Feds Warn Dealers to Stop Deceptive Pricing in Ads

0:00Welcome once again to Lato's Law. Here's Steve Lato. If you've ever bought a car before, you know how confusing it can be, trying to figure out how much the car is going to cost you. If you look at ads for cars, they'll say, oh, here's the car costs. But you and I both know that if you go and buy that car by the time you're done, after the paper vortex that happens when you buy the car, the price of the car will be substantially higher than that advertised. And so that's been something that sets people and has been upsetting people for years. And John and Kevin both sent me notes to Steve, check this out. The Federal Trade Commission claims they're cracking down on that. And that's my editorializing, because whether or not anything changes we'll see, but this is directly from the Federal Trade Commission. FTC warns 97 auto dealership groups about deceptive pricing, deceptive pricing. Letters were sent out to the dealerships and this dealership groups, stressing the need for truthful and transparent pricing

1:01in the automotive industry. We're talking about sales of automobiles. Federal Trade Commission is sending letters to 97 auto groups nationwide, warning them that the prices they advertise must be the total price, including all mandatory fees that consumers will be required to pay. Now, right there, you have an immediate problem. Because there's a chance that some dealerships may go well, some of the fees aren't mandatory. And if the person asks, we might knock it off. But if they don't ask, we'll leave it there. Therefore, it's not mandatory. So we don't have to mention that double secret documentation fee. Not the doc fee, the double secret documentation fee. The letters encourage dealers to review their advertising and pricing practices, including ensuring advertised prices include all fees consumers will be required to pay when buying a vehicle. At a minimum, this includes evaluating advertised prices to ensure they match actual prices, charged consumers.

2:03The FTC will continue to monitor the marketplace, the letters state, and will take additional action as warranted to ensure compliance with the FTC Act and other rules that the Commission enforces. The FTC, this is them speaking now, about themselves and third person, is committed to preventing auto dealers from misleading consumers with low advertised prices, and then adding on mandatory fees the end of the purchasing process. That's the director of the FTC's Bureau of Consumer Protection Speaking. The FTC will remain focused on monitoring auto dealerships to ensure that the market functions efficiently and competitors are transparently competing on price. One of the problems is that all the dealerships do it. So if one dealership stopped doing it and became more competitive, then it might cause others to start not doing it also, but they all kind of do it. It's like an industry standard. So the letters are part of the FTC's ongoing work to ensure price transparency across multiple markets,

3:06including other things you're looking at like rental housing, ticketing, hotels, grocery and delivery services, and auto sales and leasing to help support affordability in the marketplace. The FTC is dedicated to ensuring that consumers only pay the advertised price for products and services and are not subject to undisclosed fees, hidden charges for other illegal conduct. Now, there's a list of things that they want the dealerships and auto groups to look at. And one of them is something I've not mentioned yet, but I have a story about where I went with somebody to go look at a car and they ran a scam on us. They didn't get us for any money, but they wasted our time. So the FTC sent letters to dealers citing examples of illegal pricing practices in the auto industry, including advertising a price, does not reflect all required fees, advertising a price that reflects rebates or discounts,

4:07not available to all consumers. And I've seen that before, where they actually say, here's the price. There's a little asterisk and you look down below and the asterisk says, that's if you get employee pricing from the manufacturer. So they're gonna say, well, we do that little asterisk thing, we're good, right? Advertising a price that fails to take into account the amount of an additional required down payment, conditioning the advertised price on the consumer using dealer financing, requiring consumers to buy additional items, not reflected in the advertised price. And the last one is what I'm talking about, advertising unavailable or non-existent vehicles. And so I've mentioned before that I have friends who'll call me up and say, Steve, I'm car shopping right now. Will you come with me? I love going car shopping with people because I just stand there. Now, it might be the people recognize me now, but I know in the old days they didn't. And so they have no idea what I do for a living. I'm Steve, I'm a friend, you know? I'm just here.

