The FTC cracks down on auto dealer fraud

On Behalf of | May 2, 2024 | Auto Dealer Fraud

If you haven’t been car shopping in a while, you’re in for an unpleasant shock: Sticker prices have risen dramatically year after year, and the last few years have seen a shortage of some in-demand vehicles and parts.

Something else that’s risen dramatically is the number of car dealership scams. The Federal Trade Commission reports that there are more than 100,000 complaints against dealerships reported every year – which costs consumers upward of $3 billion in losses.

For example, the FTC and Connecticut recently alleged that Chase Nissan LLC has been tacking on thousands of dollars in junk fees and unwanted add-ons to the cost of their certified used vehicles, even charging customers for bogus fees that are made to seem like they’re state-mandated. They’ve also allegedly tucked unwanted service contracts and preventative maintenance agreements into deals. According to the FTC, these kinds of consumer complaints are distressingly common. 

What is the FTC doing about it?

The FTC is using a set of rules they call “Combating Auto Retail Scams” or “CARS.” These are designed to stop predatory dealerships from taking advantage of hapless consumers in the following ways:

  • Sellers must disclose total offering prices on vehicles in addition to added options, such as those undesired service agreements
  • Dealerships are not permitted to add fees for services that consumers cannot use, such as unnecessary warranties or inspections that are not required
  • Dealers must get a buyer’s knowing consent on all charges related to the purchase of a vehicle, rather than try to hide them in a contract

The new rules were scheduled to go into effect on July 30, 2024, but the FTC issued an order postponing the effective date due to a court challenge. Consumers who believe that they have been the victims of predatory car dealership practices are always encouraged to file a complaint and take legal action.