Trying to track down the actual price of a new vehicle can be confusing, as many automakers tack on destination freight charges and other associated dealer fees that can drive up the transaction amount. The Federal Trade Commission (FTC) is now looking to put a stop to the practice of implementing hidden fees in new vehicle transactions, this week proposing a rule change that would ban so-called “junk fees,” and other bait-and-switch style tactics.
The FTC put forth a Notice of Proposed Rulemaking this week and is seeking comment on proposed measures that would prohibit dealers from making deceptive advertising claims relating to the cost of a vehicle, financing terms, or the cost of any add-on products or services. It would also ban fraudulent add-on products and services that provide no benefit to the consumer, like “nitrogen-filled” tires, and would require dealers to disclose all costs and sale conditions upfront.
GM displays vehicle prices on its website including destination and freight charges, however this does not represent how prices may be advertised by a specific dealership. GM’s Canadian brand sites also display a $250 “dealer fee” as part of the transaction price.
This change would mean dealers would be required to include destination freight charges and dealer fees in the advertised price of a vehicle, leaving out only taxes and government fees. They would also have to disclose optional add-on fees and the fact that they are not required as a condition of purchasing or leasing the vehicle, along with disclosures related to financing terms and conditions.
“As auto prices surge, the Commission is seeking to eliminate the tricks and traps that make it hard or impossible to comparison shop or leave consumers saddled with thousands of dollars in unwanted junk charges,” the FTC said in a news release. “The proposed rule would protect consumers and honest dealers by making the car-buying process more clear and competitive.”
Under the proposed rule change, the FTC would also be allowed to go after dealers that partake in fraudulent business practices and recover the customer’s money. The Commission estimates the rule would provide a net economic benefit of around $29 billion over ten years.
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Comments
Finally.
Since businesses have shown time & time again when you give them unlimited freedom they turn into customer abusers it’s time to reign them in.
I’m in the business and embarrassed by the thieves in the business now. Auto groups were the worst thing to ever hit the business. Management teams from out of town with nothing to lose. They know they’ll be gone within 12 months and they lie, cheat, and steal like no tomorrow. They need to put CEO’s and dealers in jail. Things will stop then.
Just ban the dealerships. It is the worst experience of the whole buying process. They try to tape you for every penny and up sale possible.
Learn the magic word “no”.
I’m sure dealers will be upset about not being able to scam “free” money from unsuspecting buyers, but that’s why the rules are necessary
My favorite so far has been the non-optional LoJack+ fee for $3000 a dealer tacked on once we talked about numbers. They gave me some extra dollars on the trade and other fees, but I’m not paying an extra $1500 for something I would never use and couldn’t decline.
I’m a retired Gm employee I’ve bought a lot of vehicles in my life, all GM brands except Cadillac. Got to know a lot of salesmen and I’ve always told them when I bought a vehicle off the lot that I’m not going to pay for all the crap they added on and I didn’t. This year my daughter in-law told me she wanted to by an Equinox, so I told her let me know when and I’ll get an authorization # and I’ll call my Chevy guy. Unbenounced to me she went to a dealer that I’ve never used. So, I got an authorization # for her and went to the dealer. The Chevy she wanted had a $2,700 up charge with the typical junk on it, door guard, pin stripe, protective sealcoat for the paint and the upholstery, nitrogen in the tires. I told the salesman that was a crazy upcharge and were not going to pay for it. He told me he can’t sell the car without it. I asked him how I know that there’s nitrogen in the tires and why is it not on the sticker, he told me that “they put the nitrogen in when the cars are delivered, and you can tell because there’s a green valve stem cap.” I enquired about the Equinox that was parked behind it with all the other Equinox’s that had the same upcharge on it with black valve stems. He told me that they “probably didn’t take it too the garage yet.” I told him that if I wanted a pin stripe and door guard I can go to Pep Boys and buy that for about 30 bucks and walked away.
