Car dealers warned by FTC about deceptive pricing practices, hidden fees
Agency says advertised car prices must reflect total cost consumers will pay, including all required fees
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The Federal Trade Commission (FTC) issued warnings to 97 auto groups around the country, reminding them their advertised prices must be the total price, inclusive of all mandatory fees, that consumers will have to pay.
The FTC said its letters encouraged auto dealers to review their advertising and pricing practices to ensure that advertised prices include all fees consumers must pay when buying a vehicle.
It said that, at minimum, it includes evaluating advertised prices to ensure they match actual prices charged to consumers. The agency added it will continue to monitor the marketplace and will take action as warranted to ensure compliance with the FTC Act and other rules.
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"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 FTC will remain focused on monitoring auto dealerships to ensure that the market functions efficiently and competitors are transparently competing on price."
The FTC sent letters to 97 auto dealerships in a push to promote price transparency. (iStock)
The agency said the letters to auto dealers are part of the FTC's broader efforts to ensure price transparency across multiple markets, including rental housing, ticketing and hotels, grocery and delivery services and auto sales and leasing.
The FTC's efforts aim to support affordability in the marketplace by ensuring that consumers only pay the advertised price for products and services and don't face undisclosed fees, hidden charges or other illegal conduct.
"When consumers do not know the true price of a car — or any product — consumers and others suffer related consequences, including that consumers cannot comparison-shop and make informed decisions, sellers trying to deal honestly with consumers are put at a competitive disadvantage, and the market cannot operate efficiently," a template version of the warning letter posted on the FTC's website explained.
The FTC informed nearly 100 auto dealerships that it's examining dealers' pricing practices. (David Paul Morris/Bloomberg via Getty Images)
The letters the FTC sent to the auto dealers offered several examples of illegal pricing practices in the auto industry.
Those include advertising a price that doesn't reflect all required fees, advertising a price that reflects rebates or discounts that aren't available to all consumers and advertising a price that fails to take into account the amount of an additional required down payment.
They also include conditioning the advertised price on consumers using dealer financing, requiring consumers to buy additional items not reflected in the advertised price and advertising unavailable or non-existent vehicles.
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The FTC told dealers to confirm that their advertised prices match the actual sales price. (David Paul Morris/Bloomberg via Getty Images)
The FTC's template letter informs the recipient that the agency is concerned that the recipient may be engaging in one or more of those practices.
It also encourages the recipient to "review your practices, including by making sure the prices you advertise include all required fees and charges aside from required government charges, to ensure you are complying with applicable laws. This would include, at a minimum, evaluating your advertised prices and actual prices and confirming they match."
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The template letter adds that the notice "is not intended to be a comprehensive statement of concerns that may exist about your dealership or dealership group" and it also isn't intended to "represent any conclusions on whether your dealership or dealership group is engaging in these practices."