FTC Nabs Auto Dealership Scams: Say Goodbye to Unfair Practices

The Federal Trade Commission (FTC) recently revealed a new rule designed to protect consumers from deceptive auto dealership practices. The FTC’s intervention comes as consumer complaints concerning deceptive tactics practiced by dealerships have been on the rise in the past few years. The new rule will require that dealerships provide consumers with comprehensive written disclosures, which include terms and conditions of the proposed contract, at least one day before they’re expected to sign on the dotted line. The written disclosure must be in a form that is “clear, conspicuous, accurate, and in plain language.” Furthermore, the rule applies to both direct and indirect sales, as well as vehicle leasing and financing options. This means that dealerships will not just have to provide a physical written disclosure but also make the disclosure available electronically. The new rule also prohibits dealerships from charging more fees without telling the consumer up front and from misrepresenting the purchase price of a vehicle. They’re also subject to truth-in-advertising laws, which mean that dealerships will have to use accurate pictorial representations of the vehicles they sell. The new rule has been welcomed by consumer advocates, who believe that it will help curb the prevalence of deceptive and predatory practices used by auto dealerships. In particular, they’re hopeful that it will help protect those who are already vulnerable to scams, such as military service members and their families. For its part, the FTC has warned dealerships to abide by the new rule and has noted that violations of it may result in civil penalties. To that end, the commission has also released a consumer guidance document that outlines how consumers can file a complaint against a dealership that has failed to comply with the new rule. While the FTC’s intervention may come as a relief to many, it’s still vital that consumers remain vigilant when it comes to shopping for a car. Consumers should take their time to read all terms and conditions thoroughly and should never be afraid to ask questions if they don’t understand something. Ultimately, the FTC’s new rule is a welcome move that will hopefully protect more consumers from the deceptive practices employed by some auto dealerships. Time will tell whether or not it will be successful in curbing these practices.