This rule would also ban bait-and-switch advertisements and require upfront disclosure of all costs.
The Federal Trade Commission is investigating deceptive dealer practices that could result in exorbitant or totally bogus fees. The Federal Trade Commission proposes a new rule that will reduce these costs and eliminate any misleading advertisements. It also makes the car-buying process easier.
The rule would also eliminate junk fees, which are often added to the sticker price. This is a charge for products or services that are not beneficial to buyers. The FTC lists the nitrogen-filled tires as an example. Surprising fees that may arise during the purchase process will also be addressed. These fees could be either banned or explained upfront to avoid annoyance at the end.
The rule proposes transparency and full upfront disclosure. Dealerships will need to be clear about the charges and whether they are mandatory, rather than just listing them. Dealerships would need to explain key financing information. The rule also requires them to state the total vehicle price including taxes and any government fees. It would take place before the purchase process starts, and not at the middle or end.
The rule would also target bait-and-switch techniques that are sometimes used in advertising. For example, a vehicle with a very low price because it isn’t in stock and has been sold out by the automaker. The FTC would also be able to regulate financing claims, discounts and the costs of add-ons.
Samuel Levine, Bureau of Consumer Protection director of the FTC, stated that auto prices are rising and the Commission is taking extensive action to ban junk fees, bait-and switch advertising, and any other practices that can hurt consumers’ pockets. “Our rule will save consumers time, money, and ensure fair dealers.
The rule is proposed at a time when automakers are taking a stronger stand against dealers, particularly in regards to excessive markups or fees for leased vehicles not included in the original contract.