The FTC recently held the first in a series of roundtable discussions to get information from consumers on their experiences buying or leasing motor vehicles. The agency may consider new regulations for the auto financing industry based on what it learns from the series.
The hearing lasted a full day and focused on the practices auto dealers use when setting up financing for consumers, The Detroit News reports. Americans borrow more than $200 billion every year to finance car purchases and leases. Panels focused on financing failures and add-ons such as extended warranties, the paper reported. "We want to hear from everybody and then we'll sit down and decide if there are areas that need more enforcement, more consumer education or need regulation," David Vladeck, director of the Federal Trade Commission's Bureau of Consumer Protection, said during the hearing. Andrew Koblens, the National Automobile Dealers Association's vice president and general counsel, told the newspaper that new regulations for the industry are not necessary. Since the average American spends more than $517,000 over a lifetime at car dealerships, auto dealers would not want to harm consumers, he said. "Dealers have this intense desire to have long-term relationships with their customers," Koblenz said. "That is a long-term relationship that you want to nurture." Besides owning a home, buying or leasing a car is the most expensive financial transaction for many consumers, the FTC says. The agency hopes the discussions will provide insight on consumer protection issues such as the sale, financing and leasing of cars, SUVs and light trucks. While securing financing from a dealership offers convenience, special manufacturer-sponsored programs and access to credit that may not be available to customers with a negative consumer credit report
, dealer-arranged financing can sometimes involve deceptive practices, the FTC says. Until now, the FTC's power over auto dealers was limited to bringing legal action against dealers for improper conduct. However, the Dodd-Frank Wall Street Reform and Consumer Protection Act will allow the agency to write new rules as it sees fit after July 21, the bill's effective transfer date. As news reports suggest the U.S. economy is getting stronger, auto sales in the country have followed suit. Bloomberg reports that sales of automobiles in the United States may rise faster than analysts predicted, thanks in part to an improving job market offsetting the damage of higher gas prices and supply disruptions from Japan.