- FTC warns that advertised prices must include mandatory fees upfront.
- Agency targets tactics of advertising cheap cars, then add unavoidable costs to the bill later.
- Dealers urged to review advertising practices before regulators decide to investigate further.
Shopping for a car and feeling like the price magically changes at checkout is a familiar experience for some Americans. Now the Federal Trade Commission says it’s had enough of that little trick and has sent warning letters to 97 dealership groups across the US.
If a car ad lists a price, the FTC reminds dealers that number should be the price buyers actually pay. Mandatory fees shouldn’t suddenly appear once someone’s sitting in the finance office, wondering how a bargain turned into a budget crisis.
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According to the FTC, dealerships should make sure advertised prices reflect the full cost customers must pay, aside from government charges like taxes. The agency says it’s keeping an eye on the marketplace and could take enforcement action if misleading pricing practices keep popping up.
Bait And Switch
The letters outline several practices regulators say could cross the line into illegal territory. Those include ads that leave out required fees, promotions that depend on rebates most buyers can’t qualify for, or deals that quietly assume a larger down payment than advertised. Other questionable moves include pricing that only works if customers use dealer financing, forcing buyers to purchase add-ons not mentioned in ads, or promoting vehicles that don’t actually exist on the lot.
“The Trump-Vance FTC is committed to preventing auto dealers from misleading consumers with low advertised prices and then adding on mandatory fees at the end of the purchasing process,” said Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection.
The goal, he said, is a marketplace where dealerships compete honestly, and buyers know what they’re signing up for. The FTC is also looking into unfair practices in other industries such as hotels, rental housing, delivery services, leasing, and ticketing.
A Reminder, Not An Accusation
Importantly, the letters don’t accuse the targeted dealer groups of wrongdoing. The FTC told CBT the groups were selected using nonpublic criteria, and the warnings aren’t formal findings. Think of it more as regulators tapping dealers on the shoulder and saying to double-check those ads before they do. But to make clear that these aren’t idle threats, the FTC’s press release threw in a reminder that it already has pending actions against various dealers, including one where almost 90 percent of buyers paid $2,000 more than advertised.
The National Automobile Dealers Association struck a diplomatic tone in response. The group said most of America’s more than 17,000 dealerships “service their customers in a consumer friendly and compliant manner” but acknowledged potential violations deserve attention and promised to work with the FTC to “address areas of concern.”
The images of the dealerships used in this post are for illustrative purposes only. Credit: Mazda/Infiniti/Hyundai