The Federal Trade Commission (FTC) on Wednesday finalized its 2022 Motor Vehicle Trade Regulation Rule proposal. In the final rule, the FTC exempted the RV industry, among others, and renamed the rule the Combating Auto Retail Scams (CARS) Rule.
The proposed rule, issued in July 2022, would have required massive changes to the ways RV dealers sell RVs and market their vehicles, Hudson-Cook Partner Jean Noonan said at the time.
“If the rule is adopted substantially as it has been proposed,” Noonan said in 2022, “… no dealer in the country—even those who had exemplary best practices—would be in compliance.”
Instead, after reviewing several comments on the proposed rule, the FTC narrowed the rule to apply to a “Covered Motor Vehicle” or “Vehicle,” a term excluding RVs.
“A number of industry association commenters requested that certain vehicle types, including marine vehicles, motorcycles, RVs and other recreational vehicles, be excluded from coverage,” the final rule said. “These commenters contended that the dealerships that sell such vehicles function differently from automobile dealerships and that recreational vehicles are discretionary, rather than essential, purchases. After careful consideration, the commission is excluding recreational boats and marine equipment; motorcycles; and motorhomes, recreational vehicle trailers, and slide-in campers from the definition of ‘Covered Motor Vehicle’ or ‘Vehicle.’”
Adam Crowell, a compliance attorney for KPA and the vice president of corporate development, said the exemption benefits RV dealers in numerous ways.
“For the moment, they would not have to abide by the strict formula for what the offering price is,” he said. “However, they still have to make disclosures about the price and fees related to the price. There is no requirement to keep the documentation relating to the consumer complaints, the sales scripts, the advertisements and any material changes to those advertisements.”
The exemption provides certainty, Crowell said, particularly to dealer compliance officers.
“There is no more wondering what this proposed rule in its final format will look like,” Crowell said. “Now we have certainty about what the requirements are and who they apply to. While there are going to be some necessary changes to the process, these are requirements that dealers can, in fact, be compliant with the way they are written currently.”
However, in multiple areas within the final rule, the FTC made it clear the RV industry remained subject to enforcement activity if violations similar to those set out in the final rule occurred.
“The commission underscores that, regardless of the definition of ‘Covered Motor Vehicle’ under the final rule, unfair and deceptive practices remain unlawful under the FTC Act,” the final rule said. “The commission will continue to monitor all vehicle markets to determine whether additional action is warranted to protect consumers.”
Among the reasons the RV industry was exempted from the final rule was potentially burdensome recordkeeping requirements. The FTC said two industry associations provided comment letters arguing the recordkeeping requirements would be particularly burdensome for RV dealers who are small businesses.
“In response, the commission notes that … it has determined not to finalize the rule with respect to dealers predominantly engaged in the sale, leasing or servicing of RVs, but it will continue to monitor the marketplace to determine whether modifications or revisions may be warranted in the future.”
In another final rule section, the FTC made clear its intentions to monitor dealers outside the rule’s reach.
“Moving forward, the commission will continue to monitor for unfair and deceptive practices to determine whether further action is warranted to protect consumers, through law enforcement, a future rulemaking or other measures,” the final rule said. “The commission notes that no dealer may misrepresent material terms; deceive customers about prices, add-ons, or payments; charge for products that provide no benefit; or charge consumers without express, informed consent. To the extent that dealers engage in such conduct, they are in violation of the FTC Act.”
The final rule adopted the proposed rule’s definition of “express, informed consent.” The definition is “an affirmative act communicating unambiguous assent to be charged, made after receiving and in close proximity to a clear and conspicuous disclosure, in writing, and also orally for in-person transactions” of ‘(1) What the charge is for’ and ‘(2) The amount of the charge, including, if the charge is for a product or service, all fees and costs to be charged to the consumer over the period of repayment with and without the product or service.’”
The final rule included three examples of what does not constitute “express, informed consent: (i) A signed or initialed document, by itself; (ii) Prechecked boxes; or (iii) An agreement obtained through any practice designed or manipulated with the substantial effect of subverting or impairing user autonomy, decision-making, or choice.”
Crowell said the FTC’s warnings were extremely important to RV dealers.
“RV dealers should take note of this rule and what this rule is promoting,” he said. “It is transparency about prices and transparency about the add-on products and the value of those add-on products.
“I would caution every RV dealer to be sure they are being transparent and only offering add-on products that add value and having transparent processes for those electing to receive those add-on products.”
