Many are speculating whether the new cars rule will go into effect this year, or at all if a new administration that is less keen on heavy government oversight takes over.
We have spoken with many opinionated attorneys close to the issue and they are on the fence. The issue is that this rule has been in the works for over a decade and has crossed over 3 administrations before it became law in 2023.
At SecureClose we want to be proactive on behalf of our clients in case the rule does go into effect. After reviewing the text of the rule itself, along with several of the statements made by the FTC, it seems to paint the picture that all who oppose the rule are consumer adverse, or bad actors.
The American people want these regulations. They need these regulations. The only ones that don’t want them are crooked auto dealerships across the US. It’s been far too long that such dealerships have run amuck with underhanded sales practices and deception! I would urge the FTC to stand strong against . . . dealership groups or any lobbyists and get these rules passed! I know there will be stiff resistance but it’s of the utmost importance to good dealerships, transparent salespeople, and, most importantly, the average American consumer (Page 141 FTC Final Rule)
This statement draws a clear line in the sand that those in opposition of the rule are out to harm consumers. There is not much room for nuance there!
Even before the CARS Rule, the FTC felt that dealers had not been doing a good enough job policing themselves.
Certain unfair and deceptive acts or practices have persisted, despite more than a decade of enforcement and education. Accordingly, on June 23, 2022, the Commission announced a Notice of Proposed Rulemaking (“NPRM”) addressing unfair or deceptive acts or practices by motor vehicle dealers. (Federal Register on July 13, 2022)
On the contrary, many good dealers I have talked to are not in favor of the increased scrutiny and oversight. As a former state president for the AIADA as well as attending every NIADA conference over the past 20 years, I know personally that all the state and national associations strive to do what’s right. I believe John Fullo said it best, “Every NIADA member works to promote a transparent and good experience for their customers,”
Advocates working to stop the CARS rule in its current form have pointed out that the actions of a few bad apples in the industry should not lead to punishment across the industry. In fact, some believe aspects of this enforcement could harm consumers, leading to the opposite result that the FTC is striving for. By increasing oversight, there will be new more stringent requirements dealers must comply with. Adhering to these rules could increase overhead for the dealers, leading consumers to see price increases, and longer sales processes. Additionally, if dealers are unable to keep up with the regulatory demands, they could find it more difficult to obtain funding, causing decreased opportunities to consumers. The increased costs for attorneys, IT personnel, and record-keeping storage in addition to the extended sales process could eventually be too much. These increased costs could hurt dealers’ bottom line and may even force some smaller operations to close their doors.
If a BAD dealer is one who hides from oversight, truth, and transparency, then a GOOD dealer is one who uses SecureClose.
Our software is building the bridge to help dealers address these new regulations. Here’s How:
- Prohibits misrepresentations about material information. We believe many misrepresentations stem from a lack of clear, definitive explanations given to a consumer about what they are agreeing to. Our Avatars can provide detailed explanations of all pertinent points in their documents. These Avatar-guided explanations can be written by your compliance team or by Legal Professionals like our friends at Ignite Consulting Partners, allowing you to ensure that every consumer who buys a vehicle from you gets the same opportunity to understand before they agree.
- Requires dealers to clearly disclose the offering price – the actual price anyone can pay to get the car, excluding only required government charges. While each individual dealer will be required to ensure that they make this disclosure properly, SecureClose can help explain it to consumers in a consistent, compliant way. For example, a dealer could create a clear, concise one-sheet form detailing the offering price of the vehicle and allow the Avatar to explain it to the consumer, using the FTC’s own words as a script, all while being audio and video recorded.
- Makes it illegal for dealers to charge consumers for add-ons that don’t provide benefit. While the FTC has clearly defined some examples of add-ons it believes fall into this category, we suggest that dealers go the extra mile to thoroughly explain any add-on products they do offer to consumers in SecureClose. We work with many third party product and service providers to have their teams write their own Avatar explanation scripts for you to provide to your consumers!
- Requires dealers to get consumers’ express, informed consent before charging them for anything. This is an aspect where SecureClose shines! Throughout the entirety of a SecureClose signing, consumers are audio and video recorded. This captures everything that they view and click on the screen, everything the Avatar explains to them, and a webcam recording of each party. At any time before the final Finish button is clicked, consumers can choose to cancel the signing process and all documents, signatures, and video recordings are abandoned. Not only are consumers more thoroughly informed about what they are signing in our system, if at any time they would like to cancel their signing and withdraw consent to move forward with the transaction, they can!
Whether or not the rule goes into effect, or is changed in some manner, change is coming, the FTC has made that clear. So be ready and make sure all your compliance policies are in place and remember SecureClose is ready to help.
