In March, the Federal Trade Commission (FTC) intensified its scrutiny of automobile advertising practices by sending warning letters to 97 dealer groups nationwide. The letters emphasized a straightforward message: The advertised price of a vehicle should include all mandatory fees a consumer must pay to purchase that vehicle. According to the FTC, the only charges that may be excluded from an advertised price are required government fees, such as taxes, title and registration charges.

The agency urged dealers to review their advertising and pricing practices to ensure compliance with federal law. The FTC reiterated its commitment to preventing consumers from being subjected to undisclosed fees, hidden charges or other deceptive pricing practices.

“The FTC will remain focused on monitoring auto dealerships to ensure that the market functions efficiently and competitors are transparently competing on price,” said Christopher Mufarrige, director of the FTC’s Bureau of Consumer Protection.

FTC Makes Its Intentions Clear in Webinar for Dealers

Many dealers received additional clarity during a webinar with the FTC, hosted by the National Automobile Dealers Association (NADA). Dealers should carefully review their advertising practices and ensure that the price displayed to consumers accurately reflects the amount a customer will be required to pay for the vehicle.

What About Documentary Fees?

Perhaps the most significant takeaway for Mississippi dealers is the FTC’s position on documentary and service fees.

In short, the FTC expects documentary fees to be included in the advertised vehicle price. 

Regulation 8, adopted by the Mississippi Motor Vehicle Commission, governs the disclosure of documentary and service fees. While the documentary/service fee must be included in the prominently advertised price, the amount of the fee does not have to be disclosed separately in the advertisement.

MADA’s Recommendation

In light of the FTC’s position and ongoing enforcement efforts, MADA recommends that dealers include documentary and service fees in the advertised price of vehicles.

The FTC’s warning letters also identified several pricing practices that may violate Section 5 of the FTC Act and other consumer protection laws, including:

• Advertising a price that does not include all mandatory fees;
• Advertising prices that rely on rebates or discounts unavailable to all consumers;
• Advertising prices that fail to account for required down payments;
• Conditioning the advertised price on the consumer using dealer-arranged financing;
• Requiring consumers to purchase products or services not reflected in the advertised price; and
• Advertising vehicles that are unavailable or do not actually exist in inventory.

Example of Compliant Advertisement

A vehicle is advertised for $41,999. The advertised price includes the dealership’s documentary fee and represents the amount any financially qualified customer would pay for the vehicle. Only government-imposed charges, such as sales tax, title and registration fees, are excluded.

Example of Non-Compliant Advertisement

A vehicle is advertised for $41,999, but this total does not include a documentary fee (if charged by the dealership), requires dealer financing to obtain the advertised price, applies rebates that are not available to all consumers, or requires the purchase of additional products not disclosed in the advertisement. 

Massive Fines and Penalties

The FTC is armed with the ability to punish dealers with heavy fines and penalties. The Lindsay Automotive Group settled a complaint brought by the FTC and the Maryland Attorney General for a $3.1 million civil penalty and potentially more than $75 million in restitution to consumers.

What should dealers do now?

• Audit all current advertising (website, third-party listings, print, social) to verify all-in pricing.
• Contact your advertising vendors immediately to update listings.
• Train your marketing and F&I staff on the new requirements.
• Consider ComplyAuto’s Guardian platform to help stay ahead of FTC advertising requirements. Their tools include advertising compliance workflows, state-specific training modules and disclosure templates designed for dealers.

ComplyAuto has also created a dealer guide addressing federal advertising. The guide can be accessed on the ComplyAuto website, complyauto.com. The guide includes examples of advertisements that are in compliance with the FTC’s stipulations.