Haha. I just had a conversation with a saleswoman and she agreed to every lie I told her about my understanding of the deal. Not one objection. I should not be so cruel but I needed some comic relief. Buying a new car is just like diving into a cesspool. But it is not just the dealers. Check out the cargo net Chevy offers on the Bolt EV. Cheaper by far at your local Kawasaki shop. Because Chevy needs to sell you a two dollar item for seventy five dollars.
Honestly, you would rather your salesman make a mini commission while spending all day with you while you negotiate the price. Most dealerships disclose their price on the website yet client’s who hate to negotiate or so they say… squeeze every deal for every dollar and then complain like a victim that they hate the process… crazy….. only place on earth where that behavior is tolerated.. go into literally any store and pull that and they will laugh in your face and walk you out.. and GM employees are the worse and yes I have 5 in my family. The full GM discount is a negative gross profit deal for your poor salesman who has to deal with you all day… imagine the crying if factory employees worked all day for $100… I bet he was glad to see you go. The return of MSRP pricing is a just reserve for the entitled amongst us and you should be fortunate they were offering you your discount cause they don’t have to. In this market count your blessings!
100% agree. All these people clamoring for the death of the dealership have no idea what they are asking for. Buying direct from the manufacture is going to be a nightmare! Higher prices, no negotiation, a “take it or leave it attitude”, no customer service and long waits. The current system is designed to give people options. Don’t like the dealer, go else-where.
When buying new, I tell the sales person at the outset that I won’t consider add on paint and fabric treatments that I haven’t asked for, if that’s a problem I move on.
True, I will wait for the recession when prices and incentives will return to normal.
Bob, that may be a long wait… As long as there is a chip shortage that translates into a new vehicle shortage, they got you by the “boo-boo” unless you have an honest dealer… (may the force be with you in your quest)
Thanks I have an honest dealer and plenty of time.
Honesty! The problem is DIShonesty, Outright lies by a salesman. Charging $100 to mail the Certificate of Origin and title application to the DMV, when you could hand carry it when you get your plates. Making you buy a drop-in bed liner that voids Pick-Up bed warranty, while the liner is there to hide damage done by the dealer’s people etc. Making up excuses for not showing GM employees and retires their price shown right on the invoice. Just the tip of the sleaze iceberg. BTW, Every dealer makes good money on a GM vehicle sold to a GM employee and retiree. It is part of the GM Corp/Dealer employee pricing contract.
Bait and switch and add-ons are what the owner of a dealership decides on, and the salespeople just obey orders. I have no sympathy for a salesperson. And quite the contrary for someone who earns a hundred a day. Really? I remember sitting at a bar and hearing two new car salesmen bragging about how much they pulled down- 80 k was the cutoff for success and that was in 1997. The whole point of this is to hide the profit from the consumer. Chevy won’t tell you how much a car costs to build. Salesmen won’t tell you the wholesale price. And if you go into a retail shop, you don’t have to bargain. That is the whole point of these new regulations. So that people can comparison shop. I am going to buy a new Chevy soon. What the salesman says is just blabber. I know what I want. I will see if the advertised prices actually add up to what they want.
