Congressional Scrutiny Continues on the FTC’s Vehicle Shopping Rule
The FTC’s Vehicle Shopping Rule (VSR), issued on January 4, 2024, is an onerous, market-changing rule that would significantly increase the time, costs, and complexity of the car buying process for consumers while also imposing new recordkeeping burdens such as storing customer communications, including texts, for up to two years. All dealers should be concerned about this new rule, as it would dramatically increase the agency’s power over dealers without an informed regulatory process and would subject dealers to new $51,744 fines per violation, even for minor paperwork infractions. See dealer graphic.
The VSR is unnecessary and duplicative, as all the harms the FTC’s rule is aimed at addressing are already against the law, and the agency presently has sufficient enforcement authority to police any alleged wrongdoing. As it stands, the effective date of the VSR remains stayed by the FTC pending judicial review due to the legal petition filed by NADA and the Texas Automobile Dealers Association. While NADA fights this rule in the courts, NADA also continues to challenge the VSR in Congress. NADA’s efforts to challenge the VSR include:
- Urging Congress to probe the rule’s impact on consumers and small business dealers. FTC Chair Lina Khan recently appeared before the appropriations subcommittee that funds the agency to request a 26% budget increase for 2025. Several subcommittee members questioned Chair Khan on the VSR, to which she either avoided answering or provided irrelevant background information. See video clips of Reps. David Joyce (R-Ohio), Steny Hoyer (D-Md.), Steve Womack (R-Ark.) and Ashley Hinson (R-Iowa) bringing up issues with the VSR in their questioning of Chair Khan.
- Supporting legislation to defund the rule. NADA is again seeking inclusion of a “rider” to stop funding for the VSR in fiscal year 2025. The NADA-backed “rider” would stop the FTC from enforcing the VSR until Sept. 30, 2025, and would give Congress an opportunity to fully gauge the rule’s negative impacts on consumers and small business dealers.
- Supporting legislation to repeal the rule. NADA is urging passage of the “FTC REDO Act” (R. 7101/S. 3014), which would permanently stop the VSR and require the FTC to follow certain procedures, which it failed to originally follow, should the agency choose to “redo” their flawed rule. Dealers should urge their members of Congress to cosponsor the “FTC REDO Act” to avoid negatively impacting consumers and small business dealers. (FTC Issue Brief)
