Shopping for a car might get a little less stressful soon. The Federal Trade Commission (FTC) just released rules dealerships must follow, restricting some misleading advertising.
If you have shopped for a car, you know how time-consuming it can be. You might spend hours looking at reviews, combing through dealership options, and trying out different configurations on OEM websites.
Then, maybe you decide to see some in person at a dealership. Maybe you live close to many options, or maybe the closest one to you is an hour away. If you visit a dealership and decide to purchase a vehicle there, it might be several hours — or even days — before you can walk away with keys.
This glimpse into the car-shopping process highlights how important it is for dealerships to be transparent about their advertised prices. The FTC has repeatedly emphasized the importance of transparent vehicle pricing, and this week the agency issued additional guidance on how dealers should present advertised vehicle prices.
This rule isn’t new either — Section 5’s requirements for price transparency in the FTC Act have been in effect for decades. However, many people still have experiences of going into a dealership and encountering all sorts of hidden fees that raise a vehicle’s purchase price beyond its advertised price.
FTC Offers More Guidance on Dealer Pricing
Earlier this year, the FTC sent letters to 97 dealerships in the U.S., warning that the prices they advertise online may not be accurate. As a follow-up to that and to encourage compliance, the FTC released new FAQs providing guidance on price transparency in dealership advertisements.
The document reiterates that any “advertised price of a vehicle must be the actual price that any consumer can walk in and pay to purchase the vehicle.” The only exceptions are government-required charges, such as taxes, titles, or registration fees. The FAQs include questions like:
- What needs to be included in the advertised price, and what can be left out?
- In what advertisements do dealers have to be transparent and truthful about pricing?
- How should dealers account for price negotiations and optional items when advertising prices?
- Who is responsible for accurately disclosing price in ads: dealers, third-party advertisers, or OEMs?
Dealerships are allowed to have dealer-specific fees, but must advertise those in the online price; they cannot be brought up after the fact to complete the purchase.
This doesn’t change anything about a dealership’s ability to offer discounts or rebates, or a customer’s ability to negotiate. However, dealers should present discounts and rebates clearly, including any eligibility requirements, so consumers understand the actual price available to them.
The FTC says the goal is to make it easier for consumers to compare vehicles across dealerships without dealers adding mandatory fees late in the buying process. This kind of practice not only frustrates and harms the consumer but can create distrust for the entire market.
Consumers who encounter potentially misleading vehicle advertisements can report them through ReportFraud.ftc.gov.
