The FTC Is Finally Cracking Down on Dealer Pricing Bullshittery

Think hidden fees, fake discounts, rebate games, mandatory add-ons, and vehicles advertised at prices you can't actually get are just part of buying a car?

The FTC doesn't think so.

In this episode, The Car Chick® breaks down the six dealership advertising and pricing practices the FTC says may violate federal consumer protection laws. But before we get into the legal stuff, I share a real-life dealership fiasco that happened while shopping for a military family's Ford Transit van — a deal that took three days to put together before it completely blew up over a discount that apparently didn't apply.

We'll cover:

• The six pricing and advertising practices the FTC is targeting
• Hidden fees, fake discounts, rebate stacking, and financing games
• Why dealer add-on packages may be the next battleground
• What the FTC Act actually says
• Why the CARS Rule was overturned
• Why the FTC isn't handing out $53,088 fines left and right
• How dealership pricing transparency is improving — and where the bullshittery has migrated
• What consumers should look for before signing on the dotted line

5 Things to Watch for When Car Shopping Right Now

• Get an out-the-door quote in writing.
• Do your homework on rebates, financing requirements, and add-ons.
• Verify the vehicle is actually available.
• Don't assume "transparent pricing" means "best price."
• If a deal looks dramatically better than every other similar vehicle, get suspicious before you get excited.

Resources

FTC Consumer Complaint Center:
https://reportfraud.ftc.gov/

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Transcript

The Car Chick (00:00)
Hey everyone and welcome back to The Straight Shift. I promise I was not planning to start this episode with a rant, but here we are. Because I am still so ticked off at something that happened last week when I was shopping for a vehicle for one of my clients. Therefore, there will absolutely be some, shall we say, colorful language in this episode. So if you are listening in the car with your children present, you might want to save this episode for later.

But the timing is perfect because Very recently the FTC sent out warning letters to over a thousand car dealerships across the country regarding six advertising and pricing practices that they believe are illegal. When I read this list, I thought, wow, The FTC is finally listening to my podcast because I've only been ranting about these things for years.

I'm talking about those hidden fees, the fake discounts, all the add-ons, impossible rebates, even advertising vehicles that don't actually exist. In other words, what I call bullshittery. Now, for those of you who are newer to my podcast or any of my content, I did not invent that word. I have to give full credit to one of my clients who happens to be a marketing professor at Clemson University.

She coined the term bullshittery several years ago to describe the kind of sketchy, misleading bait and switch behavior that unfortunately so many dealers still engage in and leave consumers feeling like they totally got screwed. So it's the perfect word, especially because a lot of what the dealers do is technically not illegal, but it's shady as fuck. So we use the term bullshittery. And last week, I caught a dealer red-handed.

So that's what we're gonna talk about today. I will give you that full story and tell you about the six illegal pricing practices that the FTC is starting to crack down on with car dealers. So let's get into it.

So here's what happened last week. I was shopping for a Ford Transit 15-passenger van for a military client with a large family. This is normally a vehicle that is a commercial van used for business purposes. It's the same type of thing they shuttle you to the rental car counters at the airport. But this is a large family and they had outgrown their minivan and needed a 15-passenger van.

But these things are hard to find, especially when you don't want a white one, some other color, please. So I have been searching for quite a while for this vehicle, and I found one listed on a dealer's website in Michigan. And they advertised a near $6,000 discount under MSRP. Most dealers are not discounting these at all unless you really, really push them. And even then, it's not anywhere near that much.

So I got really excited, and it was blue, was not any other color. It was their favorite color of blue. So I called them, I talked to the sales manager there. We had a great relationship, gave her the information, got a quote back. We went back and forth over the quote a few times because I wanted to make sure that the pricing was exactly correct. I wanted to make sure that the military rebate

would apply to this vehicle since it's a commercial vehicle. So I specifically asked that question: can we get that extra $500? I went back and forth with her over the Florida sales tax because this client has their permanent residence in Florida, but they are stationed in a different state. And therefore under Florida's laws, they are exempt from the vehicle sales tax in Florida. But there are of course some hoops you have to jump through to get that. So,

we were going back and forth. We were reading the paperwork. We were making sure that we both understood what would be needed to prove to the state of Florida that this family qualified for the sales tax exemption because on a $75,000 vehicle, that's a lot of money. So we spent about three days going back and forth, going over the paperwork with a fine-tooth comb down to every penny. We got transport quotes so that the vehicle could be transported to them in New York

where they are stationed. Got everything together. The client was super excited. We secured the vehicle. And then the general manager calls me late Thursday night and said, that discount doesn't apply. I can't sell that van to you at that price. I said, Excuse me? You advertised that price on your website.

