The Federal Trade Commission (FTC) recently unveiled a new rule designed to protect consumers from deceptive practices at auto dealerships, including loan packing, high-pressure sales tactics, and other scams. The goal of the rule is to ensure that consumers receive clear, timely information about all the costs associated with purchasing a car, making it easier to compare prices and make informed decisions.
Under the new rule, dealers must provide accurate, non-deceptive information about products and services, including prices, financing, trade-in values, and optional add-ons. Dealers must also provide buyers with a completed buyers’ guide at the time of purchase complete with terms, conditions, and other important information. Dealers must now include an early termination fee in the total cost of a loan if they require a consumer to terminate early.
The FTC estimates that deceptive practices at auto dealerships have cost consumers an estimated $1.2 billion per year over the last decade and the new rule is intended to help protect against such practices in the future. The new rule will also provide consumers with an easier means of comparison shopping, enabling them to identify and avoid deceptive practices.
The new rule, which is set to take effect in July 2017, is the culmination of a long-term effort by the FTC to ensure a fair marketplace for auto dealers and consumers. The commission has heard directly from affected consumers and reviewed industry research to ensure the rule is necessary and effective in protecting consumers.