Under the FTC’s plan, each dealer must first inform the customer of the cost of buying a vehicle for cash without any physical aftermarket accessories or F&I products. The consumer must decline this offer in writing before proceeding to the financing or F&I product stage of the transaction.
The proposal also states that if the customer wishes to arrange financing, the dealer must provide the full cost of financing the vehicle over time – again with no add-ons. If the borrower wishes to purchase F&I products or accessories for a financed vehicle, he must first decline in writing the base price of the financed vehicle.
If the financed vehicle or cash transaction includes add-ons, the dealer must also provide a final disclosure detailing the vehicle and those products.
While its language allows dealers to discuss F&I products with a consumer without triggering the cash price form, the agency’s proposal is much stricter on this disclosure as it relates to finances. The form must be produced and signed before “referring to any aspect of financing a specific vehicle … or before making an unfinanced sale, whichever comes first,” the FTC’s draft rulebook says.
Automakers pointed out that mandatory disclosure before “any aspect of financing” could be a problem.
“First, what if a customer drives a vehicle on a test drive and asks about financing?” Bright wrote. “Should the seller give a written document to the customer while the customer is driving before answering the customer’s question? Or should the seller refuse to discuss financing until the test drive is complete? . ..
“Second, what if a salesperson is explaining the many features of a vehicle’s infotainment system to a family and a family member asks if a feature can be included in the finance package. Does the seller have to choose between declining to answer this question until they’ve completed the infotainment system demo or pausing the discussion to disclose? Neither choice improves the shopping experience.”
The FTC should reconsider its method and timing of disclosure, Bright said, calling the issue an example of how parts of the rule could be “frustrating and not beneficial to consumers and the auto industry.”