Consumer protection: FTC issues car price transparency FAQs

The news: Federal Trade Commission staff on September 15 published a set of frequently asked questions on price transparency to help auto dealers comply with the FTC Act. The central message is that the advertised price of a vehicle must be the actual price any consumer can walk in and pay, excluding only charges the government requires the buyer to pay. The guidance is aimed at dealers and others in the industry, but it also sets out what shoppers are entitled to expect when they see a price online or in an ad.

Why it matters: A car is among the largest purchases most households make, and a low advertised number that grows once fees are added is a familiar complaint. The FAQs cover what an advertised price should include and how to handle document fees, rebates and discounts. They also address how price negotiations and optional items fit in, how to communicate prices consistently across different media, and how to advertise accurately when vehicles are in transit.

Christopher Mufarrige, director of the FTC’s Bureau of Consumer Protection, said the FTC Act requires truthful and accurate pricing, and that price transparency is a priority for the agency.

By the numbers:

• 97: the number of auto dealership groups that received FTC letters earlier this year warning that advertised prices must include all mandatory fees
• 7: the topics the FAQs list, from why pricing is an enforcement priority to how dealers can help the agency’s enforcement work

The big picture: The FAQs follow those letters and sit alongside continuing lawsuits against dealers accused of advertising one price and charging more, including through undisclosed fees and charges. In practice, the guidance gives buyers a yardstick. If a dealer’s ad says one thing and the paperwork says another, the difference is exactly what the agency has said it will look at.

For shoppers, a few habits follow from the guidance. Ask for the total price in writing before visiting. Check whether a document fee or other mandatory charge sits outside the advertised number. Compare ads with the final buyer’s order line by line.

What’s next: Dealers now have written guidance on how the agency reads the law. The agency encourages the public, including dealers, to report possible violations at ReportFraud.ftc.gov, with details about the dealership and the problem.