The Federal Trade Commission is implementing a new rule called “Combating Auto Retail Scams” (CARS) in July 2024 to crack down on four common scams that car buyers often encounter. These scams include the bait-and-switch tactic, junk fees, targeting military members, and burying the true costs of a car purchase. The new rule aims to protect consumers from falling victim to these deceitful practices.
One common scam is the bait-and-switch, where dealers advertise a car at a low price to lure customers in, only to switch them to a more expensive option once they arrive at the dealership. The CARS rule will make it illegal for dealers to falsely advertise pricing, discounts, rebates, and inventory to deceive customers.
Another shady practice is adding junk fees to the final cost of the car without the customer’s knowledge or consent. These fees can significantly increase the total cost of the purchase. With the new rule in place, dealers will be required to obtain explicit consent from customers for every charge, and customers will have the right to refuse any add-ons they do not want.
Military members have also been targeted by unscrupulous dealers who may misrepresent their ties to the military or provide false information that could affect active duty personnel and their families. The CARS rule will make it illegal for dealers to engage in such deceptive practices and will provide greater protection for military members.
Dealers often bury hidden fees or exclude important expenses from the initial pricing, leading customers to realize discrepancies between quoted costs and final numbers. Under the CARS rule, dealers must disclose the full “offering price” that includes all costs except basic government fees like registration, as well as outline the total price if advertising monthly payments.
Despite opposition from the National Auto Dealers Association, consumer advocates are celebrating the implementation of the new rule as a long-overdue crackdown on deceptive practices in the industry. The FTC estimates that the CARS rule will save car buyers over $3.4 billion and 72 million hours per year in headaches. Dealers who operate with transparency and fairness will also benefit from the elimination of competitors who rely on deception as a sales tactic. Overall, the new rule aims to make the car buying process less stressful and protect consumers from being cheated by shady dealership practices.
