On May 28, the Federal Trade Commission (FTC) released its annual report to the Consumer Financial Protection Bureau (CFPB) detailing enforcement and educational activities undertaken in 2023. The report pertains to actions under the Truth in Lending Act (TILA) and Regulation Z, the Consumer Leasing Act (CLA) and Regulation M, and the Electronic Fund Transfer Act (EFTA) and Regulation E. Specifically, the report highlights FTC initiatives in areas such as automobile financing and leasing, electronic fund transfers, so-called junk fees, payday lending, and negative options.

Automobile Financing and Leasing

• The report underscores ongoing litigation and additional refunds by the FTC in two cases arising out of deceptive automobile dealer practices, specifically:
  • Misleading mailers suggesting government affiliation, deceptive prize-winning claims, and unclear disclosure of key financing terms; and
  • Additional fees for unwanted add-ons, such as for payment insurance and paint protection.
• In 2023, the FTC finalized the Combating Auto Retail Scams Trade Regulation (CARS) Rule, which notably:
  • Prohibits misrepresentation of key information such as price and cost;
  • Requires dealers to provide an “Offering Price,” excluding only required government charges; inform consumers that add-ons are optional; and provide information about the total of payments if dealers provide monthly payment details;
  • Prohibits dealers from charging for add-ons that do not provide a benefit to consumers, such as service contracts for oil changes for electric vehicles;
  • Requires dealers to obtain consumers’ express, informed consent for charges; and
  • Includes recordkeeping requirements of 24 months.

The FTC has since released various guidance and information on the CARS Rule to consumers, servicemembers, and dealers. However, the effective date for the rule has not been established due to a pending legal challenge. For more information about the CARS Rule, see our blog post on the proposed rule here, our blog post on the final rule here, and our podcast on the final rule here.

Electronic Fund Transfers

• The FTC proposed amendments to its Negative Option Rule, which would require sellers to provide easy-to-use cancellation methods for subscriptions and memberships and require companies to obtain consumers’ express informed consent before charging them for a product or service under a subscription or membership plan. The agency also issued a consumer alert and business guidance on the rule.
• The FTC’s report to Congress on protecting older adults focused on fraud and the FTC’s efforts to combat it, noting that while older adults were less likely to report fraud than younger consumers, they often reported losing more money than younger consumers when they did report.
• Consumer education efforts by the FTC related to electronic fund transfers in 2023 highlighted the possible scam risks when using payment apps and wire transfers.

Other Agency Initiatives

• The FTC proposed a rule that would prohibit hidden and “bogus” fees to ensure that consumers know how much they are paying and what they are getting.
• In a report on issues affecting American Indian and Alaska Native populations, the FTC highlighted its work on topics including auto purchasing and financing, predatory lending, impersonation scams, tech support scams, and romance scams.
• The FTC provided guidance to consumers on negative equity in auto trade-ins, auto loan refinancing scams, small-dollar lending, and alternative payment options including buy now pay later, rent-to-own, and lease-to-own.

Why it matters: In 2023, the FTC focused on automobile sales practices specifically and deceptive and misleading practices in general — particularly related to cost — along with subscription models and payment-system fraud. We expect the agency to continue focusing on these areas through enforcement and consumer education efforts into this year and beyond.