CUNA supports the Federal Trade Commission’s effort to develop a rule addressing bad actors in the auto dealer market but believes FTCs proposal on the matter needs further clarification. The FTC’s proposal would prohibit certain misrepresentations, require consumer consent for charges, prohibit certain add-on services, and require dealers to keep advertisement records.

CUNA believes language in the proposal is “opaque and goes far beyond malevolent behavior.”

“As significant participants in the auto lending market, credit unions have an interest in ensuring consumers have access to a wide range of credit options and products,” the letter reads. “Consumer preferences should not be disregarded in favor of blanket prohibitions on valuable products.”

CUNA also notes the proposal is duplicative of several laws and regulations already in place, including the Truth in Lending Act and Regulation Z.

“Additionally, as a practical matter in many situations, dealers sell products from multiple providers. Yet, the proposal suggests requiring a dealer to offer a fixed list of products with prices,” the letter reads. “CUNA believes this may limit consumer choice by chilling innovation in this area since auto dealers will be less apt to expand their product offering. This ‘streamlining’ could in turn also reduce options available to consumers and potentially increase the cost of the set options.”

Other sections of the proposal are unclear, for example, the treatment of disclosures for cash customers versus finance customers. This confusion could lead to fewer consumer options and higher prices without any obvious consumer benefit.