Proposed FTC rule takes deep dive into car buying process

In an effort to promote authenticity and transparency in the car-buying process, the Federal Trade Commission is considering a rule aimed at cracking down on deceptive advertising, cracking down on bait-and-switch marketing, and blocking hidden add-on fees when consumers buy a car. Please read the Notice of Proposed Rulemaking and let us know what you think of the FTC’s ideas.

Going all the way back to 1 FTC 1, you’ll see enforcement actions in nearly every volume dealing with the economic impact of owning a car—a transaction that is both expensive and necessary for most people. In the past 10 years alone, the FTC has filed more than 50 cases and worked with state partners to conduct nationwide sweeps that resulted in an additional 181 lawsuits. However, even with these efforts, we have received more than 100,000 reports each year over the past three years from consumers regarding questionable behavior when they purchased or leased a vehicle.

A recurring theme in consumer complaints and enforcement actions is the significant discrepancy between what consumers are promised in car advertising and showrooms and the prices they ultimately pay. You’ll need to read the notice for details, but the proposed rule is intended to address a variety of illegal tactics that the FTC has challenged in recent years, such as deceptive claims about vehicle pricing and financing, unfair practices related to add-on products and services, and misrepresentations regarding rebates and discounts.

The proposed rules would require dealers to disclose certain key information to consumers, including the true “offer price,” excluding only taxes and government fees — a provision intended to help consumers make comparisons. What about piling on add-ons without buyer consent? The proposed rule would require dealers to obtain express written consent from consumers before charging them for additional services and to tell people what the price would be without the additional services. The proposed rule would also prohibit dealers from charging consumers for add-on products and services that do not actually provide a benefit.

To help you prepare your response, the notice contains a series of questions, some of which focus on costs and benefits to consumers and businesses, and asks for your input on provisions included in the proposed rule. Once the notice of proposed rulemaking is published in the Federal Register, you will have 60 days to submit public comments.