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FTC Proposes Rule to Ban Junk Fees and Bait-and-Switch Advertising Tactics Used by Dealerships

Robert Ebin /

On June 23, 2022, the Federal Trade Commission proposed a new rule for the automotive industry related to the sale, financing, and leasing of motor vehicles by dealers. The proposed rule aims to protect consumers by targeting junk fees and bait-and-switch advertising tactics employed by dealers.

The Details of the Proposed Rule

Per the proposed rule, dealers would be prohibited from misleading consumers on matters related to the cost of a vehicle, product availability, terms of financing, cost of add-on products and services, and the existence of discounts and rebates. The proposed rule would also prohibit dealers from selling add-on products and services that provide no direct benefit to the buyer.

The proposed rule will also ban “surprise” junk fees, prohibiting dealers from charging buyers for add-ons without clear, written consent. The rule would require dealers to be upfront about the true “offering price” of vehicles, or the full price excluding taxes and government fees. Per the rule, buyers must also be made aware that optional add-ons are not required as a condition of purchasing or leasing a vehicle, and must be made aware of the price of the vehicle without any add-on products.

The FTC is Taking Comments for 60 Days

The FTC is currently accepting questions and comments from the public regarding the terms of the proposal. Instructions for filing questions and comments will be made via the Federal Register. Questions and comments must be made within 60 days of the publication of the notice to be considered by the FTC. Following the open period, the FTC will review all of the comments and determine whether or not to proceed with a final rule.

KPA Can Help

KPA will continue to monitor this issue and provides updates and recommendations accordingly. If you have any questions about how this will impact your dealership, contact us to schedule a meeting. If you’re a KPA client, be sure to reach out to your Consultant or Client Success Manager.

Looking for More Information?

FTC Motor Vehicle Dealers Trade Regulation Rule Proposal

Federal Register

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