(Adds reaction, no comment from FTC, background, paragraphs 3-11)
Written by David Shepherdson
WASHINGTON (Reuters) – Two groups representing auto dealers said on Friday they have filed a legal challenge to comprehensive new consumer protection regulations the Federal Trade Commission finalized last month.
The FTC’s new rules prohibit bait-and-switch advertising strategies, prohibit the charging of additional costs that do not benefit consumers, and require dealers to make important disclosures to consumers, such as accurate price disclosures in advertising and sales communications. He said it would be mandatory.
The rule was first proposed in 2022 and is scheduled to go into effect on July 30th. It also requires dealers to keep records of certain advertisements and customer transactions.
Late Thursday, the National Automobile Dealers Association (NADA) and the Texas Automobile Dealers Association told the Fifth Circuit Court of Appeals that new rules that “comprehensively regulate the advertising, sale, and financing of automobiles by auto dealers” are “arbitrary. It is capricious (and) an abuse of discretion.”
The FTC declined to comment.
NADA previously said the FTC’s proposal would “transform the sales process for tens of millions of consumers and thousands of small businesses annually.”
The FTC announced new rules would ban junk fees, such as service contracts for electric vehicle oil changes, and are expected to save consumers more than $3.4 billion and an estimated 72 million hours a year in car shopping. He said there was.
Dealers will also be required to agree on additional fees to the vehicle price, and will also be prohibited from charging unnecessary additional fees to buyers, such as selling nitrogen-filled tires that do not contain the same amount of nitrogen as regular air.
The Automotive Innovation Alliance, which represents General Motors, Toyota, Volkswagen and other major automakers, previously expressed concern about the FTC’s plan, warning of “overregulation and micromanagement of the sales experience.”
A U.S. House of Representatives committee announced in November that it was investigating the FTC’s consumer protection rules, saying the rules “harm consumers and small businesses by making it more difficult to buy a car and stifle industry innovation.” There is a risk of giving
In June, a group of 17 Democratic members of Congress argued that “unfair and deceptive practices involving auto dealers have far-reaching effects” and urged the FTC to “ensure strong regulatory protections for car buyers. He requested that they be adopted. (Reporting by David Shepardson in Washington; Editing by Matthew Lewis)