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New Rule Could Give Car Buyers More Peace of Mind

A new Federal Trade Commission proposal would give car buyers more peace of mind by banning junk fees and bait-and-switch advertising and requiring dealers to disclose the full price of a car upfront.

The proposed federal regulation, or rule, also would give the FTC the power to recover money for shoppers who are “misled or charged without their consent,” the agency says.

The changes would help to:

  • Ban bait-and-switch claims. Dealers would be prohibited from trying to lure shoppers to their showrooms via misleading information about financing terms or discounts and rebates, among other things.
  • Ban fraudulent junk fees. Dealers would not be able to charge fees for add-on products and services that provide no benefit to the consumer. The FTC cites the example of “‘nitrogen filled’ tires that contain no more nitrogen than normal air.”
  • Ban surprise junk fees. Dealers would not be able to charge customers for add-ons without their written consent.
  • Require full upfront disclosure of costs and conditions. Dealers would have to disclose a slew of cost-related information to consumers, including telling them the full price they would pay for the car, excluding only taxes and government fees.

The FTC notes that complaints related to automobiles traditionally are among the top 10 complaint types the agency receives each year.

Over the past three years, an average of 100,000 such complaints have been filed with the FTC annually.

The next step in this regulatory process is for the proposed change, formally known as the “Motor Vehicle Dealers Trade Regulation Rule,” to be published in the Federal Register, which is the government’s official log of regulation-related activity.

Then, a 60-day public comment period will begin, giving consumers and others an opportunity to submit a comment about the proposal.

Once that period ends and the FTC has reviewed the comments, it will decide whether to issue a final rule.

For more on getting a deal on your next car, check out “5 Steps You Must Take Before Buying a Used Car.”

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