House Subcommittee Looks To Make Used Car Buying Safer For Consumers[SIZE=-1]The House Energy and Commerce Subcommittee on Commerce, Trade, and Consumer Protection held a hearing this week to examine the challenges facing consumers in the used car market.
Chairman Bobby Rush compared the problems plaguing the used car market to those that imperiled the housing market. "Evidence suggests that fraudulent practices with regard to both the condition and financing of used cars are on the rise," Rush said. "When it comes to the condition of vehicles, consumers are too often unaware of previous damage inflicted on the vehicle.?
Last year a lawsuit forced the Department of Justice to develop a National Motor Vehicle Title Information System (NMVTIS) to provide consumers with instant access to the salvage history of their potential vehicle. Only 13 states are taking full advantage of the system, while 14, including California, provide data to the federal government but bar their citizens from using it as a resource.
The Subcommittee questioned the effectiveness of the Federal Trade Commission's rulemaking process. The FTC is responsible for the Used Motor Vehicle Trade Regulation Rule, otherwise known as the Used Car Rule, which requires to dealers to disclose on a sticker basic information including whether or not they provide a warranty.
Rush was particularly interested in the effects of the digital divide, and whether low-income consumers would be able to access and benefit from the database. As a remedy, Rush suggested that the FTC include a provision in the Used Car Rule requiring dealers make vehicle history reports available at the time of sale.
Rush also probed the relationship between dealers and creditors, which can often burden consumers with higher prices and unfavorable terms. "Too often the dealership and the creditor work together to needlessly saddle customers with high interest loans or exorbitant fees," he said. "Such discretionary practices known as ?loan packing? and ?dealer markups? have a disparate impact on people of color, particularly African American and Latino consumers."
The industry defended the practices as beneficial to "credit-impaired" consumers.[/SIZE] [SIZE=-1]Subscribe now![/SIZE]
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