In an April 17 Webinar sponsored by NADA, the FTC confirmed that under its authority pursuant to Section 5 of the FTC Act, advertised prices of vehicles in all 50 states, irrespective of state laws, must now include documentary fees. The FTC reached this decision by excepting only “mandated” charges, such as license, title, and tax, from advertised prices. Documentary fees, while “authorized”  in many states (like Illinois) are not “mandated” in any state.

Andrew Ferguson, Chairman of the FTC, and Chris Mufarrige, Director, Bureau of Consumer Protection, provided the guidance. Chairman Ferguson noted that voluntary adherence to these guidelines will act to prevent additional federal regulation.

Additional items discussed were:

1. Advertising is defined broadly, and includes any written or oral representations in any medium, including on the showroom floor.
2. The party responsible for content is the party that is subject to FTC enforcement.
3. Dealers may show the MSRP of the vehicle in their advertising (as “MSRP”), but the advertised price, in the largest and most notable type, must also include the documentary fee.
4. In lease advertisements, the amount due at signing must also include the documentary fee.
5. All advertised vehicles must be readily available for purchase. If a previously advertised vehicle has been sold, it must be promptly deleted from the website or other advertising medium. The term “in transit” is permitted, but dealers are urged to err on the side of caution with such language. “In transit” could reasonably refer to a couple of days; a couple of weeks would seem unreasonable.
6. Any additional products added to a vehicle must truly be optional and consumers must clearly consent to purchasing such products.
7. Limited rebates can be shown, but cannot be included in the most prominent advertised price of the vehicle.

The FTC will promulgate a list of Q&As on these topics in the near future.

Dealers who feel their competitors are unfairly violating any of these rules can file a complaint directly with the FTC at https://reportfraud.ftc.gov/. As these are now deemed to be “federal” violations, such reporting will likely take the place of current reporting of these violations to the Better Business Bureau.

NADA members can find a recording of the April 17 webinar here. 

Better Business Bureau: FTC Requires Doc Fee to Be Included in Advertised Price

The Better Business Bureau (BBB) is aware of the Federal Trade Commission (FTC) requirement that documentary service fees charged by dealers nationwide must now be included in advertised prices of vehicles. This new federal mandate conflicts with Rule 475.310 of the Illinois Motor Vehicle Advertising Regulations. The same situation exists in over 20 other states that also allow doc fees to be excluded from advertised prices as long as the fees are clearly and conspicuously disclosed. The FTC states that Section 5 of the Federal Trade Commission Act, the basis for the recent 97 letters to dealers nationwide, preempts state laws concerning doc fees that conflict with this mandate.

The CATA/BBB advertising review program, in effect since 1996, is the place where dealers can refer those competitors who may be non-compliant with the Illinois Motor Vehicle Advertising Regulations, ensuring a fair marketplace for dealers and consumers. The program is based on Illinois law enforced by the Illinois Attorney General and is handled by the BBB with permission from that office. However, the requirement that doc fees must be included in advertised prices nationwide is a matter of federal law enforced by the FTC; the BBB has no role in that. As a result, the BBB is not the correct place to refer dealers who fail to include doc fees in advertised prices. That place is exclusively ReportFraud.ftc.gov.

The FTC will consider complaints as it determines what enforcement actions to take. In addition, the FTC intends to partner with the industry nationwide to understand who the “bad actors” are through complaints and to limit its enforcement actions to this category of dealers. Therefore, it is important that Illinois dealers use ReportFraud.ftc.gov to inform the FTC of doc fee issues, as well as other issues, to further these goals. The BBB will also continue to accept dealer referrals concerning the Illinois Motor Vehicle Advertising Regulations, as they have consistently done under the CATA/BBB advertising program for 30 years.

We hope this article clarifies the role of the CATA/BBB advertising review program going forward considering the FTC doc fee mandate. 

FTC Vehicle Price Advertising Guidance: Frequently Asked Questions

The CATA has received a growing number of inquiries from dealers regarding the Federal Trade Commission’s recent guidance on vehicle price advertising. In response, we have compiled the following frequently asked questions to help clarify key requirements, particularly around what must be included in advertised prices and how these changes may impact dealership practices.

Question: Do we need to include the price of the Doc fee in the advertised price we are showing?
Answer: All items other than license, title, and taxes (“government mandated fees”) must be included in the advertised price. This includes documentary fees and electronic titling fees, both of which are “authorized” under state law but not “mandated” under state law. This is a major change, because these fees were not formerly required to be included in the advertised selling price. To clarify, if the titling process is done electronically by a dealership, the titling fee that is added to that process and collected by a third party, (CVR, VITU etc..) must be included in the final selling price.  If titling a vehicle is not processed electronically by the dealer and is mailed or emailed to the Secretary of State, then no titling fee is part of the transaction and therefore the selling price does not need to reflect a titling fee at all.

Question: What about taxes, when are they presented?
Answer: Taxes, both local, state and federal and calculated after the final asking price of the vehicle.

Question: What else should be included in the final vehicle pricing?
Answer: Any rebates can be included in arriving at the advertised selling price provided those rebates are available to all customers with no qualifications. For example, if a dealer or manufacturer offers a military or a first responder rebate, a trade-in rebate, or a financing rebate, these rebates cannot be included in the advertised selling price because not every consumer will qualify for them. While these types of rebates may not be included in an advertised selling price, they may be referenced in the advertising with language like “military (or first responder, trade-in, or financing) rebates are also available for qualified buyers.”

Question: What about add-ons like undercoating or warranties?
Answer: If an add on is required to be purchased, its cost must be included in the advertised selling price. If the add-on is optional, its cost need not be included in the advertising selling price. Of course, a customer may always agree to an add-on during the negotiation of the transaction. Add-ons are subject to sales tax as part of the cost of the vehicle.

Question: Do we list all taxes in the advertisement or not.
Answer: No, taxes can be calculated outside of the vehicle asking price.