WASHINGTON -- Dealers got some ammunition last week in their effort to head off new financing rules when a federal review found broad dealership compliance with a 1976 consumer-protection regulation.
The Federal Trade Commission reported that all 50 or so dealerships it had reviewed are properly notifying customers that the customers can sue the banks that provided their loans if problems arise with the sales practices or the financing of their new vehicles.
The 1976 Holder in Due Course Rule overrode a number of state laws that shielded lenders from prospective consumer suits over alleged dealer transgressions.
The rule required dealers to include in any consumer credit contract a provision that "effectively makes lenders liable for dealers' conduct," the FTC said.
The National Automobile Dealers Association said the findings highlight the "significant push within the industry to frequently and thoroughly train dealership employees on ethics, regulatory compliance and the value of transparency and professionalism."
The FTC reviewed contracts at a random sample of nearly 50 new- and used-car retailers in 45 states as well as two large online dealers.
The review was part of the agency's information gathering on dealership practices as it decides how to use its new streamlined rule-writing authority.