Proposed FTC rule looks under the hood at the car buying process

In a drive toward truth and transparency in the car buying process, the FTC is considering a rule designed to fight deceptive advertising, crack down on bait-and-switch marketing, and put a stop to hidden add-on charges when consumers go vehicle shopping. Read the Notice of Proposed Rulemaking and let us know what you think about what the FTC has in mind.

Go all the way back to 1 F.T.C. 1 and you’ll see law enforcement actions in virtually every volume that touch on the economic impact of automobile ownership – a transaction that for most people is both expensive and essential. In just the last decade, the FTC has brought more than 50 cases and has teamed up with state partners to bring national sweeps resulting in another 181 actions. And yet even with those efforts, in each of the past three years we’ve received more than 100,000 reports from consumers about questionable practices when they went to buy or lease a vehicle.

A recurring theme both in consumer complaints and in law enforcement actions is the striking discrepancies between what consumers are promised in car ads and on the showroom floor versus what they ultimately end up paying. You’ll want to read the Notice for details, but the proposed rule is designed to address the kinds of illegal tactics the FTC has challenged in recent years – for example, deceptive claims about vehicle pricing and financing, underhanded practices related to add-on products and services, and misrepresentations about rebates and discounts.

The proposed rule would require dealers to make a number of key disclosures to consumers, including the true “offering price,” excluding only taxes and government fees – a provision aimed at helping consumers to comparison shop. What about the practice of stacking up add-ons without the buyer’s approval? The proposed rule would require dealers to get consumers’ clear, written consent before charging them for add-ons and to tell people what the price will be without the offered add-ons. The proposed rule also would prohibit dealers from charging consumers for add-on products and services that don’t actually provide a benefit.

To help you prepare your response, the Notice includes a list of questions – including some that focus on the costs and benefits to consumers and businesses – and asks for your input about provisions included in the proposed rule. Once the Notice of Proposed Rulemaking is published in the Federal Register, you’ll have 60 days to file your public comment.