The Honorable Lina M. Kahn, Chair, Federal Trade Commission (January 25, 2024)

Summary

A January 25, 2024 letter from the House Committee on Small Business to the Chair of the Federal Trade Commission; the signature blocks name Roger Williams, Maria Salazar, Mark Alford and Aaron Bean. The letter states that the Committee writes to inquire about the FTC's recent rule regarding sales practices in motor vehicle sales, and that it appears the FTC may not have properly considered small entities during the rulemaking process. It requests information no later than February 8, 2024, including how the FTC determines whether something is beneficial, the FTC's expected cost for a small entity to comply with the rule, and the data the FTC received to justify its position that these scams are common.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Full text

                                               January 25, 2024

The Honorable Lina M. Kahn
Chair
Federal Trade Commission
600 Pennsylvania Ave. NW
Washington, D.C. 20580

Dear Chair Khan:

        The House Committee on Small Business (Committee) writes to inquire about the
Federal Trade Commission’s (FTC) recent rule regarding sales practices in motor vehicle sales.
This rule would create additional record keeping and disclosure requirements for automobile
dealerships, increasing the regulatory costs and number of manhours needed to run a dealership.1
It appears that the Federal Trade Commission (FTC) may not have properly considered small
entities during this rulemaking process.

         This rule “prohibits motor vehicle dealers from charging for add-on products or services
from which the consumer would not benefit.”2 This new standard is vague and interpretation of
such a standard will undoubtedly create additional burdens, particularly on small dealerships, to
hire compliance officers to determine what is or is not a “benefit” to consumers. Further,
fraudulent misrepresentation of products and services to consumers is illegal under current law.3
After the FTC published its proposed rule, the SBA Office of Advocacy—the independent voice
for small business within the federal government—stated that the FTC did not sufficiently
calculate the projected cost to small entities, and that it should remedy this before it finalized its
rule.4 It appears the FTC either did not perform this analysis or did not include it in its final rule.

       It is important for agencies to examine small business interests—which make up 99.9
percent of all businesses in the United States—when passing any new rule. America’s small
businesses deserve to have their voices heard and considered. We therefore request the following
information as soon as possible but no later than February 8, 2024:




1
  Combating Auto Retail Scams Trade Regulation Rule, 16 F.R. § 463.
2
  Combating Auto Retail Scams Trade Regulation Rule, 16 F.R. §§ 463, 645.
3
  Restatement (Second) of Contracts § 163
4
  Letter from Major L. Clark, et al., Deputy Chief Counsel, U.S. Small Bus. Admin. Office of Advocacy., to April
Tabor, Acting Sec’y of the Comm'n., U.S. Fed. Trade Comm’n (Sept. 8, 2022).
The Honorable Lisa M. Kahn
January 25, 2024
Page 2 of 2

      1. In the rule, did the FTC anticipate and include in the analysis the fact that this action will
         reduce product offerings that many consumers like, such as service contracts on vehicle
         purchases?

      2. Given the subjective nature of product valuation, how does the FTC determine whether
         something is beneficial?

      3. In drafting this rule, the FTC received testimony from stakeholders regarding their
         negative experience with car dealers. Provide a detailed list of any and all data the FTC
         received to justify its position that these scams are common.

      4. Explain the FTC’s expected cost for a small entity to comply with this rule and how that
         differs from the compliance cost of larger entities.

      5. A detailed explanation of how this rule, which addresses a practice that is already
         unlawful, creates enough of a benefit to consumers to justify the cost to small businesses.

       To schedule the delivery of your response or ask any related follow-up questions, please
contact the Committee on Small Business Majority Staff at (202) 225-5821. The Committee on
Small Business has broad authority to investigate “problems of all types of small business” under
House Rule X. Thank you in advance for your cooperation with this inquiry.

                                           In God We Trust,



_________________________                               _________________________
Roger Williams                                          Maria Salazar
Chairman                                                Member
Committee on Small Business                             Committee on Small Business



_________________________                               _________________________
Mark Alford                                             Aaron Bean
Member                                                  Member
Committee on Small Business                             Committee on Small Business




cc:      The Honorable Nydia M. Velasquez, Ranking Member
         Committee on Small Business


File and source

File

2024-01-25_HouseSBC-Majority-to-ftc_letter-to-ftc-re-rfa-car-dealerships.pdf

Size

180,324 bytes

SHA-256

9dd23ca203992665c5d5af8cf4044ee7e7701e097ff0dcd70c951b375ceff283

Our copy

2024-01-25_HouseSBC-Majority-to-ftc_letter-to-ftc-re-rfa-car-dealerships.pdf

Original

smallbusiness.house.gov