U.S. House panel opens probe into proposed FTC car buyer rule

WASHINGTON — A U.S. House committee is investigating the Federal Trade Commission’s planned rules to require new consumer protections for car buyers that are sharply opposed by auto dealers. House Oversight Committee chair James Comer, a Republican, asked FTC Chair Lina Khan to turn over documents and answer questions by Nov. 30 on the proposed rule he said “threatens harm to consumers and small businesses by making car purchases more difficult and inhibiting innovation in the industry.”

A group of 17 Democratic lawmakers in June urged the FTC to “adopt strong regulatory protections for car buyers,” arguing “unfair and deceptive practices involving motor vehicle dealers have widespread consequences.”

A spokesperson for Khan did not immediately comment.

The FTC in June 2022 proposed banning fees and bait-and-switch advertising tactics and requiring dealers to make key disclosures to consumers, including providing a true “offering price” and making disclosures about optional add-on fees. The FTC said the rules “would save consumers time and money and help ensure a level playing field for honest dealers.”

The FTC wants to ban fees for add-on products and services that provide no consumer benefits, such as “nitrogen-filled” tires that contain no more nitrogen than normal air.

The National Automobile Dealers Association said previously the FTC proposal would “upend the sales process for tens of millions of consumers annually and thousands of small businesses.” The trade group called it “premature, legally deficient, factually inaccurate, and exceedingly confusing for consumers and dealers.”

Comer said the rule “appears to rest on thin analysis and unreliable data and suffers from several procedural flaws, including violations of FTC regulations requiring advanced notice of proposed rulemaking.”

The Alliance for Automotive Innovation, representing General Motors, Toyota Motor, Volkswagen and other major automakers, raised concerns about the FTC plan and warned that “excessive regulation and micromanagement of the sales experience can do more harm than good for both consumers and the industry.” (Reporting by David Shepardson; Editing by Chris Reese and Daniel Wallis)