No doubt the industry used to be the wild wild west and I’m all for as much clarity for the consumer as possible and I respect the GM and other supplier discounts which is why I honor them still. In retail you don’t know the cost if anything from the close on your back to much less anything else you buy. Also it’s not 1997 anymore and the internet allows you to compare prices for the most part, i dont like anything hidden either. It is true that prepandemic and including full employee discount deals on new cars now are $100 commissions with a negative front gross. Guys like you I just whip out the invoice so you can be sure no one is getting paid… I miss the old days when I gave away free car washes once me and the guy down street have given away all the profit 😆 to get a deal closed. Appreciate the cess pool when you call 30 times to see if your Tahoe has been built yet but hey sales people don’t matter…
No doubt the industry used to be the wild wild west and I’m all for as much clarity for the consumer as possible and I respect the GM and other supplier discounts which is why I honor them still. In retail you don’t know the cost of anything from the clothe on your back to much less anything else you buy which is why it’s the retail price you pay. 50% off on a shirt when it was full price 6 months ago oh my… not a peep.. wonder what wholesale is on that shirt? , but a 3 to 7% margin on a car and they are the devil. Also it’s not 1997 anymore and the internet allows you to compare prices for the most part, i dont like anything hidden either. It is true that prepandemic and including full employee discount deals on new cars now are $100 commissions with a negative front gross. Guys like you I just whip out the invoice so you can be sure no one is getting paid… I miss the old days when I gave away free car washes once me and the guy down street have given away all the profit 😆 to get a deal closed. Appreciate the cess pool when you call 30 times to see if your Tahoe has been built yet but hey sales people don’t matter…
I sell cars for a very reputable GM dealer right around the corner from the proving grounds in Milford, Mi. I assure you that the deal you get at my dealer is a no nonsense up front deal. We hide nothing. We add nothing. You want to buy a product go right ahead. You want the paint coating. Pay for it. But we’re not requiring you to do anything you don’t want to do. But I dare you to go to the other gm dealer right next to us and see the up charges there. It’s all about how much the dealer really cares about the customer versus their money. Because if you treat the customer right. You won’t have to worry about the money coming in!
Comparing honest dealers in Michigan with the thieves in California is like describing night and day. Shea GMC and Buick in Flint, Michigan earned my business and a 2,200 mile journey because they are upfront, reasonable, accurate and honest. When I acquire my next GMC Sierra Elevation, I will take another vacation and see them again!
Nice to hear from you Jeff.
I also was a Michigan GM employee that bought many vehicles over the years. The Michigan dealers in most areas are way better than where I live after I retired (currently in Utah).
Really poor service here, no inventory, and incredible markups. The add on crap is also everywhere. You would think these guys in a religious state would be more honest. Nope. Not even close.
Side note: I’ve seen the markups on some Ford models out here that are 20,000 to 30,000 over sticker on one ton models. I don’t know how people afford this. I guess there’s one born every minute.
Poor out here, worse than I ever dreamed.
I may be taking a flight and road trip for my next vehicle.
Here in south Florida you will find Dealer Fee added on which is nothing more than PURE PROFIT for the dealer and nothing else !!
Florida has no limit on doc fees. The dealer can charge you $500 or $5,000. It’s really a shame. I worked for a dealer previously that added on all that nonsense. It was awful trying to explain that to customers. Then have the manager say take it or leave it. They’d let them leave! Costing me money and the dealership as well. That’s the same place that’s charging $13,000 over sticker for a Tahoe right now!
Speaking of “Stealer” rip-offs. what about these obscene “Documentary Fees” the “Stealers” are trying to charge ? That is their cost of doing business, not mine ! They keep raising and raising them. Just say no ! Then there is “CARVANA” who automatically charges their buyers with the Sales Taxes no matter if you reside in a State where the Sales Taxes are paid at the License Office. They claim they will refund Thousands of Dollars to you only once every 30 days provided you send them a Tax-Waiver….in the meantime, most buyers have had to increase the amount they are financing ( and CARVANA has ridiculously high Interest Rates….go elsewhere) and keep paying it for the life of the Lien. We recently found a car on CARVANA that we started the buying process on. When we ran into their nonsense about Sales Tax and they refused in a lengthy phone conversation to do anything about they lost a sure sale….not that they seemed to care !
From a salesperson at an honest dealership, GOOD. I personally don’t think I’ve ever met a customer who would continue the purchase process if non-disclosed fees suddenly appeared on their quote, but maybe that’s just in my market in metro Detroit where the next guy is 10 minutes away. In non-competitive small markets, I’ve definitely heard some stories about people willingly paying them, which is surprising to me.
