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may not be “deceptive,” and some deceptive practices may not be unfair. The legal standards are independently applied. The FTC may also consider public policy in determining whether an act or practice is unfair, but it may not solely rely on public policy in making its determination. The FTC has also been given a streamlined process to issue new rules and regulations for auto dealer unfair and deceptive trade practices by the Dodd-Frank Act. Previously, the FTC had to conduct detailed studies and hold hearings under procedures contained in the Magnuson-Moss Warranty Act and demonstrate that the prohibited act was“prevalent”in the industry. Now, the FTC merely needs to publish proposed regulations for a comment period and then can adopt final rules or regulations after reviewing the comments without having to make the prior showing that the regulated practices are “prevalent.” One authority indicated the lead time for the FTC to enact unfair or deceptive practice regulations against auto dealers has been reduced from approximately seven years to approximately one year. In 2011, the FTC conducted a series of roundtable hearings on dealer auto finance practices and continues to investigate practices like spot deliveries, with the expectation that the FTC will use its new streamlined authority to restrict or limit dealer practices or require more transparent disclosures to consumers. However, the FTC appears to be employing the CFPB’s general practice of not writing rules or regulations but“regulating by enforcement,”which means bringing actions for practices that the FTC first deems to be unfair or deceptive by bringing an enforcement proceeding against a dealer, thereby putting other dealers on notice that the practice violates the FTC Act. Deceptive Conduct Most dealer deceptive conduct involves failure to make required disclosures (e.g., triggered terms under TILA or the CLA when a dealer advertises a payment amount), written or oral misrepresentations, or omissions of both in advertisements and in personal dealings with a consumer. The issue is whether the act or practice is likely to mislead a consumer, rather than whether it actually misleads the consumer. The FTC considers all of the facts and circumstances of a transaction in order to reach this conclusion. As you may be aware, the FTC has focused on deceptive dealer advertising in recent years, including its 2014 Operation Steer Clear and its 2015 Operation Ruse Control. The FTC has pursued numerous deceptive practice claims against auto dealers. For example, FTC regulations set forth restrictions on advertising practices it considers to be deceptive, such as “bait and switch” advertising and advertising discounts from MSRP if few, or any, sales below MSRP take place in the dealer’s geographic area. Another deceptive practice is “rebate stacking,” where multiple rebates available only to select groups (military, recent college grads, first time car buyers, etc.) are advertised together to calculate a vehicle price, even though few, if any, consumers will qualify for all of them. The FTC has brought complaints against dealers for misrepresenting the down payment in lease and financing transactions; failing to disclose fees, security deposits, etc.; selling vehicles with known defects that consumers were not able to determine (e.g., selling new vehicles with paint defects likely to cause rust, odometer rollbacks, and other concealment of conditions on used vehicles); selling vehicles that are subject to an open recall while advertising a rigorous pre-sale inspection; and payment packing.

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179 2020 MEMBERSHIP DIRECTORY & SERVICES GUIDE

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