Car Dealers vs. Consumers: Make Your Voice Heard

July 20, 2022

In June, the Federal Trade Commission proposed a new set of rules that would ban unscrupulous sales practices that are commonly employed at car dealerships. Among the notoriously anti-consumer practices targeted are the sale of products without benefit, bait-and-switch pricing, forced add-ons, and discriminatory practices for cash buyers.

There’s a reason the annual trustworthiness of profession poll from Gallup ranks car salespeople at the bottom; it’s not because every salesperson is bad, it’s because a few bad apples ruin the bunch. Over the years I have heard countless stories from our community of these aforementioned practices. Still, powerful dealer lobbies are combating the FTC proposal, and it’s become clear that they’re determined to defeat the proposal at all costs.

Fortunately, consumers have a real opportunity to have their voices heard. A public comment period is now open until September 2022, and we’re calling on you to share your opinion with the FTC. It’s clear that auto dealers are already amassing a unified position, and we need to do the same. If consumers show up in numbers, car buying may be transformed for the benefit of we, the people. Time is of the essence, as this narrow window leaves less than two months for the public to share their support.

FTC Proposal Levels the Playing Field for Car Buyers

On June 27th, The Federal Trade Commission proposed a new set of rules that would ban specific auto sales tactics commonly used by car dealers to take advantage of consumers. In an FTC proposal titled Motor Vehicle Dealers Trade Regulation Rule No. P204800, the following auto dealer practices are targeted:

  • Selling Products with No Benefit to the Customer
  • Advertising the Real Price of the Car Online
  • Non-Discriminatory Practices for Cash Buyers
  • Enhanced Consent for F&I Products

FTC Bureau of Consumer Protection Director Samuel Levine explained the reasoning behind the proposed rules. “As auto prices surge, the commission is taking comprehensive action to prohibit junk fees, bait-and-switch advertising and other practices that hit consumers’ pocketbooks. Our proposed rule would save consumers time and money and help ensure a level playing field for honest dealers.”

The average new car transaction is now $47,202, or 72% of the median household income in the United States. Bait-and-switch pricing, forced add-ons and dishonest financing tactics have all contributed to the average monthly car payment soaring to $730, 40% higher than the average payment just five years prior. With car prices at record highs, consumers are fed up with anti-consumer sales tactics that proliferate at many dealerships nationwide. 

This is our chance as consumers to unite behind a proposed rule that could change car buying for the better unlike ever before. However, this battle is far from won. 

Car Dealer Dissent Has Been Swift, Yet Flawed

The National Automobile Dealers Association, or NADA, is a nationally-recognized industry and political force that represents over 16,000 auto dealers nationwide. Every year, the NADA and its counterpart for independent dealers spend millions of dollars lobbying politicians to advance legislation that is pro-dealer, too often at the expense of the consumers the auto industry relies on. The power and influence of today’s car dealers can be traced directly to the NADA and NIADA. 

Needless to say, the dealer lobby isn’t happy about the FTC’s proposed rules. In a letter to the FTC, the NADA characterized the proposal as unsupported, sloppy and inconsistent. How so? NADA senior vice president Paul Metrey dismissed the proposal as “woefully inadequate” because the regulation is unnecessary in his view, because it would address “things they can go after” already. It’s as if dealers and their powerful lobbies are fully aware of the anti-consumer sales tactics flourishing in the industry, but are content with pushing the limits of regulation until enforcement encroaches on their bottom lines.

Read the full NADA response here.

Another flawed argument promoted by the NADA is that complaints are few and far between. The FTC said it received more than 100,000 auto-related complaints in 2021. To counter that startling statistic, the NADA says there were 42 million new- and used-car sales last year. We all know that car buyers rarely have the time to seek out the procedures to submit a formal FTC complaint. Consumers have jobs, families, and other financial obligations on their minds. Imagine if one out of twenty dishonest car sales resulted in a formal complaint. In reality, reporting is likely even lower.

YAA’s Community Members Share Troubling Car Buying Experiences

There’s no way of knowing just how widespread this problem is, yet every day our community of YAA members shares tales of shady dealership practices, and dishonest, anti-consumer tactics that cost them time and money. Whether it be comments on YouTube, or essays we receive via email; our millions of monthly viewers are fed up with the status quo, and demand change.

Industry media outlets are picking sides, and some heavyweights are clearly siding with dealer lobbies. Industry news outlet Automotive News published an editorial promoting the talking points disseminated by the NADA and NIADA. They too are calling for interested parties to submit comments during the narrow public comment period.

The Time to Act Is NOW. Make Your Voice Heard By Submitting a Comment in Favor of the FTC’s Proposal

The FTC’s open commenting period is now open, and it will remain open until September 12, 2022. Anyone can submit a comment to voice support or displeasure with the proposal. In a classic David versus Goliath scenario, dealer lobbyists are facing off against consumers like you and I. With massive auto dealer lobbies and even media outlets calling for dealers to submit comments opposing the proposed rules, it’s up to all of us to make our voices heard. Submit a comment today on Regulations.gov. This should be a priority for all Americans who are sick and tired of car buying being synonymous with deception and dishonesty. We’ll keep you posted on the latest developments.

