In the Matter of Holder Rule Review, FTC File No.P164800; Docket No. HHS--OPHS--2015--0008 #23

Submission Number:
Ben Bingham
Initiative Name:
In the Matter of Holder Rule Review, FTC File No.P164800; Docket No. HHS--OPHS--2015--0008
Clarification of the Holder Rule with respect to who is a "seller" would be helpful. For example, in the VW "Dieselgate", VW has admitted that rigged diesel engine so that they would appear to pass emissions test. VW Credit financed the purchase of many such vehicles. VW Credit says VW is the manufacturer, not the "seller" and so consumers cannot withhold payment under the FTC Rule. (see attached). The manufacturer is the one who runs the advertising directing people to see its authorized dealers, and the manufacturer makes the warranties, but the manufacturer claims not to be the seller for FTC Holder purposes. Under the UCC, the manufacturer is the seller, even if it is not the retail "seller". Second, in principle the Holder Rule is the best thing that ever happened for consumers; in practice it is worthless. Nothing in the rule restricts the creditors/assignees from negative and derogatory credit reporting if the consumer exercises her rights to withhold payment. In the VW Dieselgate case, consumers clearly have the right under the UCC and Holder Rule to reject their acceptance of the counterfeit VW Diesel, and receive back the money that they have paid. Yet the treat of adverse credit reporting is so great that consumers are afraid to exercise their rights, and lawyer are afraid to advise them to exercise their rights. Third, the Over $25,000 exemption made in 1976 should be eliminated or at least be tied to the inflation rate. My internet inflation calculator says that $25,000 in 1976 is the same as $106,542.79 in 2016. Fourth, the Rule should clearly be applied to "financing leases" for vehicles. This is how many people acquire cars nowadays, and the difference between a retail installment contract and a financing lease is more of form, not substance.