The Feds Want To Stop Car Dealers From Conning Buyers

Industry News / 16 Comments

The Federal Trade Commission is looking to make vehicle advertising more transparent, among other things.

Purchasing a new vehicle should be an exciting experience but, in recent years, it's turned into somewhat of a nightmare. Yes, signing on the dotted line for something like a Rolls-Royce Phantom will always be a pleasurable event but for the rest of us, this isn't the case. The bizarre climate in which the auto industry finds itself has led to excessive dealer markups and inflated used car prices. The result is Americans are keeping their cars for longer.

In an attempt to make the car buying process easier, the Federal Trade Commission (FTC) has put forward a series of proposals that dealerships across the country won't like. As Automotive News reports, the government agency is hoping to ban non-beneficial dealer add-ons that provide no benefit to the consumer. This includes things like charging extra for "nitrogen-filled tire-related products or services that contain no more nitrogen than naturally exists in the air" and certain financial and insurance packages.

Obi Onyeador on Unsplash

The FTC Bureau of Consumer Protection Director Samuel Levine said in a statement that the commission is looking to protect the consumer from "junk fees, bait-and-switch advertising, and other practices." He added, "Our proposed rule would save consumers time and money and help ensure a level playing field for honest dealers."

But it's not just so-called junk fees the FTC is hoping to eradicate. The agency is looking to make vehicle pricing clearer than before. This would see dealerships including extra information in listings, such as the price of the car (with and without financing) and the price without various options. "If the customer agrees to pay something different, both they and a dealership manager must sign a document saying so."

It's a serious problem that has plagued many unassuming car buyers in America. The proposal notes that "the length and complexity of motor vehicle transactions [have] created an environment that is ripe for deceptive or unfair conduct." It goes on to say that consumer complaints allude to dealers adding unauthorized charges to the final price, such as "add-ons that consumers had already rejected."

Nothing has been finalized but there's hope yet for the American car buyer. The proposal was approved 4-1; Christine Wilson is the only commissioner who voted against it. As Automotive News reports, she acknowledges the fact that unethical practices are commonplace in the retail industry but noted the proposal runs the risk of introducing "unintended but negative consequences."

Wilson notes these proposed changes would have a negative impact on competition. Interestingly, the opposing commissioner also brought up dealership-free car buying models, as employed by Tesla. Wilson added, "The market dynamism flowing from these innovations makes it likely that an FTC rule will be incomplete even as it is finalized."

Other changes would include doing away with guaranteed asset protection "if the consumer's vehicle or neighborhood is excluded from coverage or the loan-to-value ratio would result in the consumer not benefiting financially from the product or service." Consumers and the public will soon have an opportunity to comment on the proposal, something you should consider if your latest vehicle purchase punched you in the stomach and stole your wallet.

Source Credits: Automotive News

Join The Discussion



Related Cars

To Top