U.S. Appeals Court Strikes Down Biden's Auto Dealer Fee Crackdown
Washington, D.C. - A federal appeals court has overturned regulations implemented by the Biden administration that aimed to curb deceptive pricing practices in the auto industry.
In a 2-1 ruling, the 5th Circuit Court of Appeals determined that the Federal Trade Commission (FTC) failed to follow proper procedures in drafting the regulations. The court found that the FTC did not provide adequate advance notice or engage in sufficient public consultation.
The regulations, finalized in January 2024, required auto dealers to disclose prices upfront and obtain informed consent from consumers before charging for add-on features that did not provide clear benefits. The FTC estimated that the rules would save consumers billions of dollars and reduce shopping time by 72 million hours annually.
The National Automobile Dealers Association (NADA), one of the groups that challenged the regulations, argued that they would unnecessarily burden dealers and lengthen the sales process. Judge Stephen Higginson dissented from the ruling, asserting that Congress had specifically granted the FTC authority to regulate deceptive practices in the auto industry.
"This rule came after years of consumer complaints and federal and state enforcement actions against unfair and deceptive practices," Higginson wrote.
The FTC and the Biden administration have not yet commented on the ruling.