Court Overturns FTC's Auto Dealer Regulations

A U.S. appeals court invalidated Biden administration rules designed to eliminate bait-and-switch tactics by car dealerships. The 2024 regulation would have mandated price transparency, benefiting consumers by saving billions and reducing shopping time. The court ruled procedural errors during rule-making led to the decision.

A U.S. appeals court has invalidated regulations crafted by the Biden administration aimed at curbing deceptive practices by auto dealerships. The 5th Circuit Court of Appeals, in a 2-1 ruling, determined that the Federal Trade Commission (FTC) breached procedural rules by failing to provide adequate notice of the proposed regulation.

The regulation, proposed in 2022 and finalized in January 2024 before being suspended due to legal challenges, sought to establish upfront pricing in advertisements and sales dialogues, while also requiring clear consent from consumers prior to imposing charges. The FTC argued these measures would eliminate unnecessary fees, ultimately saving consumers over $3.4 billion and 72 million hours annually.

The National Automobile Dealers Association contended that the rule would unnecessarily complicate car sales by adding layers of bureaucracy. In his dissent, Judge Stephen Higginson argued that Congress empowered the FTC to enact regulations promoting price transparency, citing substantial consumer harm from current practices and previous enforcement actions against deceptive dealer tactics.

(With inputs from agencies.)