The past few years for dealers have been tumultuous and lacked certainty. From a pandemic to global supply chain constraints, to non-existing inventory, dealers have had to pivot, adapt and become more innovative. Now on the heel of all these uncertainties, manufacturers are increasingly adopting a tone that makes new franchise dealers feel even more uncertain about their future roles. And if this isn’t worrisome enough, the Federal Trade Commission proposed a sweeping new UDAP rule (unfair or deceptive acts or practices) that would impose a wide range of unwarranted new duties and restrictions on dealers. Keep in mind that this newly proposed UDAP rule is in addition to the Safeguards rule that is currently in place and all dealers nationwide must comply with it by Dec. 9, 2022.

This article is not meant to scare you or be doom and gloom, I will leave that to the attorneys; however, this article is intended to make you aware of the challenges that we must be prepared to fight as a strong collective group through WVADA.

Let’s start with the manufacturers and their incessant attempts of circumventing their dealer “partners.” On June 10, 2022, our new franchise law, H.B. 4560, became effective. WVADA has sent a letter to every manufacturer that does business in WV regarding reservation sales, subscriptions, and direct financing. We want to make sure every manufacturer is on notice and observing WV’s new franchise law. In addition, WVADA has sent letters to Ford, Volkswagen, and Subaru this month, regarding the new COVP Name Match Policy, the recent announcement of the Scout new line make, and Subaru’s Love Promise Pricing Pledge. Also, on behalf of our Lincoln dealers, WVADA filed a lawsuit against Ford Motor Company last week due to the 2020 and 2022 Lincoln Commitment Programs.

The WVADA Board voted unanimously to fund the Lincoln Suit. Unfortunately, this suit may be one of many that WVADA chooses to support and fund. This is an absolutely crucial time for dealers to support WVADA and the legal defense fund! There is no doubt that we are stronger as a unified collective body. I will keep everyone updated as this suit progresses.

Second, the FTC’s safeguards rule is in effect and dealers MUST comply with this federal requirement by December 9 of this year. This rule creates significant technical and administrative compliance requirements for dealers and others such as internal penetration testing, vulnerability assessments, data encryption, security awareness training, and the performance of written risk assessments. WVADA has and will continue to host webinars for dealers and their staff to assist with complying with this rule.

Apparently, the implementation of the Safeguards rule was not enough for the FTC and now they are at it again with a new UDAP rule. This proposed rule includes a prohibition on add-on charges that do not provide value to the customer, new record retention requirements for advertisements, training materials and marketing, and specific disclosure requirements for a vehicle’s “offering price” and optional add-on products. However, the FTC fails to provide sufficient support to justify its sweeping set of proposed duties and restrictions.

“NADA is mounting a comprehensive and detailed response to the proposal, which will defend the highly competitive and pro-consumer benefits of the optional, dealer-assisted financing model, and show that, in fact, the FTC’s proposal is likely to harm consumers,” said Mike Alford, President of NADA.
The FTC has provided the public 60 days to respond to the proposed rule after it is published in the Federal Register. NADA has requested an extension of time to file and submit an in-depth response to the FTC’s proposal that will further educate the FTC on the array of consumer benefits provided by dealers and explain how the many flaws in the FTC’s proposed rule will threaten those benefits.

Again, this article is not meant to scare or cast a gloom over our industry. Rather, I hope this article educates and inspires you to continue to be innovative and offer consumers second to none experiences. We must demonstrate to the OEMs and the FTC the important role that franchise dealers play. It is extremely important for you to be or continue to be involved with WVADA and NADA. Your franchise is under attack on all fronts, franchise dealers must continue to show their value while creating a unified front through our strong Association. WVADA vows to protect your investments and combat future uncertainties, but we must do it together.

It is a privilege serving as your President, and as always, do not hesitate to contact me if I can be of any assistance.

Sincerely,
Jared