Dealer Alert: FTC Sends Warning Letter Regarding Illegal AdvertisingMay 2026 | Pennsylvania Automotive Association The Federal Trade Commission (FTC) sent warning letters to 97 dealers in March regarding illegal pricing, including advertising a price that does not reflect all the required fees. Dealers can view the FTC warning letter online at https://www.ftc.gov/system/files/ftc_gov/pdf/AutoWarningLetter.pdf The National Association of Automobile Dealers (NADA) met with the FTC to clarify the information. The FTC stated:
The FTC has the authority to regulate dealer advertising as unfair or deceptive acts or practices under Section 5 of the FTC Act. This prohibits advertisements that materially mislead consumers or fail to clearly and conspicuously disclose material terms. The definition of advertising is broad and includes social media, online posts, television commercials and radio messages. A dealer’s oral representations can also constitute advertising. In reviewing advertising, the FTC asks what a reasonable consumer would understand. Responsibility for Advertising Dealers are responsible for their own advertising and messages they can control. NADA recently hosted a webinar where the FTC acknowledged there are issues related to control by entities such as OEMs and third-party platforms, and the FTC is open to learning more. Dealers should beware that the entity that controls the ad content is ultimately responsible for its accuracy and that third party sites should understand these requirements and cooperate with dealers to ensure the price is being advertised compliantly. “Most Prominent Price” The most prominent price in any advertisement must be the all-in, out the door price available to all consumers. Consumers can also purchase a vehicle for a lower price than advertised. More guidance can be found in the FTC’s dotcom disclosure guidelines on page 17. You can access the guidelines online at: https://www.ftc.gov/system/files/documents/plain-language/bus41-dot-com-disclosures-information-about-online-advertising.pdf Documentary Fees During a NADA/FTC webinar, the FTC was very clear that this ‘most prominent price’ must reflect everything except government charges (taxes and title), and must include the documentary fee (doc fee). Documentary fees are not government fees – they are permissible but not required by state law. While it was previously permitted to exclude the documentary fee from the advertised price under Pennsylvania’s Attorney General Automotive Industry Trade Practices Regulations, the FTC has taken the position that the doc fee must be included in the advertised, most prominent price. Dealers can separately disclose the doc fee, if it is less prominent and included in the most prominent price. The FTC’s compliance expectation is that dealers in all 50 states need to include the doc fee in the advertised price. Other examples of government fees, pass through messenger fees, or split fees may be addressed in the FAQs that the FTC has promised to publish. Advertising MSRP The most prominent price in an advertisement needs to be the total price a consumer will pay. An ad can display the vehicle’s MSRP, so long as it is displayed less prominently. Credit and Lease Advertising While the warning letters addressed advertisements for vehicle sales, the same principles would apply to lease advertisements. Neither the warning letters nor the FTC’s Section 5 authority replace any advertising or disclosure requirements for leases and credit sales under Regulation M and Regulation Z.
Advertising Rebates and Discounts The most prominently displayed price may not include rebates or discounts that are not available to all consumers. Advertisements can, however, include rebates for certain consumers (first responders, service members, students, etc.), so long as they are properly disclosed and less prominent than the all-in price. Conditioning Price on Consumers Using Dealer Financing The most prominently displayed price may not be conditioned on dealer financing, which is not available to all customers. Dealers can advertise a price conditioned on dealer financing, so long as it is properly disclosed and less prominent than the all-in price. Optional Products Consumers may select optional products related to a vehicle that would increase the amount paid over the advertised price provided it is clearly communicated that such products are optional and not required to purchase the vehicle at the advertised price. This should include optional add-on equipment to the vehicle; if such equipment must be purchased, it must be included in the advertised price. If it is abundantly clear that it is optional, it may be excluded. Future FTC Enforcement The FTC intends to aggressively pursue dealers that are not complying with Section 5 and will be developing FAQs to supplement the information provided in the warning letters and during the webinar. NADA will continue actively engaging the FTC as it develops the FAQs and continue educating the FTC on dealer advertising. PAA’s powersports dealers and heavy-duty truck dealers have questioned whether these advertising requirements under the FTC Act also apply to their industries. While the FTC’s warning letters were specific to automotive dealers and their enforcement actions to date have focused on the sale of new and used cars, the FTC Act applies broadly to all industries. The FTC has the authority to enforce these requirements on powersports and truck dealer advertisements. PAA to Host Webinar on Advertising The Pennsylvania Automotive Association (PAA) will host a webinar for Pennsylvania dealers on May 12 to provide additional guidance. To register, visit https://apps.paa.org/EducationOnline PAA also encourages attendance at upcoming Regional Meetings. To register, visit www.paa.org. |
