This month, the Federal Trade Commission charged an Arkansas auto dealer, Abernathy Motor Company, and its two principals, with failing to display a “Buyers Guide” on used vehicles offered for sale, as required by the FTC’s Used Car Rule. Before being charged, the FTC had visited the dealer in December 2012 and identified issues of noncompliance with the Used Car Rule. Thereafter, the FTC sent the dealer a warning and information regarding compliance with the Rule.  During a follow-up visit to the dealership several months later in May 2013, FTC officials noticed that the dealer continued to ignore the requirements of the Used Car Rule and did not display Buyers Guides on its vehicles as required.

The FTC’s recent enforcement action should serve as a reminder that failure to implement compliant practices, particularly after a specific warning by federal regulators, will put a dealer at heightened risk for enforcement action against not only against the dealer itself, but the dealer’s officers, directors and owners.

While the Consumer Financial Protection Bureau (CFPB) has primary enforcement jurisdiction over many companies engaged in financial services, the FTC has retained jurisdiction over significant areas of the financial services industry, including auto dealers that originate auto financings with consumers and then sell the financings to others.  This recent enforcement action is part of a very deliberate message being sent by the FTC that it will be exercising its retained jurisdiction aggressively.  Those businesses that believe they have escaped the jurisdictional reach of the CFPB should not take solace in this fact, given the FTC’s aggressive stance.