.


The agency has said it plans to convene as many as five roundtables this year to determine "what consumer-protection issues, if any, exist that could be addressed through a possible rule-making or other initiatives."


During the congressional battle last year over whether dealerships should be overseen by the new U.S. Consumer Financial Protection Bureau, the Pentagon weighed in on behalf of military families.


Undersecretary of Defense Clifford Stanley argued unsuccessfully that dealers should fall under the new agency's oversight.

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"There are still documented cases of service members falling victim to predatory practices and prohibitively expensive products," Stanley said in a Feb. 2010 letter to the Treasury Department.


A Pentagon survey found 72 percent of 659 counselors and attorneys on military installations had counseled service members in the previous six months on deceptive auto-financing practices, the letter said.


Among these practices were falsification of loan applications, failure to pay off liens on trade-ins, and packing loans with items at inflated prices, Stanley said.


The National Automobile Dealers Association has been invited to participate at the upcoming roundtable.


"We will clearly demonstrate that optional dealer-assisted financing expands access and reduces the cost of credit for all car buyers -- including those who serve our country in uniform," NADA spokesman Bailey Wood said.

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At the first FTC roundtable in April, NADA argued that current state and federal rules already prohibit dealerships from practices being reviewed by the commission.


The dealer group said a review of customer complaints showed "no systemic concerns with dealer-assisted financing."


The new Consumer Financial Protection Bureau, which is to be up and running July 21, oversees the financial institutions that provide loans to auto consumers.


An office within the new agency was created to educate military families about financial issues and protect them from unscrupulous lenders.


The office is to be headed by Holly Petraeus, wife of Gen. David Petraeus, who was unanimously confirmed by the Senate today to head the Central Intelligence Agency.


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