Read Ray’s comment to the FTC

View Ray’s comment here, or read it below:

As someone who spent 43 years managing automobile dealerships and advocating for better enforcement of rules and regulations regarding dealer advertising and F&I practices, I strongly support your efforts to finally rid America of the unethical practices that many dealerships employ. Business decisions are made by dealerships everyday as to how to advertise the price of a vehicle online. Should we include the destination charge that is part of the MSRP in the price or should we disclose that in the small print? Should we disclose any dealer installed accessories or packages that the customer is expected to pay for in the advertised price or should we only disclose that once they have come into the dealership? Should we disclose all dealer and state fees or again wait until the customer has agreed to buy the car? How should we disclose our F&I offerings, or our rate markups for placing indirect loans? These are all business decisions that truthfully should not have to be made, full disclosure and transparency is not only what consumers want, it is what they are entitled to. You can read many consumer complaints in regards to this issue on our YouTube channel: https://www.youtube.com/c/YourAdvocateAllianceYAA/ videos, just click on just about any video and read what consumers are saying on a daily basis.

One must question what is wrong with a society as a whole when everyone knows that consumers are taken advantage of everyday when purchasing a car or truck and everyone turns a blind eye to it. Law enforcement, consumer protection agencies, State Attorney Generals, the Federal Trade Commission and many other “consumer” protection organizations all know what is going on yet do next to nothing to correct it. The essence of commerce should not be “who can we take advantage of today” but rather how can we operate in a consumer respectful and honest manner. I believe the enactment of these proposals would bring us closer to the later and finally rid our society of the former.

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7 Comments

  1. Deward Hext

    Thank you for addressing the unscrupulous methods used by car dealers. After many hundreds of bad experiences by buyers every month it is refreshing to see our Government taking positive measures to protect citizens from this type of activity. One thousand thanks, and please keep working to protect citizens.

    Reply
    • michaelsuewahsing

      Car buying in New York and Florida has become a night mare although you have the money to buy the vehicle you must have a pre approval loan from the bank before making any transaction dealers and private dealers are acting as pirates to rob honest people of their money something needs to be done.

      Reply
  2. Mike

    Dear Ray, and Zach
    I truly believe a marked change is absolutely coming as the vehicle market simply has a limit like any other commodity. Most folks need the service of transportation in their daily existence, and this system set up to accommodate them has evolved into a massive opportunity for any provider, (sales, service, leasing, finance, insurances, inspections, towing, parts, fuel….to become so overreaching that it is no longer affordable or even desirable to deal with anyone related to the industry. Brand new units are now suspect in quality, dealers make the experience an exercise in distrust from the thought of even showing up at a location. Leasing I will never do again..Service and parts out of warranty now require financing, insurance carriers will do anything to avoid responsibilities they themselves have in written form that is covered or have such limitation under “full” coverages that you had better involve an attorney to interpret. The last thing anyone needs is more complication in life involving their needs to be mobile…is it worth owning a vehicle if you simply are spending loads of your money on an item that is not appreciating??, at least a tractor works for you and has much better resale the older it seems to get….my point affordability across the board is questionable. Henry Ford made it affordable, median incomes we a peg for vehicle prices…the only method now is to extend financing to nearing a decade??? Really….it’s on its way to a collapse…bad for everyone in its way..the industry employs millions….what will it finally take?

    Reply
  3. Joseph Espino

    Thanks Ray and Zach. Love this article and I filled out the FTC public comment section.

    I just recently went to a Kia dealership. I was shopping around for a new Kia K5. I cannot buy pre-owned because used car prices are nearly the same or more than a new car. The car had an MSRP of $33,840. Dealer online price was $37,134. Test drive and I asked for an out the door price. The salesman for just the out the door print out still talked to his manager. The total out the door price was $40,462.72. That’s a heck of a price range. The salesman said “We are charging the $1,294 as our dealer mark up but unlike other dealers our mark up offers something. We give you exterior and interior paint protection. It’s nonnegotiable.”

    I said, “Okay, so what’s the extra $2,000 selling price?”

    Salesman said, “It’s Kia’s markup.”

    I responded, “No, Kia MSRP says $33,840. So what is the extra $2,000 charge? “

    He then said “Well it’s our Kia dealer markup.”

    So I asked, “So you’re charging me another markup and not giving me anything in return for that extra charge?”

    He said, “Yes.”

    I said thank you and good bye to the salesman.

    Reply
  4. Nick

    Take you very much for being consumer voice. I was cheated to buy a new car with about 3k markup from Hyundai while Honda was asking for the same 3k and I left the table. The same Honda dealer ship send me a message to inform me that they have 10k markup now when I was asking for price of a Civic Si. Clearly dealerships are abusing their monopoly over producers and consumers while they don’t add added value to sales process.

    Reply
  5. BMW cars USA

    I appreciate you bringing up the shady practices by car dealers.

    Reply

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