Auto dealer industry petitions Fifth Circuit for review of new FTC rule

The Federal Trade Commission on January 4 published in the Federal Register its final rule to rein in widespread unfair and deceptive auto dealer practices. The next day, Reuters reported that the National Automobile Dealers Association (NADA) and the Texas Automobile Dealers Association filed a petition before the Fifth Circuit Court of Appeals seeking review of the FTC rule.

Generally, the Combating Auto Retail Scams Trade Regulation Rule, or the CARS rule, bans dealer misrepresentations in the selling, leasing, and financing for vehicles; requires certain disclosures for car advertising and pricing; and requires dealers to keep certain sales records. NADA opposed the proposed regulation from the very beginning. Public interest groups generally supported a rule to remove and deter unfair, deceptive sales practices, but also recommended changes to better protect car buyers.

Also on January 4, the FTC announced that it teamed up with the State of Connecticut to take action against an auto dealer, Manchester City Nissan and its top executives, for deceiving consumers about its used-car pricing, add-on products, and inflated or misrepresented government fees. 

The CARS rule is scheduled to become effective on July 30.

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