US boat dealers exempt from new retail scam regulations

Boat dealers in the US are breathing a sigh of relief after the Federal Trade Commission (FTC) released the final version of its Auto Rule, renamed the Combating Auto Retail Scams (CARS) Rule.

The final language of the CARS Rule explicitly exempts marine retailers and other non-automotive dealers. 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; and golf carts.

At face value, the CARS rule increases disclosure requirements and necessitates dealers to make all costs and sale conditions known upfront. The rule also increases recordkeeping requirements and mandates that dealers keep detailed records of their compliance with these new processes for two years. Dealers impacted by the rule are required to create and retain records showing compliance, including advertisements, price lists, customer correspondence, financing documentation, LTV calculations for all sales of GAP coverage and customer complaints.

The MRAA (Marine Retailers Association of the Americas) had been advocating on the issue, requesting that the marine industry be exempted from the ‘burdensome’ requirements of the rule.

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.

“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 and the high-quality input we provided to FTC that highlighted why these proposed regulations are simply not needed for a recreational boat dealer.”

Dave Lewis, of Tommy’s Boats, an MRAA member, adds: “This is a huge win for boat dealers everywhere that frees us from regulations that would fundamentally change how we sell boats.”

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.

MRAA argues that the FTC had put forth this proposed regulation with ‘no idea’ how it would impact marine retailers or if it ‘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 favourable 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.”