It's like, yeah, but that's the friends and family program that Ford is offering right now, but it doesn't apply to that vehicle. ⁓ was I mad. He said, I'm sorry, we just made a mistake. No, no, no, no, no. We have been discussing this with your manager for three days. You had every opportunity to correct that supposed mistake. But it wasn't a mistake because it was explicitly listed on

the website as a discount. There were no qualifications, said nothing about the employee pricing for everyone program that Ford is in fact running. It simply said MSRP and then discount and your price. And that is exactly what the FTC has been cracking down on. So I mentioned that, and I got a lot of sidestepping.

So this is why I was so incredibly pissed because I had to go back to my client and tell them what had happened. Like, we can't get this van for this price. And of course, they were angry too, especially since she's pregnant with another child and really is on her last you know what. But this really went over the line from, ⁓ it was an honest mistake, to no, this is really shady because you know the new rules.

And because we went back and forth for three days of me verifying that everything was correct. So I was furious. Needless to say, it blew up the whole deal. But it did give me great information for this podcast because I want to share with you what these six illegal practices are from the FTC that they are cracking down on. The first one is...

Advertising a price that is less than the full price that a consumer has to pay for the vehicle, excluding government charges. So let me translate that FTC legalese for you. They're talking about hidden fees. This is things like their doc or administration fee. Something that they always charge that you don't have any choice necessarily but to pay. It's really just

a part of the selling price of the car. It's not a part of MSRP necessarily, although it does prevent dealers from the practice of listing a new car at the pure MSRP before the destination charge, which is just part of the MSRP and screaming about that. So they have to list the full MSRP with the destination charge rolled in, like it is on the window sticker. And then they have to specifically list their doc fee.

Or they have to say this is the price of the car and it includes a documentation or admin fee of $799, $599, whatever that is. They do not have to include the government fees. So your tag and title fees that the DMV charges, electronic filing fees that the government may charge, and your taxes. But if it is the price of the car, they have to disclose - they cannot hide fees.

Now, that doesn't mean that that is the lowest price that they could sell the car for. You still need to negotiate to see if you can get it even lower than that. But if they list a discount, that discount has to be available to everyone. And that is a part of practice number two that they're cracking down on. Advertising a vehicle price that includes rebates or discounts.

Not actually available to all consumers. Fake discounts. This is what they violated at the dealership in Michigan. They listed that almost $6,000 discount simply as discount under the price of the car, which legally means it should be available to anyone for that specific vehicle.

And dealers have been doing this for a long time. One of the things that I really, really hate seeing are things like rebate stacking. That's the term that we use in the industry. And that's where they would list a price. Hey, this is the price of the car, but it secretly includes all of the rebates that are offered on that vehicle. None of which any one person can actually qualify for, because one, you know, not everyone is military,

first responder, a college grad, has a loyalty discount, meaning that they have a vehicle of the same brand that qualifies under that program, or a conquest rebate, where they have a vehicle that is from one of the competitors that they have decided to offer a rebate to try to steal you away from that competitor. Rebates always have a lot of conditions on them.

And I've honestly never ever seen a case in 20 years where one human being actually qualified for all of those rebates at the same time to all be taken off the price of the car. But that has not stopped dealers from advertising the car at that price, stacking those rebates, even though we all know it's complete and utter bullshittery. Well, this is what this particular rule from the FTC says: uh-uh, not cool. You cannot do that.

Apparently, the dealer in Michigan didn't get that memo. Another practice that they are cracking down on is advertising payments on a vehicle that do not clearly and conspicuously disclose the material terms to get that price, such as a required down payment, any other conditions. So this really applies strongly to leases, but also loan advertising because

Dealers like to pull what I call low-monthly payment catfishing. They'll advertise, get into this car for $199 a month. I mean, I know you've heard the crazy radio ads, but there are so many caveats to that. There's microscopic print. So if they say, for example, you can lease this SUV for just $299 a month. If you get out your magnifying glass or possibly your microscope and read,

oh there's $7,500 due at signing. Oh that's a super low mileage lease of only 5,000 miles per year, which most people would go way over that. If it's for a payment, they might be saying, you can get into it for $199 a month, but again, it doesn't disclose a huge down payment. It assumes you're trading in a vehicle that has a certain amount of equity. It might be an 84-month loan term.