Ours is one of the few industries where consumers still shop between different retailers of the same brand, despite our retailers being some of the lowest margin retailers in existence, and that shouldn’t be able to happen. A Chevy should cost X, and a Ford should cost Y, and consumers can shop between the brands themselves rather than feel that they didn’t get the best deal if they didn’t check with at least three different Chevy stores. Luckily we’re already heading down that path, mostly thanks to Tesla and their non-negotiation model that the other brands are eager to copy, but this FTC rule would seem like another step in that direction.
Before I bought my 2022 GMC Acadia Denali AWD with the V6 I asked for a detailed (in my case a 20+page) copy of the build sheet, and a copy of the “window sticker”. This way I knew exactly what I was getting, I knew what the factory price was listed at, then I went to work negotiating the dealer and government add-on costs… Then I negotiated what I would receive for my 16-year-old Pontiac Montana with the slipping transmission.
Oh, then I told them as Summer was coming, I wanted all the Winter air removed from the tires and fresh Summer air installed.
Hey Dee, I tried to get winter air installed in my tires but all my dealer had was hot air so it didn’t happen
Tell the dealer that you are NOT paying the bill and watch the air get frosty real quick!
The desire for no BS should work both ways.
Ordered a new van two weeks ago … paid noting down as I’m a repeat customer. If they try anything shady, I will walk away and leave them hanging. I agreed to $38K, no more. If they try to do add-ons, they will be left with a Transit Connect to sell to someone else.
I work for a no nonsense dealer. Everything is by the book. My commute has been 40 minutes a day for 15 years. I pass two others stores selling the same brand and have turned their job offers. However, I don’t have to hide from customers and I can sleep at night knowing I did the right thing. Best advice to the consumer. Find a dealer that only owns one store and is involved in the store and the community on a daily basis. Odds are they care about their reputation and treat you a lot better. Especially, in a smaller market. The bigger they get, the worse they get. Greed becomes their mission.
Just bought a new GMC with all the BS extras. 5K over MSRP. How can I get this money back. FTC contact me below.
When buying new, I tell the sales person at the outset that I won’t consider add on paint and fabric treatments that I haven’t asked for, if that’s a problem I move on.
Lol, at closing of my last new purchase in 19, the finance manager told me they don’t make any money on the new car sales, just on the service. Of course the dealership building looks like a palace, so I’m not buying that.
Leased a 2021 Colorado ZR2 on a 2 year term. I paid all the admin fees which amounted to approximately $450. I kept the truck 6 months and decided it wasn’t a fit so I decided to send it to auction. Made $3700 more than the dealership was gonna give me after paying them another $450 to release the truck. It’s about time the hammer came down on them.
Last Fall they had no inventory of course and were selling cars with 2-3 thousand miles, loaners, with new prices almost. I told them I was paying cash. They spent 45 minutes trying to talk me into financing, claiming they didn’t make anything, it was just a service for the customer. They tried too hard. I put my check book away and walked. This was Metro Detroit.
What store?
Serra Chevy on Telegraph in Southfield.
Yeah, not surprised unfortunately. Serra is a massive group, no one with an ownership stake is involved in the day-to-day operations of any of their stores, just managers trying to increase the bottom line for their absentee overlords.
I did finally find a car . My parameters were : Equinox, 2.0, 9-speed(which is awesome), AWD, Made in Canada(it’s a retired auto worker thing). This meant I had to go back to 2019 model year. Found one the week before Christmas. The dealer had had it for a while and the price was lowered twice I think so I bought it. I love this car. After years of driving big vans I feel like I’m driving a Camaro, but with good visibility. This car supposedly had a “clean Carfax”. However, when waxing it this Spring I discovered the whole right side had been painted. It’s a good paint job, but still… So I guess Carfax is just another gimmick that doesn’t mean anything.
In Canada, GM finance only does leasing. GM does guarantee a reduced rate for buyers that are purchasing through a bank… GM guaranteed 2.9% rate on my 2022 Acadia Denali for bank financing. The funny thing was if a person were to lease instead of buying, the interest rate was much higher through GMC Financing
Gee, it only took a Democratic Administration to get this ball rolling.