Feds clamp down on such car dealer chicanery as bait-and-switch, junk fees

Get ready, car shoppers: the Wild West of auto retail is getting tamed.

The Federal Trade Commission (FTC) has lassoed two notorious bandits plaguing the car-buying experience – bait-and-switch tactics and hidden junk fees – with its new Combating Auto Retail Scams (CARS) Rule.

This rule is a game-changer, estimated to save Americans over $3 billion and 72 million hours of frustration each year. No more surprise fees buried in the contract or promises of a dream car disappearing like tumbleweeds in the wind.

“Bait-and-switch and junk fees are like rust on the car-buying experience,” said New Jersey consumer advocate Lisa McCormick, who is encouraging readers to visit the FTC’s website for more information or to file a complaint if they experience car-buying scams. “The CARS Rule is like WD-40, shining a light on shady practices and protecting Americans from getting fleeced.”

The new rule also includes clear protections for members of the military and their families, who are often targeted by deceptive dealers with various scams, including lies about the cost of a car or the terms of financing, the availability of discounts or rebates, and the actual availability of vehicles being advertised.

For members of the military, the issues addressed by the CARS Rule are compounded by dealers who prey especially on young service members, for whom having a vehicle is often vital when stationed on sprawling military bases.

Military personnel have twice as much auto debt as civilians. By the age of 24, around 20 percent of soldiers, sailors, and marines have at least $20,000 in auto debt, which creates a substantial challenge to their financial well-being.

Here’s what the CARS Rule means for you:

• No More Phantoms of the Highway: Dealers can’t lure you in with fake prices or nonexistent vehicles. The CARS Rule demands clear, upfront disclosure of the actual offering price anyone can pay, not just mirages shimmering in the salesroom heat.
• Junk Fee Roundup: Those pesky “add-ons” that magically appear on your contract? Outlaws will meet the new sheriff because the CARS Rule bans charging for useless extras like warranties that duplicate existing coverage or oil changes for electric vehicles (they don’t need ’em!).
• Informed Consent, Not Con Job: Remember those contracts longer than a Texas ranch fence? You’ll have the chance to say “hasta la vista” to unnecessary charges before signing on the dotted line. Your consent? Informed, not ambushed.
• Protecting Our Heroes: Military families, often targeted for their unique needs, get double the protection. The CARS Rule outlaws lying about affiliation with the military, vehicle relocations, and repossession laws specific to servicemembers.

“When Americans set out to buy a car, they’re routinely hit with unexpected and unnecessary fees that dealers extract just because they can,” said FTC Chair Lina M. Khan. “The CARS Rule will prohibit exploitative junk fees in the car-buying process, saving people time and money and protecting honest dealers.”

This rule isn’t just about saving money. It’s about fairness, transparency, and peace of mind. Imagine walking into a dealership with the confidence of a seasoned rodeo champion, knowing your rights and ready to saddle up for a fair deal.

The CARS Rule takes effect July 30, 2024, giving you plenty of time to brush up on your car-buying knowledge.

The rule prohibits misrepresentations about key information, like price and cost.

“The Department of Defense appreciates the FTC’s CARS Rule,” said Deputy Under Secretary of Defense for Personnel and Readiness Ashish S. Vazirani. “For our service members and their families, a car is an essential purchase, and this CARS Rule will help fight predatory practices that target our men and women in uniform.”

The FTC offers helpful resources for both consumers and dealers, so you can navigate the showroom with the swagger of a gunslinger who knows the territory.

The era of car-buying chicanery is officially in the rearview mirror.