Cracks in the FTC CARS Rule Armor

by: Ronnie Wendt

There are two sides to every story, and such is the case with the Federal Trade Commission's Combating Auto Retail Scams, or CARS.

The FTC says the regulation would eliminate confusion and inconvenience in the car-buying process and won't cost dealers a thing, but the automotive industry casts a different light on the regulation.

Despite the opposition and the fact that the FTC has stayed the rule while auto industry trade groups contest it in court, compliance experts say it's wise that dealers don't wait on the outcome but prepare for its enactment now.

Meanwhile, those experts are trying to prevent its enactment.

"The FTC says this will be better for the consumer," says James Ganther, an attorney and CEO of Mosaic Compliance Services. "But in four years, there has been one complaint for every 10 million retail automobile transactions. That's not a crisis. This regulation is a solution in desperate search for a problem."

Tony Wanderon, CEO of APCO Holdings LLC, shares that sentiment, finding it perplexing that regulators doubt the dealers' commitment to customer service. "The only way a dealer will survive is for their customers to come back to their dealership and buy a car," he says. "It's almost a requirement that you walk the customer through the process, provide them a great customer experience, and disclose everything properly."

The regulation also paves the way for additional litigation, some of which may be frivolous, he says.

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