NADA seeks allies to oppose FTC survey

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Scarpelli: Urges support from credit unions.

UPDATED: 5/23/16 5:58 pm ET – corrected

Editor’s note: An earlier version of this story mischaracterized some groups’ positions on the FTC’s proposed survey.

SAN DIEGO — The National Automobile Dealers Association is lining up allies for a fight with the Federal Trade Commission over a proposed survey of consumers regarding their experiences trading in, buying and financing vehicles at dealerships.

NADA Vice Chairman Mark Scarpelli told credit union managers at a conference here last week sponsored by CU Direct, “We look forward to working with your regulatory team” on the proposed FTC survey.

So far, the FTC has received comments questioning its survey plans from NADA, the National Independent Automobile Dealers Association, and a joint comment from the Consumer Bankers Association and the American Financial Services Association, among others. NIADA’s comment noted, among other points, that it “does not believe the costs to conduct the survey are warranted.” A spokeswoman for the CBA said the group has “asked for an objective survey with a representative sample size.”

NADA says the survey is unnecessary because it essentially repeats one the FTC conducted five years ago that found no systemic problems with the auto-retailing sector, and because it is deeply flawed as planned.

The FTC says the proposed survey aims to “inform the Commission about current consumer protections issues that may exist and that could be addressed through FTC action, including enforcement initiatives, rulemaking, or education.” It hasn’t said when the survey would begin. 

In 2011, the FTC held public hearings in Detroit, San Antonio and Washington for much the same purpose. Those hearings’ 21 hours of testimony from 58 panelists yielded more than 500 pages of transcripts; the agency also received 100 written comments. 

The commission “repeatedly requested credible data demonstrating that prevalent abuses exist in the auto industry but received none,” Metrey wrote in a March 7 comment letter to the FTC. 

The Federal Trade Commission “repeatedly requested credible data demonstrating that prevalent abuses exist in the auto industry but received none.”

Paul Metrey
NADA, in a March 7 comment letter to the FTC

Where the 2011 hearings attempted to be quantitative, the proposed new survey would be qualitative, says the FTC. 

The commission will interview 40 consumers — or 60, if adding 20 more is deemed to be helpful — using 90-minute interviews. Half will have prime credit scores; the other half, subprime. The FTC says the results “will not be generalizable to the U.S. population” but “believes that they can provide useful insights into consumer understanding of the automobile purchasing and financing process at the dealership,” according to a notice that the FTC published in the Federal Register. 

Not really, says NADA. It consulted with outside experts in survey techniques, and in his March 7 letter, Metrey listed numerous concerns about the survey’s design and mechanics. He concluded: “NADA requests that the Commission reconsider the necessity of pursuing this initiative.”

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NADA seeks allies to oppose FTC survey