Overview of FTC's New Rules for Auto Dealerships:

• A few weeks ago, we discussed the Federal Trade Commission's (FTC) new regulations under Rule 5 (Section 5) regarding auto dealer marketing and sales processes.

What are Consent Decrees?

• The FTC is not only passing new rules but also changing dealership operations using consent decrees.
• The FTC investigates dealerships' advertising and business practices.
• If questionable practices are found, the FTC can file complaints or regulatory actions.

What Happens with a Consent Decree?

• Dealerships can choose to fight the action or negotiate.
• Instead of a trial or large fine, dealerships sign a consent decree, agreeing not to use specific tactics and abide by the rules.

Clarifying Vague FTC Rules:

• Consent decrees help clarify vague FTC rules. For instance, the rule saying “no misleading practices” could mean dealerships must include a vehicle's VIN in advertisements for pricing accuracy.
• Consent decrees provide specific and clear guidelines to dealerships.

Creating Precedents and Widespread Compliance:

• Once a dealership signs a consent decree, it sets a precedent for other dealerships.
• If a group of dealerships follows the same rules and others do not, the FTC can target non-compliant dealerships, labeling their actions as anti-competitive.

FTC's Strategy for Enforcement:

• The use of consent decrees expands compliance across the industry, ensuring proper advertising, pricing, and sales tactics.
• It covers everything from finance department add-ons like warranties and GAP insurance to things like nitrogen tires.

Why Consent Decrees Matter:

• The FTC uses consent decrees as leverage to ensure dealerships operate within the legal environment for proper advertising, marketing, and sales practices.