document processing charge, from an advertised vehicle price is illegal. The FTC has since confirmed this position. Under these circumstances, to avoid a compliance issue with the FTC, dealers should include all non-governmental fees in their advertised total prices. The MSRP Trap. The advertised price is a ceiling, not a suggestion. Dealerships are legally prohibited from selling a vehicle for more than its advertised price. This can become tricky when the Manufacturer’s Suggested Retail Price (MSRP) is advertised for a specific vehicle. If you list an MSRP that is not the actual total price, you risk creating a misleading impression. Dealerships must be careful to ensure that a consumer doesn’t mistake a listed MSRP for the vehicle’s total price. Moreover, the FTC has recently stated that the most prominent price in advertising must be the asking price for the vehicle, inclusive of all non-governmental fees. Thus, if the MSRP is advertised but is not the actual total price (including all dealer fees) for a specific advertised vehicle, the actual total price must also be advertised more prominently than the MSRP. The CARS Act will impact this as well, as discussed below. The 2026 Shift: The California CARS Act Impact Among other things, the California CARS Act represents a tightening of price transparency. Under this Act, the disclosure of the “total price” becomes mandatory in a wider variety of contexts: 1. Vehicle References: Any ad referencing a specific vehicle for sale must disclose the total price. 2. Monetary and Financing Terms: Any ad representing a monetary amount or a financing term for a specific vehicle must include the total price. 3. Direct Communication: The Act requires a total price disclosure in the first written communication to a consumer that mentions a specific vehicle, a monetary amount or a financing term. Because the CARS Act requires the total price to be included in these situations, if the MSRP is not the total price for a specific vehicle advertised, the total price must be disclosed either alongside or instead of the MSRP. Rebates: The “Net Cost” Calculation Rebates are a powerful sales tool, but they are strictly regulated to prevent “phantom” pricing. Dealerships are prohibited from advertising their own dealer rebates, though factory rebates are permitted if they are expressed in specific dollar amounts. These tips can help you stay compliant when advertising factory rebates: • Math Transparency: A good practice has been to show the actual total price first, then show the deduction of the rebate, and finally display the resulting “net cost.” • The “Anti-Stacking” Rule: You cannot “stack” conditional rebates, such as combining military, first responder and college student discounts, to reach an artificially low net cost that almost no customer could qualify for. Moreover, you should not advertise a rebate with conditions that conflict with the conditions of another rebate in the stack, or that cannot be combined with another rebate included in the stack. In its March warning letter, the FTC states that it is illegal to advertise a price that reflects rebates or discounts not available to all consumers. We are awaiting clarification of whether the FTC would also prohibit the use of such conditional rebates in price stacks and net cost calculations, even when permitted in advertising under California law. • Disclosure of Conditions: Any material requirement to receive a rebate (e.g., residency or military status) must be clearly stated. Deep Dive: Vehicle Financing and Regulation Z When advertising financing, you must be aware of “trigger terms” defined under Regulation Z. If your ad uses even one of these terms, you are legally obligated to provide a full suite of additional disclosures to ensure the consumer understands the true cost of credit. The trigger terms of Regulation Z: • The amount or percentage of the required downpayment. • The number of payments or the period of repayment. • The amount of any payment. • The amount of any finance charge. The Required Disclosures. Once a trigger is pulled, your advertisement must also include: 1. Downpayment Details: The specific amount or percentage downpayment required. 2. Repayment Terms: This includes the number of payments and either the specific monthly payment amount or the payment per unit of financing amount (e.g., payment per $1,000 borrowed). 20
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