New Dealership Regs "Combating Auto Retail Scams Rule"

https://jalopnik.com/it-just-got-harder-for-car-dealers-to-scam-you-ftc-1851096024

The Federal Trade Commission has announced new regulations, called the Combating Auto Retail Scams Rule, that are meant to stop car dealers from screwing customers with hidden fees and other bait-and-switch pricing tactics.

The new rule bans misrepresentations about price, cost and other important information when shopping for a car. It’ll also require dealers to provide the actual price consumers have to pay for vehicles, tell them that additional items like extended warranties aren’t mandatory and state the full monthly payments consumers will be paying upfront.

It also bans add-on items that the FTC described as “providing no value to consumers” like duplicative warranties, software and auto subscriptions for vehicles that don’t have the tech, or service contracts for oil changes on EVs that don’t need motor oil. It’s really shitty stuff, NBC News reports.

Another provision in the new rule will prohibit dealers from trying to trick members of the military by falsely suggesting that dealerships are affiliated with the military.

“This rule by the FTC is really going to help ensure a more fair and honest marketplace so that Americans can buy cars without worrying about getting tricked or deceived,” Kina Khan, FTC Chair, said in an interview.

Khan went on to say that every year for the last four years, the FTC has gotten over 100,000 complaints from people trying to buy cars who say they are hit with all sorts of bogus products and services that were snuck into paperwork they had to sign.

 

I agree that dealers pull shenanigans but if you're paying attention you won't get screwed over. Not sure we need yet more government oversight when being an alert consumer will take care of it anyway. Of course I'm not talking about outright fraud but there are laws against that already.

 

A true statement but I don't mind this one. Alert isn't the only thing you have to be, it also takes assertiveness and the discipline to walk out, and few people have two of those attributed let alone all three. The point to me is that you shouldn't have to navigate a minefield of expensive BS that shouldn't be there to begin with just to buy a gd car.

 

Just let manufacturers sell direct to consumers. Dealerships should be service centers at most.

 

Ford wants to do exactly this. I wonder if other manufacturers will follow.

https://jalopnik.com/ford-ceo-wants-to-abolish-the-dealership-experience-as-1849007700

 

It's how Tesla does it.

No games. No BS. This is the price. Same price, everywhere.

 

I like that idea as everyone would pay the same price. The only bad thing is that there would be no test drive to make sure you like the vehicle. Could be a very expensive mistake.

 

I agree with Mass4runner. If I’m not alert, assertive, and disciplined when it comes to a large purchase, then I need to either learn these character traits, or take someone with me who has them. Asking the government/law to provide them on my behalf doesn’t prepare me for the next time. My most recent car purchase is levels better than my first one due to experience and learning. I do agree that all items being purchased should be clearly listed.

 

They don't do this for the same reason airlines don't (I used to be an airline pricing analyst). Filling every seat is easy if the fare is low enough. The goal is to fill every seat while ensuring every traveler pays as much as they are willing to pay. Same with car dealers. They want the wiggle room to hose you for as much as they can get.

Fair points. Goes along with the way the whole student loan thing is reported - as if people were forced to borrow the money against their will. If they want to borrow $100K for a degree in a field that pays $35K a year, taxpayers shouldn't be underwriting their financial ignorance.

 

You can test drive a Tesla....by appointment.

 

You can walk in and test drive a Tesla with no appointment. We've done it twice in 2 different states. They let us go for 30 min with no salesperson along for the ride. Super easy, no pressure. Didn't buy one, but it was a way better experience than any car dealer I've been to.

 

I'm in full support of these rules. I've wasted way too much time dealing with BS add-ons that are purely meant to add profit, and it sucks to have to walk away from a car you want when the dealer just flat out refuses to remove them. It's just a huge PITA and a waste of time and money. That shit absolutely should be illegal.

 

I think the fees that folks talk about are bull, however I am not sure that I have ever encountered them. I don’t like that the government has to step in because folks are not alert, assertive or disciplined to protect themselves in a process such as this.

 

I have always been able to avoid those hidden fees this law addresses, but more concerning are the dealer add-on's that skyrocket the prices. They throw on tons of accessories and protection packages that cost them pennies and they charge hundreds or even thousands for. This law doesn't address that, but it is another level of dealer douchyness.

 

It’s their car, they can do what they want with it. If it’s my car, so can I. Government can stay out of my business.

 

If only they would get out of the lawmaker’s pockets…

 

I am fine with laws that increase transparency. Dealer can try to charge you what they want, but they just need to be clear upfront with it. Consumer can then choose intelligently. A favorite ploy by my local dealers os to have you sign a document that you are turning down a BS extended warranty or add on. One last chance to “persuade” the consumer they are somehow making a terrible mistake.

 

This is a government regulation I can definitely get behind... now just repeal ALL laws that make dealerships mandatory.

