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Leaders in Lending | Ep. 110

Addressing Concerns in New Auto Consumer Protection Rule

This week, we sat down with Paul Metrey, Senior Vice President, Regulatory Affairs for the National Automobile Dealers Association to discuss the FTC’s Safeguard Rule going into effect June 9.



Paul Metrey

Paul D. Metrey is the Senior Vice President, Regulatory Affairs for the National Automobile Dealers Association. In this capacity, he directs a team of attorneys who represent dealer interests before, and educate dealers on regulations promulgated by, federal executive branch agencies that oversee dealer operations. Mr. Metrey is the author and editor of numerous NADA publications, including the NADA/NAMAD/AIADA Model Dealership Voluntary Protection Products Policy and the NADA/NAMAD/AIADA Fair Credit Compliance Policy & Program. He frequently speaks to dealers, Automotive Trade Association Executives, dealership compliance professionals, and other industry groups on an array of regulatory topics. Mr. Metrey is active in several professional organizations and serves on the Governing Committee of the Conference on Consumer Finance Law. Mr. Metrey joined NADA in 2001 as its Director, Regulatory Affairs. He previously served as an attorney with the Federal Emergency Management Agency and as an active-duty Army JAG officer, with assignments in Germany, The Netherlands, and Fort Meade, Maryland. He also served in a reserve capacity as the Chief, International Law Branch of the National Guard Bureau’s Legal Support Office. Mr. Metrey obtained a Juris Doctorate degree from Catholic University’s Columbus School of Law and a Bachelor of Arts degree from Virginia Tech. 



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Key Topics Covered

  1. The challenges and questions surrounding FTC’s proposed rule
  2. Mitigating concerns: what currently exists and what needs to happen
  3. Positive trends in the auto industry


Last June, the Federal Trade Commission proposed a new rule regarding consumer protections. This rule would greatly affect auto dealers, placing greater restrictions and imposing new duties.

This week, we sat down with Paul Metrey, Senior Vice President, Regulatory Affairs for the National Automobile Dealers Association to discuss the FTC’s Safeguard Rule going into effect June 9.

Join us as we discuss:

  • The challenges and questions surrounding FTC’s proposed rule
  • Mitigating concerns: what currently exists and what needs to happen
  • Positive trends in the auto industry

The challenges and questions surrounding FTC’s proposed rule

As a best practice, consumer experience should play a sizable role regarding any proposed policies and procedures — that being the case, Metrey questions the FTC's decision to bypass due diligence surrounding their recent auto consumer protection rule.

There was no lack of attempts at slowing the ruling. Many automobile associations sought extensions for review and feedback to measure the effect of the new rule market-wide and consumer-wise and were denied, and the FTC only allowed for a 60-day comment period.

“The proposed rule was accompanied by 49 questions. They asked a lot of questions about the impact on business and that type of thing,” Metrey said. “We wanted more time to be able to do an assessment. Unfortunately, that was shut off.”

Metrey believes the coordination around this new ruling relating to multiple states and specific scenarios was thin at best. 

“You've got to think through — if you pile on a bunch of disclosures and other obligations — how is that going to play out?” he said.

There was no consumer testing around the proposed disclosures to ensure they serve their intended purpose. Skipping that crucial step can lead to more confusion than clarity on both sides. This fact raises concerns for long-term impacts on both consumers and the market. 

The initial claim of the FTC’s proposal is that they will prohibit certain misrepresentations, and apply multiple new disclosures. However, due to questionable wording, it’s unclear what a regulated entity can and can’t do.

“When you now have fine authority of over $50,000 per violation — remember, these are dealers, not banks, so the capacity to ascertain or absorb these violations would be much more difficult. That is an issue,” Metrey said.

Mitigating concerns: what currently exists and what needs to happen

Despite the execution, the FTC's concern for pricing discretion is warranted. Past efforts against discrimination included looking at not only how pricing discretion relates to dealer participation, but also other voluntary protection products on the market.

“There's a lot of focus on the exercise of pricing discretion and voluntary protection products as it relates to things like disclosures and consumer consent, those types of issues,” Metrey said. “Another thing the FTC has done is imposed individual liability on a number of these cases, so it's not just against the corporate entity.” 

Despite uncertainties about new regulations, there are always measures to take that can support positive motion in times of stress.

“We have come out with an optional program based on DOJ consent orders on this whole issue of pricing discretion, we have one that pertains to dealer participation and one on voluntary protection products, and those are ones that we believe can be very helpful,” Metrey shared. 

Educating oneself to the best of one's ability on new expectations — no matter how lacking in research those expectations stand — can help solidify action items. 

Positive trends in the auto industry

Zooming out from the FTC’s controversial new rule, there is a ton of positive momentum across the auto industry. 

“In terms of online engagement with consumers, we've seen — as consumers get more and more comfortable with shopping and learning about products online — the ability to provide quality information, clear disclosures and give them a good snapshot of what they're going to get back gets stronger all the time,” Metrey said.

Alongside online strides, the transition to EVs makes consistent headway across multiple groups. Factories continue to address supply chain issues and implement smoother procedures, including more charging infrastructure.

“One thing we always stress is: dealers are indispensable to that process,” Metrey said. “Because at the moment, the EV purchasers tend to be in more urban areas. When you talk about a fleet that's mainly if not exclusively EVs, then you're talking about mass market penetration and trying to make sure that consumers understand their concerns about range anxiety are addressed.”

Investing in dealers to help guide consumers through that process bodes well for a smooth transition, regardless of questionable FTC rulings.

Stay tuned for new episodes every week on the Leaders in Lending Podcast.


Stay tuned for new episodes every week on the Leaders in Lending Podcast