FTC may ban some car dealer tactics

Proposal aims to protect consumers from bait-and-switch advertising, junk fees

The Federal Trade Commission's proposed rules would ban some car dealers' sales tactics in an effort to protect consumers from shady practices.

SAN ANTONIO – Ever been frustrated by a car-buying experience or shaken hands on a deal only to realize later you’d been taken for a ride?

The Federal Trade Commission is proposing new rules they say will protect consumers from questionable sales tactics.

One practice they would ban is not disclosing the full price of the car when you ask.

“Until then, you’re going to want to get as much information in writing from the dealer as possible,” said Consumer Reports’ Keith Barry. “Ask for an itemized, out-the-door price.”

That includes add-ons that have already been installed on the car.

“Under those new rules, you wouldn’t have to pay for those extras,” Barry said. “But, in the meantime, you’re going to want to negotiate to get them taken off.”

The FTC says nearly half of a dealer’s profit from a new car sale and about one-third of the profit from a used car sale come from extra financing, leasing, and services fees. So, Barry says be sure to check the paperwork and the math.

“If there is an extra that you want to buy, negotiate the price on that and don’t fall for unnecessary extras,” he said.

An example is nitrogen tires. Consumer Reports has seen charges as high as $495. But, one company says dealers should charge $8 to $12 for a fill.

Another frustrating experience is when the buyer goes to pick up the car only to be told there was a mistake, that the car was sold, and the only one left is more expensive.

“It’s the classic bait and switch,” Barry said. “In some states, it’s illegal and at the very least an unfair trade practice. So, this is your sign to walk away.”

Earlier this summer, the head of National Automobile Dealers Association issued a statement issued a statement saying deceptive practices should be dealt with but that the FTC proposal was unwarranted.

“The FTC’s proposed rule would impose a vast array of new, completely unwarranted, redundant and ineffectual requirements that will cause great harm to consumers by increasing prices, extending transaction times, and making the customer experience much more complex and inefficient,” NADA President and CEO Mike Stanton said.

He went on to say that deceptive practices should, however, be dealt with.

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About the Author:

As a consumer reporter, Marilyn is all about helping people stay safe and save a buck. Since coming to KSAT in 1985, she’s covered everything from crime to politics, winning awards for her coverage of the Mexican Mafia, Oklahoma tornadoes, children’s transplants, an investigation into voting irregularities and even a hit-and-run Santa Claus.