US Court Throws out Biden-Era Rules Designed to Protect Car Buyers
WASHINGTON, Jan 27 (Reuters) - A U.S. appeals court on Monday threw out consumer protection rules adopted by the Biden administration to ban bait-and-switch tactics and prohibit auto dealers charging for add-on costs that do not benefit new car buyers.
In response to legal challenges brought by the National Automobile Dealers Association (NADA) and a Texas dealer group, the 5th Circuit Court of Appeals said in a 2-1 decision that the Federal Trade Commission (FTC) had violated procedural rules in writing the regulation without giving advance notice of the planned regulation.
The rule required up-front pricing in dealers' advertising and sales discussions and informed consent from consumers before charging for any item. It was proposed in 2022 and finalized in January 2024 but put on hold pending the legal challenge.
The FTC had said the new rules would bar junk fees like a service contract for an oil change for an electric vehicle or a duplicative warranty and estimated it would save consumers more than $3.4 billion and 72 million hours annually shopping for vehicles.