Last week, the Federal Trade Commission settled a complaint against 10 dealerships for charges of misleading customers about car prices and financing. In the era of the Consumer Federal Protection Bureau and increased scrutiny of the auto business, the FTC action could affect lenders, too.
“The most obvious is under Section 5, the FTC has the power to rescind contracts that they view as having been formed in violation of the FTC Act,” Mike Thurman, a partner at law firm Loeb & Loeb LLP, told Auto Finance News.
Essentially, loans on lenders’ books could be invalidated if regulators decide that consumers signed them based on misleading information from dealers. As such, lenders must consider how their dealer partners are advertising loans and leases, Thurman said.
None of the dealers involved in the settlement admitted guilt.