The Federal Trade Commission is asking for public comments — which also means dealers and auto lenders could submit comments — on consumer research the FTC wants to do on dealer financing.
Background information submitted as part of the FTC’s comment request is mostly oriented to dealerships, but lenders could have an interest, too, since the proposed research would also explore how well customers understand their finance contracts.
The request stresses the FTC’s recent history of enforcement actions regarding misleading dealer advertising, and the FTC’s jurisdiction over dealers in the general area of “unfair and deceptive acts or practices” by dealerships.
“Financing obtained at the dealership, whether it is provided by a third party or directly by the dealer, may provide benefits for many consumers, such as convenience, special manufacturer-sponsored programs, access to a variety of banks and financial entities, or access to credit otherwise unavailable to a buyer,” the FTC said in the request, which was announced Tuesday.
“Financing that is offered or arranged by dealers, however, can be a complicated, opaque process, and potentially involve unfair or deceptive practices,” the FTC said.
The FTC plans to interview 40 consumers who purchased a new or used vehicle at a dealership within the prior six months, who got financing at a dealership, and who kept their finance contract from the purchase. The FTC said it might interview another 40, “if the FTC deems the additional interviews likely to be helpful.”
A third-party research firm is supposed to recruit half prime-risk customers, and half customers with subprime credit, including a mix of men and women, and racial identities. The public comment period lasts 60 days, starting when the FTC request is filed with the Federal Register. Jack Ferry, a spokesman for the American Financial Services Association, said today it was too soon to comment on the FTC proposal.
