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New federal rule aims to cut down on time car buyers spend at dealerships

Posted at 4:33 PM, Jan 11, 2024
and last updated 2024-01-11 16:35:19-05

LEE COUNTY, Fla. — When you buy a new car, you can expect to spend a few hours at the dealership. The Federal Trade Commission, a federal agency in charge of protecting consumers, wants to change that with a new rule.

They call it "CARS," or Combatting Auto Retail Scams. The new rule makes certain tactics illegal and is intended to provided more protection for consumers.

"Dealers often advertise one price or other attractive terms, but then charge consumers much more once they arrive at the dealership lot and spend hours there," said Dan Dwyer, a staff attorney for the FTC. "Often it will be a low price that doesn’t mention a certain substantial amount down."

That's called a bait and switch tactic.

The FTC is also targeting dealerships when it comes to what the agency calls "junk fees."

"Dealers often bury fees that consumers don’t know they’re paying or don’t realize they don’t have to pay," Dwyer said.

This could include duplicate warranties that don't apply additional coverage, other GAP coverage and services the vehicle doesn't support.

"The FTC estimates that the rule will save consumers 72 million hours of vehicle shopping time and $3.4 billion each year," Dwyer explained.

So why make this rule now?

"They [the tactics] persist despite extensive education, outreach and law enforcement action and that’s why the commission is taking this step now," Dwyer said.

However, not everyone is behind the rule.

The National Automobile Dealers Association is speaking out against the new rule.

“This regulation is heavy-handed bureaucratic overreach and redundancy at its worst, that will needlessly lengthen the car sales process by forcing new layers of disclosures and complexity into the transaction. The FTC made up data to support its claims, then rejected calls to slow down the process and test the effectiveness of its proposal with real consumers. We are exploring all options on how to keep this ill-conceived rule from taking effect.”
Mike Stanton, NADA CEO

Dwyer says the FTC's goal is to save buyers time and money at the lot.

"The commission could pursue them through a law enforcement action to try and get money back from consumers or penalties against dealerships," he said. "For honest dealers, this should be business as usual."

The new rule takes effect July 1, 2024.

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