Boat dealers exempt from new FTC auto regulations

The Federal Trade Commission (FTC) released the final version of its Auto Rule, renamed the Combating Auto Retail Scams (CARS) Rule, earlier this week. The final language of the CARS Rule explicitly exempts marine retailers and other non-automotive dealers thanks to the advocacy efforts of MRAA and its coalition partners requesting that our industry be exempted from the burdensome requirements of the rule. This exemption represents a huge victory for MRAA’s advocacy efforts and recreational boat dealers.

CARS Rule Details

The rule will only cover “self-propelled vehicles designed for transporting persons or property on a public street, highway or road.” The rule will not apply to:

• Recreational boats and marine equipment
• Motorcycles, scooters and electric bicycles
• Motor homes, recreational vehicle trailers and slide-in campers
• Golf carts

The MRAA collaborated with the RV Dealers Association, the National Powersports Dealer Association, a number of state-based marine trades associations, the U.S. Small Business Administration’s Office of Advocacy and more, to voice its opposition to the FTC’s initial rule, ultimately making the case for an exemption. To read MRAA’s comment letter, click here.

“The MRAA and our members are excited to see that the FTC listened to our input and exempted our members and other marine dealers from this overburdensome regulation,” says Chad Tokowicz, MRAA Government Relations Manager. “I think our success here stemmed from our work with a coalition of stakeholders as well as the high-quality input we provided to FTC that highlighted why these proposed regulations are simply not needed for a recreational boat dealer.”

The FTC first issued a Notice of Proposed Rulemaking related to motor vehicle shopping in June 2022, and the original rule did not explicitly exclude marine retailers, causing concern within the industry due to the potential cost and burden of compliance. In its original form, the Auto Rule would have required marine dealers to fundamentally change the way they do business and subjected them to an entirely new regulatory scheme.

Additionally, the MRAA was concerned about the potential economic impact on marine retailers and other small businesses because the FTC failed to complete a Regulatory Flexibility Analysis to determine the economic impact. In short, the FTC put forth this proposed regulation with no idea how it would impact marine retailers, or if what was proposed in the regulation would even make sense at a boat dealership.

“This win highlights the importance and effectiveness of MRAA’s advocacy work and underscores our commitment to our members, ensuring a favorable business environment for recreational marine dealers,” says Matt Gruhn, MRAA President. “As the MRAA continues to scale up and invest in our advocacy work we will continue to ensure the voice of dealers is at the table, as we are dedicated to ensuring representation of our members at all levels of government.” 

In addition to working with trade associations in the outdoor recreation industry, the MRAA collaborated with the Small Business Administration’s Office of Advocacy, the independent voice for small business within the federal government and the watchdog of the Regulatory Flexibility Act. The MRAA and the Office of Advocacy cooperated to provide information to the SBA, which was included in their comment letter.

Junk Fees Rule Persists

While this is great news for all marine retailers, there is another FTC proposal that may yet impact the way business is conducted. In October, the FTC proposed an extremely broad rule to prohibit “junk fees” across all sectors of the economy from concert ticket prices to internet service provider fees and within the text of the rule made it clear that businesses not covered by the auto rule would indeed be covered by the junk fee rule.

This new proposal is less burdensome than the CARS Rule and can largely be boiled down to one simple rule: the advertised price must be the out-the-door price (minus taxes) on any product or service. If there is a part or service that is required for the larger item or service to function as a consumer would expect, the price of that part or service must be included in the advertised price. Accessories or services that are truly optional do not need to have their cost included in the advertised price. The MRAA has reviewed this rule and is actively engaged to ensure it does not adversely affect the marine industry.