P&A Providers & Administrators
MenuMENU
SearchSEARCH

NADA Challenges the FTC’s New Advertising and F&I Rules

The National Automobile Dealers Association has challenged the Federal Trade Commission's proposed rules on dealership advertising and finance and insurance.

July 19, 2022
NADA Challenges the FTC’s New Advertising and F&I Rules

 

Credit:

FTC

3 min to read


 

The National Automobile Dealers Association (NADA) has challenged the Federal Trade Commission's (FTC’s) proposed rules on dealership advertising and finance and insurance.

NADA claims the disclosures are unsupported, sloppy and inconsistent in regulating the industry, while the FTC believes the proposals are solid, backed by research, studies and past enforcement actions.

Ad Loading...

The agency's justification for the rule changes is "woefully inadequate," Paul Metrey, NADA senior vice president of regulatory affairs told Automotive News. Regulation is meant to fill a hole in the law, but in this case, "it's things they can go after" already, he said.

The FTC maintains their research shows bait-and-switch tactics and junk fees in the industry. The FTC can target such tactics under the Truth in Lending Act and other prohibitions to unfair and deceptive practices.

But others say these concerns are unwarranted. For instance, NADA estimates 42 million new and used vehicles were sold to consumers in 2021, while Cox Automotive puts that number at 34.2 million. When compared to either sales tally, auto complaints add up to less than half a percent of all transactions.

The FTC also drew upon comments from qualitative research conducted in 2017 to draft the proposed rules.

But NADA reports this research does not contain statistically significant data found in quantitative research. The research involved interviews with just 38 borrowers who bought new or used vehicles in the Washington, D.C., area.

Ad Loading...

The FTC claims over 50 enforcement actions also justify the new rule. These actions targeted "matters involving misleading motor vehicle advertising, financing paperwork falsification, 'yo-yo' financing, deceptive and unfair add-on fees, discrimination, and privacy and data security issues,” according to the FTC.

But only three claims actually involved voluntary protection products which comprise the bulk of FTC's proposed rules.

The FTC also cited operations with other law enforcement agencies that produced 246 punitive actions. But these numbers are inflated, according to NADA.

NADA will examine the costs the proposed regulation would impose upon dealerships. The FTC puts this figure at $1.36 billion to $1.57 billion over a decade.

Andrew Koblenz, NADA executive vice president of legal and regulatory affairs, has criticized the FTC's estimate of the corresponding benefit to society over that time. The agency forecast $31.08 billion to $36.34 billion in gains from consumers needing three fewer hours to shop for a vehicle, with an hour valued at $22.20.

Ad Loading...

NADA has called the source of that three-hour calculation into question. 

NADA maintains the FTC hasn't studied the effectiveness of its proposed solutions. Previous examples of such research by the Federal Reserve Board and the FTC found disclosures confused consumers agencies sought to help.

NADA finds the rules also fail to capture the entire industry, suggesting they apply only to the franchised and independent dealerships over which the FTC has jurisdiction, not independent dealerships regulated by the Consumer Financial Protection Bureau (CFPB). This means the FTC made the new rules without conducting joint rule-making with the CFPB.

The FTC maintains enforcement and research supported its proposal.

NADA seeks to extend the public comment window, which opened Wednesday, July 13, to Sept. 12.

 

Originally posted on Auto Dealer Today

More Industry

Orange electric vehicle charging station.
Industry•by Lauren Lawrence•October 20, 2026

Charger Network Growth Slows

Despite a projected increase in public EV chargers in 2026, charging infrastructure remains a top concern for consumers as the gap between the most and least EV-friendly places remains substantial.

Read More →
Fan of $100 bills atop a white envelope
Industry•by Hannah Mitchell•October 13, 2026

Lenders, Consumers Take on More Auto Loan Risk

September records loosened credit access the most in over a decade as buyers took advantage of the conditions to afford trading, though loan applications fell.

Read More →
Red type R Honda civic parked on road.
Industry•by Lauren Lawrence•October 13, 2026

Next-Gen Hybrids in Sight

Dealerships can expect to see revamped hybrids from Honda next year as the company rolls out a new system and model lineup.

Read More →
Ad Loading...
Dodge ram emblem on orange vehicle exterior
Industry•by Hannah Mitchell•October 6, 2026

Gem State Stores Change Hands

A larger auto group founded in the industry’s early years sold two franchises to a neighbor group that's on a growth spurt.

Read More →
Graphic of model car driving on fake road.
Industry•by Lauren Lawrence•October 6, 2026

Charging In Motion

Honda has been researching wireless in-motion charging for electric vehicles since 2025, and new technology developments have put it a step closer to a final product.

Read More →
front grill of a Ford truck with blue Ford emblem
Industry•by Lauren Lawrence•September 30, 2026

Twin Cities Stores Sell

Minnesota-based Walser Automotive Group made what it called the most significant acquisition in its history with a three-rooftop deal in Minneapolis.

Read More →
Ad Loading...
Diesel engine on a production line in a factory
Industry•by Hannah Mitchell•September 29, 2026

U.S. Auto Sales Still Below Prepandemic Levels

Mobility Global industry observers don’t expect the market to return to the higher volumes that became routine before Covid but to stay well below its potential.

Read More →
Front of red tesla car.
Industry•by Lauren Lawrence•September 22, 2026

The Powertrain Shift

Electric-vehicle owners are backpedaling, according to new data, with product availability driving many to shift back to gas-powered engines.

Read More →
White BMW SUV driving on road.
Industry•by Hannah Mitchell•September 15, 2026

Achromatic Autos

The shades that dominate the U.S. car market don’t call attention to themselves, though grayscale may have plateaued after a 30-year upswing, research shows.

Read More →
Ad Loading...
Line of eclipse SUVs in parking lot.
Industry•by Lauren Lawrence•September 15, 2026

Used-Vehicle Affordability Worsens

Listing prices in August defied seasonal trends, rising above $27,000 for the second time this year.

Read More →