5:07And they hate that by the way, they love when people shop alone because they can lean on you harder. And a friend of mine said, hey, Steve, I found a car I'm gonna go look at. And it's a specific making model in a year and they have one of this dealership. I'd never dealt with a dealership before, but it was a distance away. And so we drove over to look at this car and we pull in a lot and there's a bunch of cars there. Go inside and my friend says, I'm here to talk to so and so, salesperson. Oh, personal locks over. Oh yeah, I talked to you great. How you doing? Great. Let's go look at a car. We go outside, person takes us to a different car. Different make different model, different year. Ever, it's not the car. My friend goes, I called you specifically about a car that's A, B, C, and you're telling me a car here that's X, Y, Z. Oh yeah, that car, we just sold it. We just sold it.

6:08When you say you just sold it, recently, yes, yes. My friend goes, I was on the phone with you an hour ago. Yeah, we sold it in that hour of time between when I spoke to you and now, we sold it in that period of time. And I'm looking around the lot and I go, where is it right now? Oh, the buyers already, they're gone. Yeah, they showed up, test drove it, all the dealership paperwork, everything and they're gone. Yeah, it's gone now. I don't think they had the car. I don't think they ever had a car. I think they just listed a bunch of cars for sale or maybe they sold this car months ago and they keep showing it as being available. That car was not sold in the last hour. That car was long gone and the salesperson acted like she was offended when she goes, I've got another one just like it. I said, okay, show us that and she goes, right here. And she was showing us a car from a different manufacturer,

7:13different make, different model, different, everything was, I'm like, I don't understand. Why do you think it's like if I was showing you, I don't know, a Ford Explorer and you go, well, I want to see a Chevy tracks. Well, no, this is a Ford Explorer, it's the same thing. No, it's not, they're different things. And what was weird was this salesperson, then when she realized that we weren't in the market for whatever it was she was selling, she's like, well, let me show you some other stuff. And this is a small lot, they didn't have that many cars. And I'm looking around and going, no, you do not have the car we're looking for. And we didn't make a scene, but I was so annoyed because the salesperson lied to my friend to say they had this car on the lot. It's here, come on in, we get there. Oh no, we just sold it. No, they didn't, no, they didn't. But they know that the average person who's there is gonna go find what else you got. You just sold it, darn my luck, you know?

8:15And so it's scammy practices like that that really give some used car dealers a bad name. Would I ever go to that used car dealer again? No, of course not, but they don't care because there's enough used car dealers out there and enough people shopping for used cars. They still get phone calls and today they're telling people that car is still there. Even they sold it three, four years ago. I'm sure, I'm sure. So the letters also noted several pending actions the Federal Trade Commission has brought to address deceptive pricing practices in the auto industry, including cases against and they list a bunch of actual dealerships. They're basically saying, look, and dealership groups and look, if you guys don't straighten out what you're doing, we're gonna do it to you or we're doing to them. So the Federal Trade Commission works to promote competition and to protect and educate consumers, the FTC will never demand money, make threats,

9:15tell you to transfer money or promise you a prize. The FTC does not give up prizes, they might sue you but they won't give you a prize. So you learn more about the consumer topics at consumer.ftc.gov. You'd also report fraud, scams, bad business practices at reportfraud.ftc.gov. And you can follow the FTC on social media. I bet their TikTok account just rocks. But they do issue. Consumer alerts and the business blog, you can get news alerts, et cetera, et cetera. Just go to FTC.gov and you can find all the information but yeah, they're warning dealership groups to get together their act primarily on how they advertise prices. Be honest, what's the price actually going to be? Advertise that price. And there's other things they don't want you to do but you also should not advertise unavailable or nonexistent vehicles.

10:16But hey, we just sold it. I was this close, kind of wish I had now, to pulling at a hundred dollar bill and saying, can you show me the RD 108 that you just had filled up by that buyer? Because it'll be dated today, right? You got that handy? Here's a hundred dollar bill, just show it to me. Oh, we can't show you that, that's confidential. Is what the woman would have said to me and in that tone of voice, I'm sure. So John and Kevin, thank you for sending this. Federal Trade Commission warns 97 auto dealership groups about deceptive practices and pricing and they're telling people to straighten up but they might file legal actions as from the FTC itself. Questions or comments? Put them below those talk to you later. Bye bye. Thank you for watching Leto's Law. One can never know for sure what a deserted area looks like.