Recently, the Federal Trade Commission sent warning letters about advertising and sales practices to 97 auto dealerships. The letters amounted to a warning shot aimed not just at those 97 dealerships but at the entire retail auto industry. In those letters, the FTC states that advertisements that include prices that are not the “offering price” under the CARS Rule are deceptive and in violation of the FTC Act. To comply with the FTC Act, the advertised price of the vehicle should be the total price the consumer is expected to pay, which shall include all fees and charges (i.e., processing fees and freight), but may exclude governmental fees (i.e., tags, title and taxes): According to the FTC letters: “The FTC is committed to ensuring that the price consumers see in advertising is the actual price they will pay (aside from required government charges, like taxes). This is what the FTC Act, which prohibits deceptive or unfair acts or practices, requires.” WHAT IT MEANS FOR YOUR DEALERSHIP You are urged to take this warning seriously and move quickly to update your advertising. Consider the risks; a simple screenshot of a non-compliant online ad or a customer being asked to pay more than the advertised price on the lot can easily become a “gotcha” moment for regulators, consumers or even competing dealers. To avoid costly violations, dealers must follow the roadmap for proper advertising on their websites and on third-party sites. The FTC’s warning also extends beyond advertising. Dealers must train salespeople on compliant sales practices, especially regarding what is included in vehicle prices and how to convey those prices accurately to consumers. For example, when a customer calls the dealership to ask for an out-the-door price, the salesperson must provide the total price, including processing fees and freight charges (if your dealership previously removed them from the advertised price). In Virginia and Maryland, you must display addendum stickers showing the vehicle’s price, including such fees and charges. These stickers must be accurate, display the vehicle’s total price, and match the advertised price exactly. VADA’S NEW FTC ACTION RESOURCE PAGE With support from the VADA legal team and our external counsel, Barrett “Barrie” Charapp Beaty, VADA has prepared a comprehensive multi-article analysis of the FTC announcement for the benefit of our dealer members. In addition to a comprehensive breakdown of the new rules, these resources include a step-by-step federal advertising checklist, compliant sample ads and an extensive dealer FAQ. You’ll also find deep-dive guidance on: • What an FTC investigation entails • Reviewing your dealership’s social media policy • Avoiding “add-on” pitfalls • Practical, immediate actions you can take today To access our FTC action resource page, scan the QR code or visit vada.com/ftc-action. Further questions can be directed to VADA’s general counsel and executive vice president, Anne Gambardella, Esq. vada.com/ftc-action/ FTC Warns Retail Automotive Industry of ‘Total Price’ Enforcement 14 Virginia Auto Dealer
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