Dealers Angry As FTC Finalizes Rules On Bait & Switch, Transparent Pricing, And Junk Fees

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The FTC has just finalized new rules to combat bait-and-switch tactics, junk fees, and more. Dubbed the Combating Auto Retail Scams (CARS) rule, the group of regulations aims to add consumer protections. It’s possible that it could make the process of buying a car far more transparent and less expensive. At the same time, dealers are up in arms about the rule and are going to keep fighting to keep it from going into effect in 2024.

The CARS rule set requires a few very specific things. First, “No misrepresentations” means that dealers can’t misrepresent info about pricing and cost. They must also provide the offering price or “the actual price any consumer can pay for the vehicle.” They have to make it clear to consumers that add-ons like extended warranties aren’t required and they have to provide information on the total payment when talking about monthly installments.

Combating add-ons

Dealers aren’t allowed to charge for any add-on that “doesn’t provide a benefit to consumers.” It gives examples like warranties that duplicate what the manufacturer already covers or service contracts for oil changes on an electric vehicle. Finally, it requires dealers to get express, informed consent for “any charges that they pay as part of a vehicle purchase. In short, it sounds like dealers are going to have to change a lot of the shady practices so many of them have relied on for years.

Read: FTC Urged To Introduce Measures To Stop U.S. Buyers Being Ripped Off By Dealers

Dealers oppose

Strangely, dealers appear to not like this bill. “This regulation is heavy-handed bureaucratic overreach and redundancy at its worst, that will needlessly lengthen the car sales process by forcing new layers of disclosures and complexity into the transaction,” Mike Stanton, CEO of the National Automobile Dealers Association, said in a statement Tuesday. Evidently, the NADA is still going to try and ensure that its members can bait and switch and add junk fees in the future.

Stanton claims that “The FTC made up data to support its claims, then rejected calls to slow down the process and test the effectiveness of its proposal with real consumers.” He also went on to tell Reuters that “We are exploring all options on how to keep this ill-conceived rule from taking effect.”

Notably, the CARS rule also has specific protections for service members as they carry double the auto debt as civilians on average. One example of that protection is prohibiting dealers from lying about whether the dealer is affiliated with the military or any other governmental organization. They’re also prohibited from lying about whether a vehicle can be moved out of state or repossessed.

When do the rules go into effect?

It takes effect on July 30th, 2024, as long as nothing changes between now and then. The FTC has created guidance for dealers and for consumers to help each side understand the changes. If dealers have to actually abide by these rules it could sincerely improve the car-buying experience.