US Federal Trade Commission Increases Pressure on Car Dealerships
The US Federal Trade Commission (FTC) is tightening its oversight of car dealerships across the country, targeting a series of illegal practices that have long frustrated buyers. The most problematic are advertisements for cars that are not actually in stock, as well as advertised prices that silently exclude mandatory fees.
The agency, specifically its Bureau of Consumer Protection under the leadership of Christopher Mufarrige, recently sent warning letters to 97 auto dealers nationwide. The message is direct: regulators believe some dealerships may be using “deceptive tactics” that fall under a list of six illegal pricing practices that have become stubbornly widespread in the industry.
Key Pricing Violations
Among these practices are advertising prices that do not include all fees, prices with discounts not available to all customers, and prices that do not mention an additional down payment. Furthermore, some dealers are in trouble for prices conditional on using in-house financing, and for requiring the purchase of additional goods or services.
Earlier this month, the Swickard auto group agreed to pay an $800,000 fine and accept a conditionally deferred $200,000 penalty after allegations from the Alaska Department of Law regarding unfair or deceptive practices.
Additionally, dealerships can be caught advertising unavailable or non-existent cars, often due to an inability to remove ads in a timely manner. Violations can lead to fines over $50,000 and consumer restitution.
Inventory Updates and Control Mechanisms
The FTC did not specify how quickly ads should be removed, but ComplyAuto co-CEO Chris Cleveland explained that dealers could update vehicle listings by stating that they accurately reflect inventory as of the last update with a timestamp. Many large dealer groups use software to automatically update ads, but others still rely on manual updates or deletions.
These regulatory actions come against the backdrop of increased overall attention to auto dealer practices, which often lead to confusion and financial loss for the end buyer. The problem of outdated ads is particularly acute on large online platforms, where buyers can spend hours researching offers that are no longer valid.
The FTC’s warning is part of a broader campaign aimed at protecting consumers in a sector where deals are often characterized by complexity and a large number of hidden conditions. Successful cases, like the one involving Swickard Auto Group, demonstrate that regulators are willing to apply substantial financial penalties to ensure compliance. This sets an important precedent and may encourage the entire industry to be more transparent, which should ultimately simplify the car buying process for ordinary people.