Or it might be only for buyers that have, over 800 credit score. These are all hidden terms that they would hide in this microscopic print. The print is not allowed to be quite as microscopic anymore. They need to be much more clear about what those conditions are so that people are not tricked into thinking that they can get into this car for that low monthly payment when they can't. Now, when it's a lease,

that monthly payment that they advertise does not have to include the state taxes. So if the base lease payment is say $299 a month, but then you have to add on, you know, other $40 a month or whatever for your taxes, that's okay. They don't have to advertise that because it is different in every state, maybe even different in your locality.

So if the government is requiring the fee, then the dealer does not have to explicitly list that in the price of the car. We all know that it's what we call plus plus plus. And the industry is plus, tax, tag, and title. So they get around that, and that is perfectly fair. But they have to show you how they got to that math.

So that you understand and don't end up signing papers for something that's really getting you screwed. Another related practice is advertising a vehicle price that is conditioned on you as the consumer financing the car through that dealer or through a specific lender without clearly and conspicuously disclosing that. Again, that is well, you only get that price if you finance the car with.

Us if you pay cash or you bring your own financing to the table, it's a thousand dollars more. And there is a dealer in the Charlotte area that has done this on a regular basis and it really makes me mad. It's total bullshittery, and I don't think that that's a right practice to do. It's dishonest. And you know, I get it, dealers make money on the financing, and so I understand we might be able to negotiate a lower price

if we are going to finance the dealer. And I will use that in my negotiating all the time. But it's not right for them to advertise a price on their website without telling you this price requires that you finance with us, or it assumes a $1,000 trade allowance, meaning you've got at least $1,000 in equity on your trade. These are just practices that the dealers do so they can advertise a lower price to try and get you in their door.

Practice number five is requiring consumers to purchase add on products or services that are not included in the advertised price. This is what I call the dealer added crap, or the addendums is the official industry term. This is where you see the advertised price, you go and you talk, and they give you the final paperwork, and all of sudden there's this $3,000 protection package. What? Where did that come from?

You it's the low jack, the paint protection, the VIN etching, ceramic coating, nitrogen in the tires, you know, whatever crap they want to add on to the car and try and force you to buy. Now, here's the the little nuance in this rule. If they force you to buy that, if that item is non-negotiable, we add this to all of our cars. We can't take that off the price. It's already on the car. One...

We know that's bullshittery. But two, they are not allowed to do that unless they advertise it as part of the car's price. They cannot spring it on you later when you finally sit down to sign the paperwork. They have to be at least upfront and honest about their bullshittery. Which is helpful because at least you're forewarned and hopefully you can avoid stepping in it. But you still don't have to pay for that crap.

The last practice is advertising vehicles that are not actually available at that advertised price or on those terms. And this is the old fake car bait and switch. They literally in the past have listed cars that aren't there, or they will advertise that you can get this price on this car, but there was only one of them on their lot, and it sold a long time ago. So you get the, ⁓ yeah, well, that price was for this car.

You know, not for this car that you want, or I'm so sorry, that one just sold. No, can't do that. If they are advertising a price that they intentionally did not mean to actually sell the car for. It was obviously a ploy. They cannot do that. And a Honda dealership in New York recently got busted for this, and they actually got busted for it

by the city of New York. Because even though these FTC rules are at a federal level, that doesn't mean that your state or locality doesn't have more specific rules so that they can enforce these things. And this Honda dealership was advertising used cars at a price that they openly admitted once this investigation came to light that, yeah, we had no intention of selling those cars at those prices. It was all bullshit. So they admitted it.

And they ended up negotiating a fine of $130,000, which is a fraction of what it could have been. But they did it and then they sold the dealership to another dealership group. And the investigation didn't happen until after it had sold to the new owners who ended up kind of stepping in it without them realizing what had happened. But the old owners still got busted.

