Capito, GOP colleagues question FTC on proposed auto financing rule

U.S. Sen. Shelley Moore Capito (R-WV) and five of her Republican colleagues oppose a proposed rule from the Federal Trade Commission (FTC) that they say would fundamentally change the way that vehicles are retailed in America. 

“If implemented, this proposal would confuse customers, lengthen the transaction time to purchase a vehicle, limit consumer choice, increase paperwork, and mandate burdensome new recordkeeping requirements on small businesses,” the senators wrote in a Sept. 12 letter sent to FTC Chair Lina Khan. “More troubling, the FTC appears not to have done any consumer testing to ascertain whether its new regulatory regime would work in practice.”

Among the lawmakers who joined Sen. Capito in signing the letter were U.S. Sens. John Thune (R-SD) and Todd Young (R-IN), who requested that Khan answer several questions to help them better understand both the scope and rationale of the FTC proposed rule, “Motor Vehicle Dealers Trade Regulation Rule,” which was published in the July 13 Federal Register.

“By the FTC’s own analysis, the proposed rule would impose nearly $1.4 billion in costs on dealers,” wrote Sen. Capito and her colleagues. “At least part of these costs will be passed along to consumers in the form of higher prices, further adding to inflation, which is at its highest levels since 1982.”

Moreover, they wrote, the proposed rule includes numerous new duties and paperwork requirements along with their attendant costs, while at the same time, “the savings, especially in absence of any consumer testing, may prove illusory.”

Among several questions, Sen. Capito and the lawmakers want to know if the FTC consulted with the Federal Reserve Board, which has rule writing authority regarding automotive financing under the Truth in Lending Act, or any other agency or department with regulatory or enforcement authority over motor vehicle dealers before issuing its proposal and if not, why not.

They also asked what consultations the FTC had with the Consumer Financial Protection Bureau before issuing the proposal, among numerous other questions.