Three weeks ago, I recorded a segment from the NIADA Convention in Las Vegas. I had just attended the Fireside Chat session with a representative from the Federal Trade Commission. After that session, I spoke with her about the knotty topic of what would constitute “express, informed consent” under the CARS Rule. She didn’t have an answer for me, of course, but she did promise to arrange a meeting with other FTC personnel who could answer my question. I was thrilled and, in the segment I recorded in Las Vegas, I promised to keep you posted. Here’s that update.
“Express, Informed Consent” Under the CARS Rule
In anticipation of a meeting, probably via Zoom, I sent the FTC representative a short list of questions:
From the FTC CARS Rule Dealers Guide: “If a dealer mentions optional add-ons, the dealer has to tell the consumer they can say no. And if discussing a monthly payment, the dealer has to tell the consumer the total payment.”
Does this mean that if a dealer mentions that a Vehicle Service Contract (“VSC”) would increase total monthly payment for the transaction by $75, the dealer must contemporaneously disclose the total financed cost for the VSC?
Continuing with the VSC example, that item and its cost would typically appear on the F&I menu, the Buyers Order, the Retail Installment Sale Contract, and the VSC enrollment form. Must the cash price/total financed cost disclosure be made on each of those documents?
Does the FTC envision an expanded “TILA box” that covers every voluntary protection product the consumer selected to satisfy this disclosure requirement?
Could the necessary disclosures be made on a properly configured F&I menu, a document already used in most retail transactions?
The Rule tells dealers what does not constitute “express, informed consent.” Does the FTC intend to explicitly state what does constitute express, informed consent?
After waiting over two weeks for a reply, I discovered I had used the wrong email address (insert Boomer joke here). When I used the correct email address, I did receive a prompt reply:
“I hope you had a nice trip back from the conference. I’ve passed along your questions to our auto experts to see if there’s any helpful public information we can point you to. Many are unfortunately out/about to be out, but they should be in touch soon. Feel free to reach back out to me if you don’t hear back within a couple of weeks.”
In other words, the offer of an actual meeting seems to have been revoked. Instead, I can look forward to someone else pointing me towards previously-published public information, otherwise called “stuff we already know.”
So that’s the update on the FTC’s promise to provide some clarity on the CARS Rule: no such clarity appears to be coming, but we’ll keep pressing the issue and will post what we hear.
Upcoming NADA and TADA v. FTC Case
One thing we do know is that the 5th Circuit Court of Appeals has scheduled oral arguments in the NADA and TADA v. FTC case concerning the legality of the CARS Rule. Those arguments will take place the week of October 7th. A decision is still possible before year-end, and almost certain before the end of the first quarter of 2025. Depending on what the 5th Circuit rules, the issue of what constitutes “express, informed consent” may become moot. A boy can always hope.