A Congressional committee plans to launch an investigation into a new rule to protect car buyers proposed by the Federal Trade Commission (FTC) on the grounds that it could be harmful to consumers and small businesses.
The rule could actually harm car buyers by “making car purchases more difficult and inhibiting innovation in the industry,” the House Oversight Committee head James Comer alleges, as reported by Reuters.
The FTC proposed the new rule in June to reduce the hidden fees and other possibly dubious add-ons dealerships use to drive the actual selling price of vehicles higher. Among the add-ons the FTC noted are nitrogen-filled tires with the same nitrogen content as Earth’s ordinary atmosphere, as well as fees that are not needed to actually buy a vehicle.
The Federal Trade Commission pointed out many purchases are rife with “tricks and traps” that “leave consumers saddled with thousands of dollars in unwanted junk charges.” The new regulations were supported by 17 Democratic members of Congress claiming “unfair and deceptive practices involving motor vehicle dealers” should be addressed for consumer protection.
The rule would require dealerships to provide details of all add-on fees, including clear indications of which fees are optional, along with an “offering price” showing the bare-bones price minus optional add-ons. The FTC says the rule would also “help ensure a level playing field for honest dealers.”
The rule would be “premature, legally deficient, factually inaccurate, and exceedingly confusing for consumers and dealers” according to the National Automobile Dealers Association. The head of the new investigating House committee, Republican congressman James Comer, asserts the new regulation would make “car purchases more difficult and [inhibit] innovation in the industry.”
Several objections to the rule include an alleged failure by the FTC to provide correct advanced notice of its regulatory plans, along with claims that the agency used inadequate or faulty information as the basis for its regulation.
GM and several other major manufacturers made their opposition known through the Alliance for Automotive Innovation, which called out “micromanagement of the sales experience.”