Auto Finance

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The FTC has sent letters to 97 auto groups, warning them that they must advertise the total price of vehicles that consumers will be required to pay; that figure must include all mandatory fees.

“When consumers do not know the true price of a car—or any product—consumers and others suffer related consequences, including that consumers cannot comparison-shop and make informed decisions, sellers trying to deal honestly with consumers are put at a competitive disadvantage, and the market cannot operate efficiently,” Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection, wrote, in a template of the letter being sent to the auto groups.… Continue Reading

The Fifth Circuit Court of Appeals has struck down the FTC’s controversial CARS Rule, saying that the commission violated its own procedural rules by failing to issue an Advance Notice of Proposed Rulemaking (“ANPRM”) before publishing the rule.

“The FTC asserts that even if the Commission was required to publish an ANPRM, its failure to do so was ultimately harmless error,” two of the judges on the three-judge panel wrote.… Continue Reading

On October 7, the CFPB released the Fall edition of its Supervisory Highlights, “Special Edition Auto Finance,” focusing on the auto finance market. The report highlights various supervisory observations and enforcement actions taken to address issues the CFPB asserts it has seen in the auto finance sector, including deceptive marketing practices, wrongful repossessions, and failures in servicing and add-on product administration.… Continue Reading

In February 2023, the Consumer Financial Protection Bureau (“CFPB” or the “Bureau”) announced an auto finance data pilot, where it ordered nine large auto lenders to provide information about their auto lending portfolios. These lenders consisted of banks, finance companies, and captive lenders (manufacturer-owned finance companies that generally provide below-market interest rate auto financing to consumers).… Continue Reading

On August 15, 2024, the Federal Trade Commission (“FTC”) and Arizona Attorney General announced a proposed settlement with an Arizona-based vehicle dealership to resolve allegations that the dealership misrepresented prices in online advertisements, engaged in unfair and deceptive practices related to the sale of add-on products, and discriminated against Latino consumers by charging higher interest rates and more expensive add-on charges.… Continue Reading

The Fifth Circuit Court of Appeals has set oral arguments for Oct. 7 in the challenge of the Federal Trade Commission’s Combating Auto Retail Scams Rule (“CARS Rule”). The petition, filed on January 5, 2024 by the National Automobile Dealers Association and Texas Automobile Dealers Association asks the court to vacate or modify the rule and stay its enforcement pending resolution of the petition.… Continue Reading

Vroom, the former used car sales website which halted vehicle sales in January 2024, has agreed to a proposed settlement with the FTC over allegations the company misrepresented that it had examined all vehicles before listing them for sale, failed to obtain customers’ consent to shipment delays and failed to provide prompt refunds when cars were not delivered on time.… Continue Reading

A new CFPB report, “Negative Equity in Auto Lending,” contains an analysis of data relating to the financing of negative equity in vehicle trade-ins.  The report uses data collected by the CFPB in response to nine market monitoring orders issued by the CFPB in February 2023.  The orders were issued to three banks, three finance companies, and three captive lenders requesting information about their auto lending portfolios. … Continue Reading

On May 14, 2024, the Federal Trade Commission’s (“FTC”) filed its brief in opposition to Petitioners’ Brief in the legal challenge to the Combating Auto Retail Scams Rule (“CARS Rule”). The petitioners are the National Automobile Dealers Association and Texas Automobile Dealers Association (collectively, “NADA”). In its opposition, the FTC addresses NADA’s three main arguments, namely that the FTC: (1) unlawfully issued the CARS Rule without the required advance notice of proposed rulemaking (“ANPR”), (2) failed to articulate a rational connection between its factual findings and its decision to impose a far-reaching, industry-wide rule, and (3) unreasonably and arbitrarily evaluated the benefits and costs of the CARS Rule.… Continue Reading