The FTC’s new CARS Rule: Long Overdue Help to Suffering Car Buyers

Ask anyone who’s bought a car within the past couple of years and you are almost certain to hear about how difficult it is to find out just how much any vehicle is going to cost you. A typical example goes like this: you check out the inventory on a local dealership’s website, find a car that you like listed for sale. The advertised price says “MSRP $34,999 – Contact Dealer for Discount!” So you do just that. You email or call the dealership, and they tell you yes, that car is available, and yes that’s the MSRP but if you come to the dealership they can get you an even better deal. So you go to the dealership. Sure enough, the Manufacturer’s Suggested Retail Price is there on the window sticker. You test drive it, like it, and sit down to sign the purchase agreement. But when you look at the contract, they haven’t given you a discount at all. Instead, they’ve actually raised the price. Now, the car manufacturers don’t like this, because they have rules about how their dealerships are allowed to fiddle with MSRPs. But back when cars were in short supply due to COVID, the dealerships started a new scam: WORTHLESS ADD-ONS.

Now, worthless add-ons aren’t really new in the car business. But they have become ultra prevalent since 2020. What do these worthless addons look like? Well, if you look closely at the window sticker on any new vehicle, you may see an addendum added by the dealership. The vehicle may be completely stock with literally NO upgrades installed by the dealership. But they’ll list something like “Protection Package” or “Theft Prevention” or “Wheel Guard.” Theoretically, the dealership will explain away these charges by saying that they installed some sort of boost, like spraying the windshield with a coat of Rain-X, labeling it as “Weather Guard,” and charging $1,200 for that. Sure, maybe they did buy a bottle of Rain-X from their local AutoZone, and maybe they did send a shop boy with a rag to coat the windshield, costing them a grand total of $20. But realistically it is a worthless product. And this is just one of many, many examples. Some contracts will have over $5,000 of “enhancements” that have literally zero actual value to the customer. And like most fraudulent scams, the Courts tend not to care, as long as the dealership can get you to sign the papers, you will get blamed. Even if every dealership within 100 miles of your home is doing the exact same thing.

Well, the law has finally started to catch up. The Federal Trade Commission, acting under its authority to regulate consumer car sales pursuant to the Dodd-Frank Act of 2009, has issued a final Rule addressing this particular sort of scam. It is called, rather accurately, the “Combatting Auto Retail Scams” or “CARS Rule.” This Rule, which will become effective July 30, 2024, prohibits dealerships from advertising prices they have no intention of honoring. More importantly, it takes away some of the fine print loopholes that courts all over the country were using to let fraudulent car dealers off the hook. For instance, a dealer website advertising a car for sale for $24,999 might have some very tiny fine print at the bottom of their website saying something like “don’t trust our prices because they may not include all the stuff we’re going to add once we get you into our sales office” could switch the price of that same vehicle to $27,999 by adding some fake “upgrades.” After the CARS Rule comes into effect, that will be illegal. Finally.

If you want to see some great examples of big business hypocrisy, take a look at the comments that the auto dealer industry associations made when the FTC was considering the Rule. Like every big money special interest group does when faced with the consequences of their unfair behavior, they whined and complained and hollered about how unfair it was for this sort of big government intervention. “How are we supposed to make any money if we have to list our prices and stick to them? This is going to kill jobs!” Waaa..Waaa…Waaaaaaa.

If Wal-Mart can honor its price advertisements, then I don’t think it can be that damned hard.

You can read the Finalized Rule Publication HERE.