The staff of the Federal Trade Commission has published Frequently Asked Questions (FAQs) to warn the automobile industry that it must comply with FTC Act requirements on vehicle pricing.
The guidance emphasizes that the advertised price of a vehicle must be the actual price that a consumer can walk in and pay to purchase the vehicle. Only charges that the government requires the consumer to pay may be excluded, according to the commission.
“The goal is simple: to ensure that the advertised price reflects reality,” the FTC said, in issuing the document. “That way, consumers can comparison‑shop with confidence, and honest dealers can compete fairly on transparent, all‑in pricing.”
“The FTC Act requires truthful and accurate pricing, which brings significant benefits for consumers and competition,” Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection, said.
When consumers do not know the true price of any product, the results are felt across the marketplace, according to the commission.
“The FTC’s focus on price transparency is driven by the evidence and complaints we see every day in the marketplace: when the price a consumer sees in an ad is not the price they will actually pay, the entire shopping experience breaks down,” the commission said.
Consumers cannot comparison shop, the FTC said. “They cannot make informed decisions because they are evaluating prices that do not reflect reality,” according to the commission. “And legitimate dealers trying to compete honestly for consumers’ business by advertising truthful, all‑in prices are unfairly disadvantaged by competitors willing to advertise artificially low numbers that no customer can actually obtain,” the commission said. “The result is a marketplace that cannot function efficiently.”
The 14 questions are technical in nature and address specific issues that auto dealers may address. For instance, one question asks, “Can dealers use a representative photo of a particular vehicle in an ad?” And another asks, “Can the MSRP or discounts and rebates be included in ads?”
One section of the document urges the public to report potential violations to the commission. “The FTC closely reviews submitted reports, which can play a critical role in the agency’s consumer protection work,” the commission said.
As part of its efforts to encourage price transparency, the FTC earlier this year sent letters to 97 auto groups nationwide to encourage dealers to review their advertising practices and warning them that the prices they advertise must be the actual price that consumers will be required to pay to purchase a vehicle.
The FTC also warned that it continues to file lawsuits against dealers alleging that they mislead consumers by advertising one price, only to end up charging more for a vehicle.