LAW-News-FTC Rule-0524

There are more than 30 federal laws and regulations currently addressing dealership’s advertising, sales, and F&I compliance - not to mention additional state and local requirements. Dealers are increasingly being targeted by the Federal Trade Commission (FTC) and state regulators, sometimes leading to six and seven-figure settlements.

If the FTC’s Vehicle Shopping Rule, also referred to as the CARS Rule, becomes effective, it will increase scrutiny by creating several new disclosures, standardizing the vehicle’s offering price in advertisements and customers communications, and establishing new recordkeeping requirements. As a result, dealers need a renewed focus on their documents and processes to ensure a strong customer experience.

If you’re thinking that this is all talk, and you’ll never find yourself under the FTC’s microscope – just know that some of the dealers in the following cases probably thought the same.
• In November 2020, a New York franchised dealer entered into a $1.5 million settlement with the FTC where the FTC alleged the dealership failed to honor its advertised sales prices, double-charged customers for taxes and fees, and failed to disclose required credit information.
• In April 2022, an Illinois dealer group settled with the FTC and the state Attorney General for $10 million. The regulators alleged that the dealers included unwanted and undisclosed products and engaged in discriminatory lending practices by charging minorities higher interest rates and fees to finance the vehicle compared to white customers.
• A California dealer group settled with the state Attorney General for $20 million in August 2023. The California regulator alleged that the dealership falsely advertised about credit and discount programs, inflated the customer’s income to obtain financing, and deceived customers into purchasing add-on products by inflating the benefits and failing to disclose important limitations and exclusions.

The FTC’s Vehicle Shopping Rule raises the stakes for dealers to comply and provides yet another tool to put your dealership in hot water if or when it takes effect. With penalties of up to $51,744 per violation, it’s more important than ever to ensure you’re using the proper documents and working with experienced companies to reduce your risk of being targeted. LAW®, the industry leader for standard automotive F&I documents, offers both. By using LAW products you get:
• A complete set of state-specific F&I documents.
• Documents available in both print and digital formats.
• An industry-leading team of in-house and outside legal resources.
• Compliance Consultants who can work with you to manage your compliance risks.

Get yourself on the right path today by scheduling a free LAW F&I Document Review. An experienced compliance consultant will collect your forms, provide an assessment, and establish an annual review process to keep you on top of the latest regulatory and best practice updates.

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