FTC reinforces auto industry enforcement priorities

Tom Pahl of the Federal Trade Commission conducted the opening presentation of the National Policy Conference hosted this week by the National Independent Automobile Dealers Association. (Photo by Nick Zulovich)
WASHINGTON, D.C. - 

Coinciding with the regulator offering a deeper explanation of its revamped Used Car Rule, Tom Pahl of the Federal Trade Commission made the opening presentation during the National Policy Conference, hosted this week by the National Independent Automobile Dealers Association.

Pahl covered a variety of topics during his 45-minute opportunity behind the lectern at the Dupont Circle Hotel, located less than a test drive distance away from the White House and Capitol Hill. Pahl told nearly 200 dealers, service providers and other industry representatives that working with organizations such as NIADA is beneficial to helping consumers understand the intricacies of acquiring and financing a vehicle.

Pahl also recapped some of the most recent FTC actions. What might be a thorn for dealers and finance companies, Pahl noted that the regulator is trying to make civil investigative demands “more streamlined” and “more transparent of what info we’re seeking.”

Reinforcing the assessment of compliance expert Randy Henrick, , Pahl also mentioned how the FTC is continuing to watch dealer advertising closely when it comes to stores promoting financing options. Many FTC investigations are connected to “truthful statements in advertising to consumers,” according to Pahl, who back in February was appointed as acting director of the FTC’s Bureau of Consumer Protection.

While certainly busy, Pahl went on to point out that the FTC likely won’t be highly active in rule making, rather focusing on regulations already in place.

Pahl urged dealers and finance companies to leverage the guidance available on the FTC’s website as a path to making business decisions that are compliance with the regulator’s mandates. Another example is what the FTC just delivered in response to a request from the National Automobile Dealers Association.

The legal team at Hudson Cook highlighted that the FTC issued a guidance document answering certain frequently asked questions about the revised Used Car Rule and the revised Buyers Guide.

The material explained that the 2016 amendments don’t change the essential requirements of the Used Car Rule. The regulator insisted the changes include certain revisions to the Buyers Guide to give consumers more information and to make it easier for dealers to disclose manufacturer and third-party warranties. Here is a summary of what’s new:

—The revised Buyers Guide recommends that consumers get a vehicle history report before buying a used car and sends them to ftc.gov/usedcars for more information on how to get one.

—The revised Buyers Guide directs consumers that before buying a vehicle, they should visit to check for safety recalls.

—There’s a new description in the revised Buyers Guide of an “As Is” sale to clarify that “As Is” refers only to whether the vehicle is offered with a warranty from the dealer.

—The revised Buyers Guide adds boxes dealers can check to indicate whether a vehicle is covered by a third-party warranty and whether a service contract may be available.

—The revised Buyers Guide adds a box dealers can check to indicate that an unexpired manufacturer’s warranty applies.

—The new English-language version of the Buyers Guide adds a statement in Spanish advising Spanish-speaking consumers to ask for the Buyers Guide in Spanish if the dealer is conducting the sale in Spanish.

—On the back of the revised Buyers Guide, air bags and catalytic converters have been added to the list of major defects that may occur in used vehicles.

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