FTC Finalizes New Rule to Stop Auto Dealers from Ripping Off Car Buyers

December 12, 2023 Press Release

Washington, D.C. — In response to a final rule announced by the Federal Trade Commission today to stop the use of junk fees and bait-and-switch tactics that auto dealers target at consumers buying a car, the American Economic Liberties Project released the following statement.

“We’re thrilled to see the FTC stop auto dealers from ripping off working families during one of the biggest purchases of most Americans’ lives,” said Erik Peinert, Research Manager and Editor at the American Economic Liberties Project. “The Commission has clear power to police unfair and deceptive behavior across the economy, including banning surprise fees, fraudulent fees, and bait-and-switch tactics that plague so many during the car buying experience. The unfortunate truth is that already vulnerable communities—like veterans and low income households—are often the most susceptible to these exploitative tricks. This new rule will save consumers billions of dollars in extra cash and millions of hours in wasted time, promoting honest business and transparent car sales across the country.”

In June 2022, the FTC proposed a rule to ban the junk fees and unfair tactics that harm consumers when they purchase a car. These include deceptive advertising claims on the cost or financing of a vehicle, fraudulent junk fees like including “nitrogen filled” tires that simply contain normal air, and surprise add-on junk fees that bump up the price of a car for options that consumers were not informed of. After receiving tens of thousands of comments — many of them in favor of the rule — the Commission today proposed a final rule to take immediate effect for car dealerships across the country.

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The American Economic Liberties Project works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. Economic Liberties believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.