WASHINGTON, D.C. — Nearly 100 auto groups nationwide will be receiving warning letters from the Federal Trade Commission concerning deceptive advertising prices.
Auto dealers are being encouraged to review their advertising and pricing practices to make sure the advertised price is the total price - including all mandatory fees that consumers will be required to pay.
“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.”
Examples of illegal pricing practices in the auto industry, according to the FTC, include:
•Advertising a price that does not reflect all required fees;
•Advertising a price that reflects rebates or discounts not available to all consumers;
•Advertising a price that fails to take into account the amount of an additional required down payment;
•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 nonexistent vehicles.
The FTC said in the letter that it will continue to monitor the marketplace and take additional action as needed to ensure compliance with the rules the Commission enforces.
Auto groups are not the only market the FTC is monitoring for deceptive advertising practices. Price transparency is also under scrutiny across multiple markets, including rental housing, ticketing and hotels, grocery and delivery services, and auto sales and leasing. In order to help support affordability in the marketplace, the agency wants consumers to feel confident they are only paying the advertised price for products and services and not being subjected to undisclosed fees, hidden charges or other illegal conduct.
“One of the FTC’s enforcement priorities is ensuring that advertised pricing is transparent and truthful. 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,” the letter said in part. “This is what the FTC Act, which prohibits deceptive or unfair acts or practices, requires.”
Mufarrige stated the letter sent to the auto groups was not intended to be a comprehensive statement of concerns that may exist about any one dealership or dealership group.
“Nor is it intended to represent any conclusions on whether your dealership or dealership group is engaging in these practices. It is your company’s responsibility to comply with all requirements of federal law, including Section 5 of the FTC Act and other laws and rules enforced by the Commission,” he wrote. “We will continue to monitor the marketplace and take additional action as warranted.”
Copies of the cases discussed in this letter are available on the Commission’s website at www.ftc.gov.