Comer Launches Probe into FTC’s Motor Vehicle Trade Rule

WASHINGTON—House Committee on Oversight and Accountability Chairman James Comer (R-Ky.) is today opening a probe into the Federal Trade Commission’s (FTC) proposed Motor Vehicle Trade Regulation Rule. The proposed rule would prohibit or burden automobile dealer practices in the sale, leasing, and financing of new vehicles and add-on products. In a letter to FTC Chair Lina M. Khan, Chairman Comer requests documents and communications to assist in conducting oversight of the proposed rule.

“Promulgated under the guise of protecting consumers, the proposed rule threatens harm to consumers and small businesses by making car purchases more difficult and inhibiting innovation in the industry.  The proposed rule appears to rest on thin analysis and unreliable data and suffers from several procedural flaws, including violations of FTC regulations requiring advanced notice of proposed rulemaking,” Chairman Comer wrote.

The Oversight Committee is investigating the FTC’s questionable administration of its duties to prevent unfair and harmful practices in the American marketplace. In the letter to FTC Chair Khan, Chairman Comer warns that the proposed rule places sweeping regulations on all automobile deals without evidence suggesting a pervasive problem of deception in the industry, fails to consider burdens to small businesses, and violates the FTC’s own procedures by failing to issue advanced notice of proposed rulemaking. The Committee will continue to bring accountability and transparency to ensure the FTC is not overstepping the bounds of its role in protecting the American marketplace.

“The [Small Business Administration’s] Office of Advocacy noted that the FTC lacks evidence to suggest deception is a pervasive problem in the industry, especially when less than one percent of consumers have complained about the conduct the FTC proposes to address with the rule. The Office of Advocacy raised concerns that the FTC may have violated the Regulatory Flexibility Act by failing to adequately assess the proposed rule’s costs and by failing to consider less harmful alternatives to small businesses. Finally, the Office of Advocacy noted that the proposed rule would make car purchases more cumbersome, stifle industry innovation, and sweep in non-automobile dealers,” Chairman Comer continued.

Read the letter to FTC Chair Lina Khan here.