Proposed FTC ‘junk fee’ rule garners nearly 1,700 comments

The Federal Trade Commission (FTC) has received 1,678 consumer responses as of Monday afternoon to its proposed rule to ban “junk fees and bait-and-switch advertising tactics,” with many consumers applauding the plan while some dealer advocacy groups are requesting more time to submit feedback.  

The FTC proposed a rule at the end of June to ban dealerships from making “deceptive” claims regarding vehicle cost, financing terms, discount availability, cost of add-on products, vehicle availability and whether a finance deal is finalized.  

The proposed rule aims to bar dealers from charging unnecessary fees for add-on products and services that provide no benefit to the consumer and prohibit dealers from adding surprise fees without the clear, written consent from the consumer, according to an FTC release. Dealers also must disclose the price of the vehicle with and without add-on products. 

Consumers and advocacy groups began commenting through the federal government’s rulemaking application that acts as a central hub for the public to submit comments on regulations for the proposed rule starting July 13, and the 60-day window to respond closes Sept. 12. 

Car-shopping process ‘not transparent’ 

A large portion of consumers who commented stated the proposed rule is long overdue and that customers need to be protected from deceptive dealer practices, with many saying the car-shopping process is not transparent, according to an Auto Finance News analysis of the comments. 

Many consumers reported difficulty finding dealership vehicle prices that matched dealer website prices, and some consumers said they were under the impression that they did not have the option to purchase a vehicle without add-ons.  

Some dealers are also in support of the proposed rule. For example, the owners of an independent auto dealership in Gainesville, Fla., voiced support of the proposed rule in a submission on the site due to “deceptive” dealership advertising and stated dealers will often not disclose full prices of add-ons until the consumer is on the lot. 

“Dealerships will add in extended service contracts — wheel or rust protection or paint protection — without telling the customer. They will also add a ‘power pack’ or a ‘bonus pack,’ which would include items such as pinstripes, wheel locks and mud flaps,” the dealership wrote in the submission. “These items will show on an addendum window sticker and may cost the customer thousands of dollars for products that should cost a couple hundred [dollars]. The dealership will refuse to take off any of these add-ons.”  

Extension requests 

Meanwhile, dealer and consumer advocacy groups have mixed opinions on the time allowed for public comment related to the proposed rule.  

Dealer groups have requested the time be lengthened: The National RV Dealers Association (RVDA), National Automobile Dealers Association (NADA), American International Automobile Dealers Association (AIADA), National Independent Automobile Dealers Association (NIADA), National Association of Minority Automobile Dealers (NAMAD), American Property Casualty Insurance Association and American Financial Services Association (AFSA) filed requests to extend the 60-day response period by a minimum of 120 days to allow the associations to gather more input from its dealer members, according to several letters from the associations to the FTC.  

Consumer groups, however, oppose an extension: The Consumer Federation of America, Americans for Financial Reform Education Fund, Center for Responsible Lending, Consumers for Auto Reliability and Safety, Consumer Reports, the National Association of Consumer Advocates, National Consumer Law Center and the U.S. Public Interest Research Group filed a joint response in opposition of all time extension requests, citing the current deadline provides enough time to submit a response. The groups under the opposition have yet to submit comments on the proposed rule but plan to by the Sept. 12 deadline, according to the group’s’ letter to the FTC.  

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