FTC Testifies on Protecting Consumers in the Used Car Market

The Federal Trade Commission today outlined the biggest challenges facing consumer protection agencies in the used car market in testimony before the U.S. House Committee on Energy and Commerce, Subcommittee on Commerce, Trade and Consumer Protection.

Commission testimony, delivered by the Acting Director of the FTC’s Bureau of Consumer Protection, Eileen Harrington, described three main consumer protection issues in the used car market: making sure consumers get important information about the cars so they can make sound purchasing decisions; preventing deception in the financing of used cars; and helping consumers avoid debt cycles that can lead to the repossession of their car.

The FTC enforces the Used Car Rule, which prohibits dealers from misrepresenting the mechanical condition of a used car and requires them to post a Buyers Guide, which discloses warranty and other information on all used cars offered for sale, the testimony states. The agency currently is conducting a review of the Used Car Rule and has received input from associations of automobile dealers, state law enforcement authorities and consumer advocates. The agency also brings enforcement actions under Section 5 of the FTC Act against deceptive advertising of car loans and deceptive lending, and does extensive work educating consumers on these subjects, according to the testimony.

The testimony stated that the agency will continue to work with state and federal law enforcers to stop unfair or deceptive practices involving used car loans, as well as illegal debt collection practices. The FTC also will take all available steps to protect American consumers who face a credit crunch on their car loans. The agency also cautioned that consumers in need of emergency loans should be fully informed about the risks involved in borrowing against their car titles.

The Commission vote to approve the testimony was 4-0.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.