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.

FTC
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.
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.
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.
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

Kia Closes Out Summer With a Bang
Its U.S. subsidiary broke multiple records in August, in part due to a surge of demand for hybrids models.
Read More →
Indiana Dealership Changes Hands
A 30-year-old Ford dealership in Indiana has a new owner and will soon be undergoing renovations to meet manufacturer requirements.
Read More →
Texas Dealership No Longer in the Family
The Ford store, a longtime cornerstone of the Houston market, is now part of one of the fastest-growing U.S. auto groups.
Read More →
Genesis Grows California Presence
The Cardinale Automotive Group opened its third Genesis rooftop in the Golden State, Genesis of San Bruno, a stand-alone dealership serving the San Francisco Bay Area.
Read More →
August Auto Sales a Mixed Bag
An early forecast shows strong business despite consumer hurdles, and hybrids are a big piece of their affordability coping strategy.
Read More →
EV Market Humming Along
July sales show steady growth as the segment stabilizes from last year’s artificial surge following pullback of federal support.
Read More →
Auto Loan Delinquency Rates Stabilize
Auto loans are a main driver of nonmortgage consumer debt, but delinquency rates stabilized in the second quarter across all credit risk tiers.
Read More →
EV Sales Recover in Q2
The EV sales roller coaster continues as numbers show improvement, but industry experts predict a year-over-year third-quarter decline and fourth-quarter jump.
Read More →
The Cheapest Hybrids to Fuel
The powertrain is increasing in popularity, in no small part due to its fuel economy. A new report lists the most efficient hybrids on the market.
Read More →
Hybrids and SUVs Gaining Ground
The most recent Kelley Blue Book Brand Watch found that only two nonluxury brands increased in shopper consideration, buoyed by their hybrid and SUV offerings.
Read More →