The FTC can technically fine dealerships $53,088.

for these violations. Don't ask me where they come up with these wacky numbers. I mean, why is it not just 50 grand flat? I don't know, they don't ask me. But that fine can be applied either per violation, each instance of that violation, or for every day that violation continues after they have been busted for it. So let's just go back to just the per violation.

Do some math here. That can add up fast to a very painful amount, especially if the dealers are applying that hinky pricing across every car that's advertised on their website. And they tend to do that, especially with new cars. It's just built into the pricing structure on the website. So, really, the computer is doing that. And I think that was the "mistake"

that the Michigan dealer was trying to hide behind. Oh the computer applied the friends and family discount to every vehicle on their website. Well, I'm sorry, you're still responsible for what is on your website. If it was coded incorrectly, tough shit. Fix it, don't hide behind it because you still broke the law. But anyway, let's just do the math, because you know I love doing math. Let's say a dealership advertises 200 new cars. that are on their lot.

And they have the computer that applies these pricing models to every new car on their lot. Well, if it's applying a pricing model that violates one of these rules... let's see, $53,088 times 200. That's That's like over $10 million in fines. That would probably get the dealership to change their practices, don't you think?

So, why isn't the FTC just cracking down on every dealership and raking in the dough left and right? I mean, I could probably send them a hundred listings just right off the top of my head. If I could have, you know, maybe one half of 1% of those fees, that'd be fantastic. But it's a little more complicated than that. And unfortunately, the FTC is very limited in what they can do. So we need to rewind and explain

a little bit about how our government works and what the laws are. The Federal Trade Commission Act was signed into law way back in September of 1914 by Woodrow Wilson. So this has been around for well over a hundred years. And at its core, the FTC Act is very simple. They say: businesses are not allowed to engage in unfair or deceptive acts or practices. Yeah, clearly there's a lot of businesses across a lot of industries that didn't get that memo, but...

When you hear me talking about things like these hidden fees, the fake discounts, the rebate bait and switch games, all the dealership bullshittery, yeah. None of that's new. They've just been getting away with it for decades. And it's not like the FTC just suddenly decided that this deceptive pricing is bad. They've always known it's bad. It's technically violated the FTC Act for over a hundred years. And technically they have the authority

to go after the dealerships for this, but it's not that easy for them to do. So a few years ago, they said, you know, we are kind of tired of this bullshittery. Again, I hope they were listening to my podcast. But they decided we need some more clear rules, specifically aimed at car dealerships, that gives them the ability to enforce those rules. So they created the CARS Rule - because of course they had to call it that.

It stands for combating auto retail scams. And the goal was to give very specific guidance and penalties for deceptive pricing practices - junk fees, the mandatory add-ons, even the market adjustments, all the things that really came to light under a spotlight during the pandemic when they were trying to maximize their profit per vehicle because they didn't have that many cars to sell.

So, why does the FTC care so much? We'd like to think it's because of us consumers and they are trying to protect us from the evils of capitalism. But no, it's really more about being unfair to other dealerships. Because if you think about it, the dealers who are honest about their pricing and don't pull these bait and switch tactics, it actually puts them at a competitive disadvantage.

And that is what the FTC says is not right. I mean, they probably care about us to a certain extent, but they're really trying to enforce fair competitive business practices. So if you think about it, if one dealer is advertising this car for $30,000, but it's total BS because they've rebate stacked or they have, you know, put in a bunch of discounts that people don't actually qualify for. Basically,

they're lying about the price of the car. But this other dealership isn't, they're being very upfront about their pricing, but it's a lot higher. Then which dealership do you think most people are going to walk in the door of? They're going to see that low price and be like, I'm going there. Because they don't know that that price is bullshittery. Now the bullshittery has to be shined a light on so that it's more fair for the dealers that are competing against each other. And I am 100% behind that.

I believe in fair competition. So why can't the FTC enforce this? Oh yeah, that's right, because the CARS rule got thrown out by a federal court last year in 2025. Not because the court disagreed with the contents of the rule. They actually thought that, yeah, this is probably a really good idea to do. But the FTC didn't follow their own proper processes and procedures

when they wrote the rule. Because yes, not only do we have rules in our society, but we have rules about making rules. So when they didn't follow the law about how to make a new law, the law gets thrown out. Yeah. So this is like a criminal where all the evidence is just so clear that they did the thing that they were accused of doing, but there was a technicality in how that evidence was handled.