 

Info about the new rules directly from the FTC:
https://www.ftc.gov/news-events/new...ounces-cars-rule-fight-scams-vehicle-shopping

What the CARS Rule Requires:

• No Misrepresentations: The rule prohibits misrepresentations about key information, like price and cost.
• Offering Price, Total Payment, and Add-Ons Optional: Dealers have to provide the offering price—the actual price any consumer can pay for the vehicle; tell consumers that optional add-ons (like extended warranties) are not required; and give information about the total payment when discussing monthly payments.
• No Bogus Add-Ons: The rule prohibits dealers from charging for any add-on that does not provide a benefit to consumers. Examples of such add-ons include: warranty programs that duplicate a manufacturer’s warranty, service contracts for oil changes on an electric vehicle, GAP agreements that do not actually cover the car or neighborhood in which it is housed, or other parts of the deal, and software or audio subscription services on a vehicle that cannot support the software or subscription.
• Get Consumers’ Consent: The rule requires dealers to get consumers’ express, informed consent for any charges that they pay as part of a vehicle purchase.

How the CARS Rule Affects Servicemembers

For members of the military, the issues addressed by the CARS Rule are compounded by dealers who prey especially on young servicemembers, for whom having a vehicle is often vital when stationed on sprawling military bases. Servicemembers have an average of twice as much auto debt as civilians. By the age of 24, around 20 percent of young servicemembers have at least $20,000 in auto debt, which creates a substantial challenge to servicemembers’ financial well-being.

The CARS Rule prohibits dealers from lying to servicemembers and other consumers about important cost and financing information, and about whether the dealers are affiliated with the military or any other governmental organization. They also are prohibited from lying about whether a vehicle can be moved out of state (which affects servicemembers and their families, who must frequently move to new duty stations) and whether a vehicle can be repossessed (there are laws that protect many servicemembers from having their vehicle repossessed).

“The Department of Defense appreciates the FTC’s CARS Rule,” said Ashish S. Vazirani, Acting DoD Under Secretary of Defense for Personnel and Readiness. “For our service members and their families a car is an essential purchase, and this CARS Rule will help fight predatory practices that target our men and women in uniform. The Department is pleased to see the FTC issue the CARS Rule and believes it will contribute to service members’ overall economic security and readiness.”

How the CARS Rule Was Created

The FTC issued a Notice of Proposed Rulemaking related to motor vehicle shopping in June 2022 and, during a months-long comment period, the agency received tens of thousands of comments from consumers, servicemembers, veterans, auto dealers and others about the proposed rule. The FTC carefully reviewed these comments and made substantial changes to the proposed rule in creating the CARS Rule.

The changes ensure that the rule is focused on protecting consumers from many of the most common scams that target people buying vehicles while also ensuring that auto dealers are able to compete on a level playing field. Many auto dealers submitted comments to the proposed rule noting that they lost business to other dealers who used deceptive bait-and-switch tactics. The CARS Rule takes steps to protect not only consumers but also honest dealers and competition.

What Happens Next

The CARS Rule will take effect on July 30, 2024. The FTC has created new guidance for consumers to help them understand their rights when they buy a vehicle once the rule goes into effect.

The FTC has also created guidance on the CARS Rule for auto dealers, including a website with frequently asked questions and other advice as dealerships prepare for the rule to take effect.

The Commission vote to approve the issuance of the final rule was 3-0. The full text of the rule will be published shortly in the Federal Register.

The Federal Trade Commission works to promote competition and protect and educate consumers. Learn more about consumer topics at consumer.ftc.gov, or report fraud, scams, and bad business practices at ReportFraud.ftc.gov. Follow the FTC on social media, read consumer alerts and the business blog, and sign up to get the latest FTC news and alerts.

 

Agree 100%. Yes, buyer beware, but if it's common knowledge that these scams exist, why knowingly sit by and let dealers continue to pull them? Blaming the consumer/ victim for not being better informed is not the answer. Most consumers purchase cars once or twice a decade, versus dealers that do this a dozen times a day. That's not an even matchup.

Government regulations like these are good, it's nice when they actually do something for the good of taxpayers.

The only problem I see is that the CFPB fines are often too low relative to the scam. A bank makes 500 million on extra fees, then gets fined 10 million, it's just cost of doing business.

 

Government over-reach and burdensome regulations are bad. And, yes, people should have the knowledge to defend themselves in these types of negotiations.

However, this law seems to be addressing the things that cannot be mitigated by being alert, assertive, or disciplined during the car purchasing process.

Alertness, assertiveness, and discipline can’t help you when you sign a contract, and the other party doesn’t follow the terms of the contract after the fact. Or when you willingly pay for a service that the seller knows will not be provided.

This is not about legislating away the negotiation tactics of a dealer, it’s legislating against fraud.

Government should not look away from fraudulent business practices because it’s “bad for business” or because the fraud only affected the victims.

Instead of viewing these laws as a type of “government over-reach”, doesn’t it make more sense to blame the regulations on the dealer’s inability to govern their own behaviors?

 

In the digital age where everyone orders everything online, car dealerships feel more antiquated than oil lamps and unsinkable cruise ships.

They had to know Elon would figure out a way around it.

 

Absolutely correct. These sales guys are still going to be trained to go after highest profit margin and sharkly sales tactics like pressuring you etc. This legislation will just take away the scam part of bait and switch, lying about false financing numbers, etc.

 

LOL.

Dealers pull so much shady BS that they brought this on themselves.

Maybe NADA should have spent more time trying to keep its members from being scumbags - then it wouldn’t be flailing about trying to fight it.