The FTC’s Holder Rule has been a steady backdrop in auto finance for decades. But recent legal shifts, and the FTC’s reversal on attorneys’ fees, have pulled it back into focus for lenders and dealers in 2025.
What we know: The rule itself is straightforward. Every consumer credit contract, like a retail installment contract, must include a notice saying the holder is subject to any claims a consumer could bring against the seller.
Here’s how Chris Capurso, associate with Troutman Pepper Locke, explained it: “So in our case, the dealer sells the paper to the finance company or transfers it, the finance company is now subject to any claims or defenses that could have been made against the dealer. And when you say any claims or defenses, it is truly any claims or defenses that the consumer could assert.”
Chris Capurso
The timeline: For years, recovery (the amount a consumer could claim back) was capped at what the borrower had already paid under the contract.
The FTC reinforced that interpretation as recently as 2019.
But in 2022, it quietly reversed itself, signaling that attorneys’ fees could be recoverable.
Soon after, the California Supreme Court’s Pulliam decision confirmed the same view, holding that if a state statute provides for attorneys’ fees, the Holder Rule does not cap them.
OUTSMART THE CAR MARKET IN 5 MINUTES A WEEK
No-BS insights, built for car dealers. Free, fast, and trusted by 55,000+ car dealers.
The issue: That interpretation, as Brooke Conkle, a partner with Troutman Pepper Locke, noted, is extremely broad.
Take her example, where if a customer has only paid $1,500 on a $50,000 contract, under the old understanding, liability would stop there.
Now, attorneys’ fees could blow past that amount, multiplying exposure.
Why this matters now: Because liability flows upstream, finance companies are more likely to tighten oversight.
And for dealers, that’s a reminder to keep complaint handling airtight.
“What we tend to advise clients is to really have good hygiene when it comes to maintenance of complaints and responding to complaints, responding to customer complaints, responding to auto finance company concerns,” Conkle said.
Brooke Conkle
Bottom line: The Holder Rule itself isn’t being rewritten, but the way it’s enforced has shifted. And that shift widens exposure for finance companies and puts dealers under sharper compliance scrutiny. Every complaint, disclosure, and deal jacket is now a potential test of liability, and one dealers can’t afford to treat lightly.
A quick word from our partner
Want insider knowledge on today’s auto retail trends?
The Haig Report® is the industry’s longest-published, most-trusted quarterly resource on dealership values. Since 2014, it has delivered insights on performance, market shifts, and franchise desirability—helping leaders spot opportunities and risks.
Each edition includes exclusive insights on valuation trends, brand outlooks, and blue sky values.
Looking to grow your portfolio or explore investments? Join our exclusive buyer and investor database at haigpartners.com/buyerdatabase.
