The Federal Trade Commission, or FTC, recently unveiled their newest initiative to crack down on fraudulent auto dealerships. This new rule is set to protect consumers from deceptive practices and misleading statements by prevent car dealerships from using certain marketing tactics.
Under the new legislation, car dealerships will be prohibited from using “bait-and-switch” tactics, where they advertise one vehicle for sale and then switch it with a different, more expensive model. They are also prohibited from giving false pricing information, which some unscrupulous dealers have used to get customers to sign contracts that will cost them more money than they expected.
The legislation also puts limits on car dealerships’ ability to facilitate financing or leasing agreements with creditors. They must now disclose the full details of any financing offers to customers upfront, instead of waiting until the customer has already agreed to the deal. This should help consumers be aware of any hidden fees or other costs associated with the agreement that would have otherwise gone unnoticed.
The legislation also makes it illegal for car dealerships to misrepresent the value, safety, or quality of a vehicle. Any advertisement claiming the vehicle has achieved certain recognitions such as Consumer Reports “Best Buy” must also include a complete description of that recognition.
Finally, it was determined that car dealerships should not be allowed to make any statements or claims about the creditworthiness of customers in order to sign them up for financing or leases. Customers should never feel forced or coerced into signing contracts that they don’t understand or feel comfortable with.
The FTC hopes that this new legislation will help put an end to the deceptive practices that some auto dealerships have been known to use when dealing with customers. Customers should always be made aware of all the details of any contract before signing it and be confident in the deal that they are entering into.