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Proposed Rules by FTC Seek to Protect for New and Used Car Buyers

With the cost of new and used cars becoming unreachable for most consumers, navigating the sales process can be tricky and frustrating. The Federal Trade Commission has received more than 100,000 complaints in each of the past three years about shady dealership practices. New rules proposed by the FTC aimed may be coming.

The proposed rules would:

  • Ban bait-and-switch claims: The proposal would prohibit dealers from making deceptive advertising claims to lure in prospective car buyers. Such deceptions can involve the cost of a vehicle or the terms of financing, any add-on products or services, whether financing terms are for a lease, the availability of any discounts or rebates, and actual availability of vehicles being advertised, and whether a financing deal has been finalized.
  • Ban fraudulent junk fees: The proposal would prohibit dealers from charging consumers junk fees for fraudulent add-on products and services that provide no benefit to the consumer (including “nitrogen filled” tires that contain no more nitrogen than normal air).
  • Ban surprise junk fees: The proposal would prohibit dealers from charging consumers for an add-on without their clear, written consent and would require dealers to inform consumers about the price of the car without any of optional add-ons.
  • Require full upfront disclosure of costs and conditions: The proposal would require dealers to make key disclosures to consumers, including providing a true “offering price” for a vehicle that would be full price a consumer would pay, excluding only taxes and government fees. It would also require dealers to disclose optional add-on fees, including their price and the fact that they are not required as a condition of purchasing or leasing the vehicle, along with disclosures to consumers with key information about financing terms.

Automobile dealer associations aren’t too happy about the proposed rules, saying they are complicated and could negatively affect their businesses. The National Automobile Dealers Association says the new regulations would essentially treat all covered car dealerships as though they were bad actors by imposing unnecessary and burdensome reporting requirements which would in turn trickle down to the consumer in the form of more complex transactions and higher prices to cover new administrative work.

The FTC is considering comments by NADA and other trade associations. In the meantime, consumers are advised to get as much information as possible in writing from the dealer. Ask for an itemized, out-the-door price. Always check the paperwork and the math, and don’t fall for unnecessary extras. If you feel you’ve been wronged by a dealership, report it to the FTC.

When in the market for a used car, stop by Carousel Preowned. CarouselPreowned serving Iowa City, Cedar Rapids, Davenport, North Liberty, Marion, and Coralville, IA, is proud to be an automotive leader in our community. We do our best to ensure your complete satisfaction every time you step into our car dealership. This is why we offer the widest selection of used and pre-owned cars, trucks, and SUVs and provide true ease of purchase in Iowa.

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