The Federal Trade Commission is cracking down on shady sales tactics used by car dealerships with the new “Combating Auto Retail Scams” (CARS) rule set to take effect in July 2024. This rule aims to protect consumers from common scams such as bait-and-switch pricing, junk fees, targeting military members, and burying the true costs.
The bait-and-switch tactic involves advertising a car at a ridiculously low price only to switch the buyer to a much pricier option once they arrive at the dealership. Under the CARS rule, false advertising of pricing, discounts, rebates, and inventory will be illegal, preventing dealers from deceiving consumers in this manner.
Dealerships often sneak in random fees and add-ons into the paperwork without the buyer’s consent, significantly increasing the total cost of the car. With the CARS rule in place, dealers must obtain explicit consent for every charge upfront and cannot include any fees without the buyer’s knowledge and approval.
Military members have been frequent targets for unscrupulous dealers who may misrepresent their ties to the military or feed them misinformation to exploit their unique circumstances. The CARS rule makes it illegal for dealers to deceive military personnel about their affiliation or any issues that may impact them and their families.
Many car buyers find themselves surprised by additional fees and costs not disclosed in the initial pricing. The CARS rule requires dealers to disclose the full “offering price” that includes all costs except basic government fees and outline the total price if they are advertising monthly payments, preventing them from burying the true costs.
The National Auto Dealers Association has objected to the new rules, claiming the FTC overstepped. However, most consumer advocates support the crackdown on anti-buyer behaviors that have become commonplace at many dealerships. The CARS rule is estimated to save car buyers over $3.4 billion and 72 million hours per year in headaches, benefiting dealers who play fair and do not lose business to competitors using deceptive sales tactics.
While the CARS rule cannot eliminate all the stress of car buying, it should eliminate some of the shadiest schemes that consumer advocates have long been calling out. Coming out of the dealership without feeling cheated will be a welcome change for consumers in 2024.
