Recent FTC Enforcement Actions Warrant Dealers' Attention

These enforcement actions reaffirm the need for robust training, oversight, and compliance in all aspects of dealership advertising, sales, and finance operations.

In both complaints, the FTC continues holding dealer leadership—as well as the dealership entities themselves—responsible for alleged unlawful behavior. Each enforcement action involves a unique combination of circumstances, but the FTC and state Attorneys General allegations include: 

Advertising*

• Misrepresenting vehicle prices in advertisements by advertising a low vehicle price and later adding previously undisclosed fees related to vehicle certification, reconditioning, inspection costs, or doc fees.
• Misrepresenting vehicle prices in advertisements by advertising a low vehicle price and later stating it only applies to vehicles financed through the dealership.
  Advertising vehicles that are no longer available.

Sales and Financing*

• Deceptively charging for voluntary protection products and “add-ons” including charging for products the customer did not agree to, falsely claiming that products were required, or “packing” sales contracts with products to achieve an artificially inflated monthly payment.
  

Consumer Reviews*

• Inducing employees to post fake, positive online reviews, either by threatening to withhold compensation or by paying employees for each review.
• Pressuring customers to post reviews that do not represent their actual experiences. For example, by making refunds contingent on the customer’s willingness to sign a release and remove a negative online review. (* See Note 1)

Buyers Guide** 

• Failing to prepare, fill in as applicable, and prominently and conspicuously display a Buyers Guide on used vehicles being offered for sale.*** (** See Note 2 ,***See Note 3)

NADA is presenting a webinar, FTC Enforcement and Your Dealership, on February 20, 2025, at 1:00 PM EST. Register here to learn more about these enforcement actions and how to protect your dealership.  

Dealers should carefully review the recent enforcement actions with an attorney familiar with federal, state, and local laws governing vehicle advertising, sales, and financing, as well as their dealership operations personnel to determine appropriate compliance measures:

• FTC and State of Illinois Action – This proposed settlement requires, among other provisions, that the dealership pay $20 million and make disclosures similar to those required in the final Vehicle Shopping Rule—which NADA and the Texas Automobile Dealers Association are challenging in federal court. NADA is also supporting federal legislation to stop or delay the rule from taking effect. The disclosures required by the FTC and the VSR include those related to the offering price, monthly payments, and monthly payment comparisons. More information on those disclosures can be found in NADA’s Dealer Guide to the Vehicle Shopping Rule.
• FTC and State of Maryland Action – This complaint was filed in the Eastern District of Virginia and is being challenged by the dealership. 

Both enforcement actions were approved by the FTC commissioners in a 5-0 vote. Even with an incoming Republican administration, enforcement actions will continue, and robust compliance remains vital. NADA offers a variety of optional resources to assist dealers with compliance, including: 

• Dealer Guide to Federal Advertising Requirements (LOG-IN REQUIRED)
• Dealer Guide to the Used Car Rule (LOG-IN REQUIRED)
• NADA/NAMAD/AIADA Fair Credit Compliance Policy and Program
• NADA/NAMAD/AIADA Model Dealership Voluntary Protection Products Policy
• What Dealers Need to Know About the New FTC Rule on Consumer Reviews and Testimonials (LOG-IN REQUIRED)

* Note 1: Section 5(a) of the FTC Act, 15 U.S.C. § 45(a)

** Note 2: Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 et seq.)

*** Note 3: The Illinois stipulated order seeks to prevent the dealer from: “Before offering a Used Vehicle for sale to a consumer via the internet, failing to display a properly completed Buyers Guide through a hyperlink that is prominently and conspicuously displayed with each Used Vehicle offered for sale.” The text of the law does not require the display of the Buyers Guide for online advertising. Dealers, particularly those engaged in online used vehicle sales, should work with an attorney to review their Buyers Order and other relevant disclosure processes considering this enforcement action.

Be sure to consider NHADA's Legal Partners for further guidance.