FTC Warns 97 Auto Dealerships Over Deceptive Pricing Practices

On March 13, 2023, the Federal Trade Commission (FTC) issued warning letters to 97 auto dealership groups across the United States, expressing concerns that their advertised prices do not accurately reflect the final costs customers face. The FTC's primary directive is that all advertised prices must include mandatory fees, excluding government-required charges such as taxes.

Inside what the FTC is telling 97 dealer groups to audit

The FTC outlined six specific practices that it deems illegal in its correspondence with the dealerships. These include:

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1. Advertising prices that do not include all required fees.

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2. Promoting prices based on rebates or discounts not available to all consumers.

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3. Omitting necessary additional down payments from the advertised price.

Inside what the FTC is telling 97 dealer groups to audit

4. Making the advertised price contingent upon the buyer using dealer financing.

Inside what the FTC is telling 97 dealer groups to audit

5. Requiring customers to purchase add-ons not reflected in the advertised price.

Inside what the FTC is telling 97 dealer groups to audit

6. Advertising vehicles that are not actually available.

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The FTC's action comes in the wake of a previous rule aimed at preventing hidden fees in car sales, which was significantly narrowed in December 2024. Originally, this rule included car dealers, but its scope was reduced to cover only live ticketing and short-term lodging companies. The recent letters to dealerships do not specify penalties for continued violations, raising questions about the enforcement of these guidelines.

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In response to the FTC's letters, the National Automobile Dealers Association (NADA) acknowledged the importance of compliance in advertising practices. NADA stated, "While the overwhelming majority of America's 17,000+ dealers service their customers in a consumer-friendly and compliant manner, NADA takes any potential advertising violations in the marketplace very seriously." The organization expressed its commitment to collaborating with the FTC to address any concerns.

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The FTC highlighted three active enforcement cases involving specific dealerships: Lindsay Chevrolet, Leader Automotive Group, and Asbury Automotive Group. Allegations against these groups include refusing to honor advertised prices, misleading customers about financing requirements, and charging for undisclosed add-ons. While the warning letters do not accuse any specific dealer of wrongdoing, they serve as a reminder that the FTC is monitoring compliance and may take further action if issues persist.

Inside what the FTC is telling 97 dealer groups to auditJalopnik

Although the warning letters do not carry immediate penalties, they place dealerships on notice regarding the FTC's scrutiny. If the agency finds continued violations in future investigations, dealerships may find it difficult to claim ignorance of the expectations set forth in the letters.

Inside what the FTC is telling 97 dealer groups to audit

The FTC's recent initiative to address deceptive pricing practices among auto dealerships underscores the agency's commitment to consumer protection. By warning 97 dealership groups, the FTC aims to promote transparency in advertising and ensure that consumers are not misled about the true costs of purchasing a vehicle.

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