Car Dealerships Warned Over Prices Buyers May Never Actually Get

Regulation Matters

The automotive industry as a whole is competitive, but it's even more cutthroat at the dealership and showroom levels. Each brand dealership is doing its best to stay competitive, which sometimes leads to employing "shady" business tactics.

In most cases, these sometimes illegal practices are passed on to unsuspecting customers and buyers. After all, car buying is a complicated and tedious task; more often than not, we, the buyers, just want to get it over and done with. Thankfully, we have the watchdogs keeping track of these things for us.

False Advertising

According to Automotive News, the Federal Trade Commission (FTC) has been vocal about its ongoing efforts to monitor and police dealerships nationwide. In the report, the FTC said it sent 97 warning letters to dealerships outlining what they consider to be illegal pricing practices under the FTC Act. These letters are merely a means of showing these dealerships that the FTC is watching and has no enforcement action yet.

The director of the FTC's Consumer Protection Division, Christopher Mufarrige, says the agency is concerned that certain dealerships are advertising prices that are much lower than what they are actually required to pay.

Mufarrige also pointed out that not only are the customers directly affected, but other dealerships as well. He notes that these law-abiding dealerships will not be able to properly compete with the erring ones.

The FTC highlighted six practices that caught their attention. The first is that the advertised prices exclude mandatory fees or add-ons, promoting discounts that aren't available to most buyers, conditioning advertised pricing on dealer financing, and requiring extra purchasing not reflected in the ads. Other red flags include not disclosing required down payments and, surprisingly, advertising models that are unavailable or nonexistent.

Everyone Else, Watch Out

According to compliance attorneys interviewed, despite not receiving any letters from the FTC, they should review their advertising materials to ensure they don't include anything related to the abovementioned issue that the FTC looks out for.

This encompasses everything within the dealership, not just print ads but also social media materials, and might even include what the salespeople say to the customers.

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