Insights

Many dealers across the country recently received letters from the Federal Trade Commission. The FTC sent the letters to gather information about dealers’ compliance practices with the FTC’s Rule on the Preservation of Claims and Defenses or the “Holder Rule.” In the letter, the FTC requested copies of all contracts executed by the dealership since October 2009.

The FTC appears to be engaged in basic fact-finding in the form of a nationwide survey of randomly selected dealers, looking to see if contracts routinely provide the disclosure required by the Holder Rule. And, while this FTC effort does not appear to be motivated by consumer complaints or other evidence on non-compliance with this rule, dealers are finding themselves faced with a request to provide the FTC thousands of contracts. This fact-finding mission is likely part of a larger scale review of dealer practices under the FTC’s newly created auto dealer task force designed to review auto dealer practices in general, and determine the most appropriate form of regulation.

According to the FTC, the auto dealer task force will also conduct “town meetings” across the country to help the FTC determine the issues it needs to address under its auto dealer regulatory authority.

If you have any questions, contact Tom Hudson at 410-865-5411 or by email at thudson@hudco.com or Nicole Munro at 410-865-5430 or by email at nmunro@hudco.com.