FTC Warning on Car Price Advertising
Many Americans are familiar with the situation where the price of a car they saw in an advertisement mysteriously changes at the moment of purchase. The Federal Trade Commission (FTC) stated that it will no longer tolerate such manipulations and has sent warning letters to 97 auto dealer groups across the United States.
The Commission reminds that if an advertisement for a car states a price, that is exactly how much the buyer should pay. Mandatory fees should not suddenly appear in the finance department when the buyer is already beginning to realize that a good deal is turning into a problem for their budget.
According to the FTC, dealers must ensure that advertised prices reflect the full amount the customer is obligated to pay, excluding government fees such as taxes. The agency states that it is monitoring the market situation and may take action if deceptive pricing practices continue to occur.
“Bait and Switch” Tactics
The letters outline a number of practices that, in the regulators’ opinion, may cross the line of legality. These include advertisements that do not include mandatory fees, promotions dependent on discounts that most buyers cannot qualify for, or offers that subtly require a larger down payment than stated in the advertisement. Among other questionable methods are pricing that is valid only if dealer financing is used, forcing buyers to purchase additional services not mentioned in the ads, or advertising cars that are not actually in stock.
“The FTC under Trump-Vance aims to prevent situations where auto dealers mislead consumers with low advertised prices and then add mandatory fees at the end of the purchase process,” said Christopher Muffarridge, Director of the FTC’s Bureau of Consumer Protection.
The goal, in his opinion, is to create a market where dealers compete fairly and buyers clearly understand what they are agreeing to. The FTC is also investigating unfair practices in other industries, such as the hotel business, housing rentals, delivery services, leasing, and ticket sales.
A Reminder, Not an Accusation
It is important to note that the letters do not contain accusations against the selected dealer groups of violations. The FTC reported that the groups were selected based on non-public criteria, and the warnings are not formal findings. It is more of a reminder from regulators to check advertising materials before they do. To emphasize that these are not empty threats, the FTC press release reminded of already filed cases against various dealers, including one where nearly 90 percent of buyers paid $2,000 more than was advertised.
The National Automobile Dealers Association in its response maintained a diplomatic tone. The group stated that the majority of America’s over 17,000 dealerships “serve their customers in a consumer-oriented manner and comply with requirements,” but acknowledged that potential violations require attention and promised to cooperate with the FTC to “address problematic issues.”
Dealership images in this publication are used for illustration purposes only.
This FTC initiative comes against the backdrop of a general increase in regulatory attention to pricing transparency in various sectors of the economy. Similar practices of hidden fees have long caused consumer outrage, and now regulatory pressure may contribute to the formation of new standards of fairness in the auto trade. The success of this campaign could significantly impact how millions of Americans buy cars, making the process more predictable and less stressful. The response of auto dealers and their willingness to adapt to these demands will be key factors in restoring buyer trust.