The U.S. House Oversight Committee has launched an investigation into the Federal Trade Commission’s (FTC) proposed rules that aim to introduce new consumer protections for car buyers. The rules have faced strong opposition from auto dealers. James Comer, the chair of the House Oversight Committee, who is a Republican, has requested FTC Chair Lina Khan to provide documents and answer questions regarding the proposed rule by November 30. Comer argues that the rule could have negative consequences for consumers and small businesses, making car purchases more difficult and hindering innovation in the industry.
In June, a group of 17 Democratic lawmakers urged the FTC to implement robust regulatory protections for car buyers, citing the widespread consequences of unfair and deceptive practices by motor vehicle dealers. However, a spokesperson for Khan did not immediately comment on the matter.
The FTC’s proposed rule, introduced in June 2022, seeks to ban fees and bait-and-switch advertising tactics. It also requires dealers to disclose crucial information to consumers, such as the true “offering price” and optional add-on fees. The FTC believes that these rules will save consumers time and money while ensuring a fair playing field for honest dealers.
Furthermore, the FTC intends to prohibit fees for add-on products and services that provide no tangible benefits to consumers. For example, the agency aims to address the sale of “nitrogen-filled” tires that contain no more nitrogen than regular air.
The National Automobile Dealers Association has previously criticized the FTC’s proposal, stating that it would disrupt the sales process for millions of consumers and thousands of small businesses. The trade group considers the proposal premature, legally deficient, factually inaccurate, and confusing for both consumers and dealers.
Comer has expressed concerns about the proposed rule, stating that it lacks thorough analysis and reliable data. He also argues that the FTC has violated regulations requiring advanced notice of proposed rulemaking.
The Alliance for Automotive Innovation, a trade association representing major automakers such as General Motors, Toyota Motor, and Volkswagen, has also raised concerns about the FTC’s plan. The association warns that excessive regulation and micromanagement of the sales experience can have detrimental effects on both consumers and the industry.
The investigation by the House Oversight Committee highlights the contentious nature of the FTC’s proposed rule and the significant divide between auto dealers and consumer protection advocates. The outcome of this investigation will likely have far-reaching implications for the automotive industry and the rights of car buyers in the United States.