Whole case gets thrown out on a technicality. That's what happened with the CARS Act. It got thrown out on a technicality. So here we are making it more difficult for the FTC to enforce this. But they still do have that ability from the original act from 100 years ago. They can investigate, they can bring enforcement action against that dealership. But this is civil action, it's not criminal action. So they can't just send the owners of the dealership to jail.

Might not be a bad idea, but that's not how it works. They can negotiate a settlement for penalties. They can obtain a legal cease and desist order from a judge. And that's usually the first step, telling, hey, your practices are not right, cease and desist, and require them to change their bad behavior. And then if they catch them doing it a second time, or if the cease and desist has been ignored, then they can start slapping fines.

But unfortunately, they can't just from day one, they see the violation, just start handing out $53,000 fines like Oprah hands out cars. You get a fine, you get a fine, everybody gets a fine. Trust me, I would have really enjoyed watching that after what happened last week with the Michigan guy. But what they are doing is they're putting the dealers on notice that they will more aggressively pursue the civil action through the procedures that they can do.

They're publicly calling out these behaviors. They're warning the dealerships with these letters. Say, hey, we've warned you, clean up your act. And that's really made a difference. What happened last week in Michigan, notwithstanding. But if you go out to dealer websites now and look at how they've got their cars advertised in price, you will see more transparent pricing. You will see their doc fee

listed, which helps me tremendously because I don't have to call up the dealer and go, so what's your doc fee again? It's now there. Makes my job a little bit faster. You know, it tells you if they have a package that they are putting on every car, at least they're supposed to. And really what they're doing is I find them not being as strict about saying, yeah, you have to pay for that, because they know that that's really flirting with one of those rules.

Even on sites like Auto Trader, Cars.com, when you're searching for cars there, those companies are trying to follow the FTC laws as best they can, even though they are technically not the dealer, because they are providing an advertising platform, they have to cover their own butts. And so they have changed their platform so that the dealers can show transparent pricing. And if they don't, then Autotrader and Cars.com and those

sites have disclaimers that say, hey, this dealership didn't disclose any fees. Therefore, there might be hidden fees, and you as the consumer need to ask about them. So at least they're trying to wave a flag and say, hey, heads up, we're not sure this dealer's following the rules. Pay attention. And that really helps consumers a lot. Obviously I would love to see way more strict enforcement, but we gotta start somewhere. And I'm really happy with

the better pricing transparency that I am seeing. But don't think that every dealer is doing it. Of all the dealers that got those letters, there are 97 dealership groups that have clearly violated the law, according to the FTC, but that have gotten out of paying the penalties because the enforcement is not strong enough. So this means that you still need to do your homework.

Basically, nothing has changed in the way that you should approach car shopping. There's just a little more light being shown on some of the bullshittery. So, again, do your homework and find out what price you should be paying. Know what rebates you should qualify for, at least you think you should qualify for, and which ones you don't. Be sure you understand the monthly payments. Just do all the things that I always preach about. Get that out the door quote.

In writing, because remember, the advertised price still does not have to show all the government fees. You still need to see that full numbers breakdown for your entire deal before you agree to anything. And if a deal looks dramatically better, if the price of the car looks dramatically better for the same vehicle on one dealer's website than it does on all the others, get real suspicious before you get excited because I made that mistake last week.

And I promise I will never make it again. I did report that dealer to the FTC. If you find a practice that looks kind of shady to you that you think violates one of these six practices, go to the FTC's website and file a complaint and give them all of the information because the more that we report this behavior, the easier it's going to be for them to actually enforce it.

Especially if the dealers are ignoring the cease and assist and the warnings. I also took it a step further and reported it to the attorney general for the state of Michigan because I was hopping mad and still a little bit am. I hope you've enjoyed this episode and that it's helped you to understand maybe some changes that you're seeing in car advertising in the industry. If you have not done so already, please sign up for the Straight Shift newsletter on my website.

Cause that is where I go into more details of what's really happening behind the scenes in the industry. And I call out all of the bullshittery into plain English so you know how it's going to affect your wallet. And kind of consider it as your regularly scheduled anti-bullshittery update. And you'll also get free access to the Car Care Survival Kit, which will help you take great care of your car without getting ripped off on that end. Until next time, folks, drive safely. I'm out of here.