The Federal Trade Commission (FTC) put its foot down on 97 car dealership groups nationwide over what amount to false advertising claims. The agency warned those dealers that if they don’t change the way they advertise, they’ll face charges.
The dealerships were, according to the FTC, not including required vehicle purchase fees in advertising. Taxes are not generally included in this kind of ruling, but there are unavoidable fees that every consumer pays when purchasing a vehicle. Most dealerships will list the manufacturer’s suggested retail price (MSRP), delivery and other fees, and something along the lines of “taxes, registration, and title fees not included.” That’s considered perfectly legal, in general, though still a little misleading.
The MSRP does not include delivery and other fees, which is why the window sticker (aka “Monroney”) on a vehicle at the dealer’s lot will include that plus at least one more line showing “destination charges” or similar. Right now, that averages about $1,700, but some vehicles have a destination fee of over $2,500 (usually large trucks and sport utilities). Those fees are non-negotiable. Some states also have set titling fees that are also non-negotiable.
At issue here were dealers who were listing vehicles that were often not available on the lot for purchase (base models, usually) and advertising that included the lowest price (sans fees) without explanation of conditional discounts and those added fees.
Basically, the old tactic of posting a rock bottom price on one (possibly real) vehicle to get customers in the door was being used.
“Well, I have eleven Fordevy Chryondas on the lot right now. Unfortunately, that one we advertised sold right away. But this one is a higher Subayota trim and it’s only a few thousand more. Plus it’s pretty loaded up and a super great deal. We can get you financing and keep that monthly really low..”
Specifically the FTC warned dealerships against:
- 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 non-existent vehicles.
Some dealerships get away with this kind of behavior because, despite there being laws against it, there are sometimes loopholes to work around that. Plus enforcement is spotty at best, so even if the law is being broken, chances are nobody will do anything about it.
Honest dealerships will include all non-negotiable, set fees in their advertising. And, looking at advertising here in my local area and in nearby areas like Colorado, Utah, and Montana, that seems to be the norm. Even the worst of those ads don’t relegate the fees to the tiniest of sub-print below an asterisk. They’re at least legible and close by the listed price.
Consumers, however, should know that there are fees you cannot avoid when purchasing a new car. The MSRP listed on a manufacturer’s website doesn’t include two or three extra payments’ worth of added fees you’ll also have to pay. So don’t go into a dealership expecting the price tag advertised on the vehicle is the actual walk-away price for it.
This article originally published on the AaronOnAutos Substack.
