FTC begins auto lending rules hearings in Detroit

FTC begins auto lending rules hearings in Detroit

The Federal Trade Commission (FTC) held the first of its hearings on the state of auto lending in Detroit this week as the agency considers whether to use new authority to impose additional rules.

David Vladeck, director of the FTCs Bureau of Consumer Protection, described the daylong hearing at Wayne State University Law School as a “learning, listening tour” to determine whether auto dealers that arrange vehicle financing need more regulation.

“We want to hear from everybody and then we’ll sit down and decide if there are areas that need more enforcement, more consumer education or regulation,” Vladeck said.

Under the new Finance Reform law, the FTC was given authority over auto dealer lending practices beyond bringing enforcement actions against dealers for improper conduct. This includes writing new rules impacting the automobile business.

NADA was a major presence at the hearing in Detroit, testifying that the industry is already heavily regulated when it comes to arranging vehicle financing. Andrew Koblenz, general counsel for the National Automobile Dealers Association, noted that the average new car buyer spends more than $517,000 over a lifetime at dealerships. Dealers have an intense desire to have a long-term relationship with their customers,” he said, noting that transparency in arranging financing and all other services is the key to building those relationships.

Among the topics, the FTC is investigating is what they call yo-yo financing practices, like spot deliveries. Additionally, FTC is scrutinizing the financing of add-ons, such as extended warranties, service contracts and anti-theft devices.

The FTC will hold at least two more hearings, including one in Washington and one near a military base, where it has been alleged that servicemen and women are being subjected to unfair treatment by some auto dealers.