House Committee asks for info on Vehicle Shopping Rule

The U.S. House Oversight Committee has set a deadline of Thursday, Nov. 30, for the Federal Trade Commission to turn over documents on the proposed Motor Vehicle Trade Regulation Rule.

The Oversight Committee Chairman James Comer (R-Kentucky) sent a letter to FTC Chair Lina Khan asking for the documents on the rule on Nov. 16. Comer in his letter questioned the need for the rule that would increase costs for dealers on transactions.

“The proposed rule would prohibit or burden automobile dealer practices in the sale, leasing, and financing of new vehicles and add-on products,” Comer said. “Promulgated under the guise of protecting consumers, the proposed rule threatens harm to consumers and small businesses by making car purchases more difficult and inhibiting innovation in the industry. The proposed rule appears to rest on thin analysis and unreliable data and suffers from several procedural flaws, including violations of FTC regulations requiring advanced notice of proposed rulemaking. We seek documents and information to enable oversight of the FTC’s actions related to the proposed rule.”

During the Policy Conference in September, NIADA members voiced their opposition and asked Congress to stop the proposed rule, which would add costs, and more paperwork and extend the sales process.

The sale of a vehicle is already heavily regulated, with many required documents as part of the process. The FTC “Vehicle Shopping Rule” adds unnecessary costs, paperwork, and time to the car-buying process. The Center for Automotive Research (CAR) found that the 10-year cost of the rule to consumers would exceed $38 billion, and it would add two hours per transaction. It also contradicts current laws.

A House Appropriations Committee has proposed legislation to stop the rule. Dealers asked lawmakers to support the appropriations bill.

During the Policy Conference, Malini Mithal, the Associate Director of the Federal Trade Commission’s Division of Financial Practices, went over the agency’s proposed Vehicle Shopping Rule. Mithal said the agency is reviewing comments on the proposed rule.

“Right now we are carefully reviewing comments, including yours and we’re going to decide what to do next,” Mithal said.

The options include finalizing the rule as is or with revisions. The agency could add to it or decide not to finalize it.

Mithal said the proposal is generally aimed at “curbing bait and switch tactics” and adding changes to consumers’ deals without their consent.

“Our thinking is that these are two areas that cause a significant consumer harm and they put law-abiding dealers at a competitive disadvantage,” Mithal said.

The rule additionally aims to prohibit misrepresentations, which continue to come up.

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