NADA, Texas Automotive Dealers Assn. challenge FTC Ruling


Why the NADA and Texas Automotive Dealers Association's Challenge Against the FTC Vehicle Shopping/CARS Rule is a Win for Consumers

Adapted from the Greater Cincinnati Automobile Dealers Association Wednesday Weekly Newsletter. 

The National Automobile Dealers Association (NADA) and the Texas Automobile Dealers Association (TADA) have recently filed a court challenge to the FTC's Vehicle Shopping (VSR) / Combatting Auto Retail Scams Trade Regulation (CARS) Rule. The rule imposes unnecessary and significant burdens on dealers, making the car shopping and buying experience more complex, time-consuming, and expensive for millions of Americans each year. This results in excessive paperwork, additional costs, and increased complexity that can make buying a car more difficult for consumers.

In response, NADA and TADA filed a motion in the U.S. Court of Appeals for the 5th Circuit to stay the July 30 rule's effective date. This move was anticipated, given the challenges the rule presents to dealers. The rule became a final rule just before the holidays, leaving dealers less than eight months to comply with the burdensome requirements outlined in the 12-page rule and the accompanying 358 pages of comments.

Even though there is no direct approach to the FTC concerning agency regulations, the FTC Act allows plaintiffs to directly request compensation from a federal appellate court instead of starting the procedure with a lower district court. NADA and TADA asked the court to cancel or modify the rule, stating that it would add extensive time, complexity, paperwork, and expenses to the car purchasing process for tens of millions of Americans.

After a court challenge, the Federal Trade Commission (FTC) issued an Order to delay the effective date of a new rule. The delay is pending the outcome of a judicial review. However, the FTC disagreed with the National Automobile Dealers Association (NADA) and the Truck Association Dealers Association (TADA) about the rule's impact. The FTC argued that the rule does not impose significant costs on the industry. Additionally, any additional fees are outweighed by the benefits for consumers.

Despite the FTC's Order, NADA and TADA remain defiant and seek expedited consideration of the Petition for Review. If that request is granted, a stay of the effective date pending expedited review should not postpone implementation of the rule by more than a few months.

Given the uncertainty regarding its ultimate fate, members should continue to familiarize themselves with the rule and its requirements. NADA continues to pursue legislative challenges, including the "FTC REDO Act" and a House Oversight Committee investigation into the FTC's proposed Vehicle Shopping Rule. As the situation develops, we will continue to share news about this necessary litigation.

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