David Bright, a senior attorney of the Alliance for Automotive Innovation, is calling on the Federal Trade Commission to rethink its proposed regulation to add documentation for physical and digital sales as a solution for bait-and-switch advertising and hidden add-ons.
"Manufacturers view their dealers favorably," Bright wrote in a letter to the FTC. "A regulation that unnecessarily burdens dealers and creates rigid processes in automotive retailing could frustrate consumers and have negative impacts on automakers through fewer sales and diminished consumer perception of their brands and the automotive industry as a whole."
FTC commissioners on on June 27 voted 4-1 in favor of proposed regulations on vehicle sales that go beyond the federal advertising law and the federal prohibition on unfair and deceptive dealership practices that ban aftermarket vehicle or F&I additions, advertising pricing incorporating lease terms and enforce customers declining in writing certain options and products, Automotive News reported. It is called the Motor Vehicle Dealers Trade Regulation Rule which is outlined here.
"The FTC received more than 100,000 complaints in each of the past three years regarding new and used motor vehicle sales, financing, service and warranties, and rentals and leasing, and complaints about motor vehicle transactions are regularly in the top 10 complaint categories tracked by the agency," the regulation document states.
Bright wrote in his letter to the FTC that its strategy for the dealership price disclosures plan was "cumbersome to the conversational nature" of sales, Automotive News reported. Bright went on to request the FTC clarify the language on the planned ban duplicative F&I products, which Bright calls "micromanagement" and would hurt the car-buying process.
Bright is not the first to speak out against the proposed regulations. At the beginning of the month, NADA released a video on its website stating the new regulations would ultimately bog down the car sales process and make it even more complicated and confusing, according to Automotive News.
While the proposed regulations are meant to put a stop to bait-and-switch advertising and unwanted F&I products buried within deals, it would mean the addition of three new documents for simple inquiries, such as on a vehicle, a vehicles F&I or monthly payments, Automotive News reported.
Dealerships would be required to provide information to consumers, and get a hand-written denial, for the cost of buying a vehicle for cash without any physical aftermarket accessories or F&I products, the story said. If a customer wishes to have financing for a vehicle and add-ons, a dealership must provide the cost without add-ons, have that declined if the buyer wishes and then is able to provide the cost with add-ons.
"First, what if a customer is driving a vehicle during a test drive and asks a question about financing?" Bright wrote. "Does the salesperson need to hand a written document to the customer while the customer is driving before answering the customer's question? Or must the salesperson refuse to discuss financing?"
Bright also asked in the letter, "What if a salesperson is explaining the many features in a vehicle's infotainment system to a family and one family member asks whether a feature could be included in the financing package? Must the salesperson decide between refusing to answer that question until after finishing the demonstration?"
Bright said the FTC should reconsider its method and timing for disclosures to ensure the process does not become "frustrating and unbeneficial to consumers and the automotive industry," Automotive News reported.
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