Dealerships Can Kiss Shady Add-Ons Goodbye, the FTC Changed the Rules of the Game

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The Federal Trade Commission (FTC) may move slowly when it comes to protecting consumers from ever-changing commercial practices, but it at least does the right thing at the end of the process. Starting July 30, 2024, dealerships must abide by four new rules. Here's the gist of it.
Last year, we told you about FTC's intention to transform car buying into a hassle-free process. It was just a proposal back then. However, it attracted many people's attention. Some got involved in the rulemaking activity and left comments that proved the FTC was right about implementing some much-needed changes.

Customers felt like they were caught in a tight net when they were ready to pull the trigger on a new car. They exemplified how unforeseen charges appeared, and they couldn't get rid of them without slowing down the buying process. In some cases, those who were stubborn enough to put up a fight lost their right to buy the desired vehicle.

Let's not forget that 2021 and 2022 were absurd years for those looking for a new ride. Remember the markups that plagued even cars made by mass auto manufacturers like Toyota? Did they convince you to pay for an unnecessary pinstripe?

Let's hope we're beyond that now.

But here's the thing – we don't have to hope for long! The FTC finally figured out what it must do to stop these entities from taking advantage of people who are in need of wheels. The CARS rule is here. It'll enter into effect on July 30, 2024. Until then, dealerships and car buyers have plenty of time to familiarize themselves with the rules.

Mercedes\-AMG opens redesigned showroom
Photo: Daimler AG
Sadly, there's still an issue with these novelties. Overall, they're very good. But, in a couple of considerations, they're not enough to protect unsuspecting customers from all questionable practices.

FTC's CARS rule

Starting the second half of next year, dealers won't be able to trick you about car buying, financing, or leasing costs. They will also have to be upfront about any extra costs or aspects of an add-on product or service. Extended warranty or wheel protection included in the final buying price? Not without telling you what's what from the very beginning!

Remember when you saw a brand-new, low-inventory vehicle available at a low MSRP online and decided to check it out personally, but you couldn't buy it? It was either already sold or marked as unavailable in the showroom. Well, cheer up because that's not going to happen anymore. If it does, the dealerships risk huge fines and other associated penalties.

Moreover, middlemen won't be able to hold onto trade-in vehicles and down payments or force you to pay extra fees and seek legal action for not going forward with an acquisition.

Car Dealership
Photo: Kazuo ota on Unsplash
But probably one of the best changes the CARS Rule will bring is that dealerships won't be able to disguise discounts as sweepstakes. Yes, such things happened. People believed they won a certain sum of cash, went into the dealership to claim the prize, and found out that all they got was $3,000 off the sticker price.

FTC also decided to stop dealerships from applying bait-and-switch tactics and coming up with unforeseen charges. Dealerships will have to be upfront about the final price, which must include everything apart from the required government charges. They won't be able to advertise a different cost than the one available to anyone interested in the car for sale.

In short, the changes stop selling parties from:
  • providing prospective customers with partial or misrepresented information;
  • hiding the real purchase price behind all sorts of impossible offers or strict criteria;
  • not disclosing the total monthly payment before all the documents are signed;
  • charging buyers for add-ons that aren't improving anything about the vehicle;
  • adding costs to the buyer's agreement without asking for the customer's informed consent.

That's all nice and dandy, and some could argue that these changes are so good that they should have been brought forward faster. However, it's better late than never. Still, there's a minor issue.

Wheel Alignment
Photo: Tim Fuller on Flickr

You'll still have to read everything, including the fine print

One thing dealerships love to do is to include all sorts of products or services with the car you're buying. If you bought a car from such an incorporated middleman, you might have noticed things like VIN etching, rustproofing, wheel warranty, or embellishments you didn't ask for on your purchase agreement (sales contract).

The CARS rule is changing all that. It will force dealers to "disclose that the add-on isn't required and that the consumer can buy or lease the vehicle" without it. If that's not possible, the selling party must make it clear that the potential buyer cannot obtain a lower price.

But wait, there's more! Dealers won't just have to include these extras in the final price. They must also prove that the add-ons benefit the end consumer. This rule applies to any product or service not provided by the manufacturer.

The FTC gives nitrogen-filled tires as an example. We would also add lifetime tint to the list of pricey extras you don't need.

The Commission claims that these types of add-ons are nothingburgers. In the case of nitrogen-filled tires, the gas that goes into the rubber rings usually doesn't contain more nitrogen than it's normally found in the air.

Rotating Tires
Photo: Hannes Edinger from Pixabay
Do keep in mind that filling up your tires with nitrogen for real can help. Experts like those at Continental Tires say the pressure stays steady for longer. But filling up with nitrogen isn't very simple. It requires inflating and deflating tires several times to get as much oxygen and water as possible out of the tire.

Sadly, most dealers don't necessarily do that by the book. The customer ends up paying for nothing or for a faulty fill that doesn't bring any savings in the long run.

The FTC also says the dealerships can't sell you GAP insurance if the vehicle isn't eligible.

But while all that sounds good for consumers who don't bother asking the right questions or reading everything written in the contract, the FTC left a little loophole for dealerships. If they can prove that the extras add some value to the vehicle and can benefit the customers, the add-ons are back on the table.

However, the CARS Rule explicitly says that dealerships must get your informed consent before adding any other expenses to the purchase agreement. So, ask and read before signing anything!

Finally, the FTC can come up with these new rules thanks to the Dodd-Frank Act. The novelties will apply to all US motor vehicle dealers, no matter if they're a company or a person.

The clock's ticking. There are only seven months left!
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About the author: Florin Amariei
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Car shows on TV and his father's Fiat Tempra may have been Florin's early influences, but nowadays he favors different things, like the power of an F-150 Raptor. He'll never be able to ignore the shape of a Ferrari though, especially a yellow one.
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