On Aug. 19, the Federal Trade Commission (FTC) and the State of Connecticut announced a settlement to resolve allegations that a dealership misled consumers by charging customers for “certified pre-owned” vehicles and collecting other fees without authorization. The FTC filed the case in 2024 against the dealership and its leadership, including the principals, the general manager, the finance manager, and sales managers. The dealership neither admitted nor denied the allegations but agreed to pay $4 million for consumer redress.
This settlement follows the FTC’s March 13 announcement that it sent 97 letters to dealerships warning of potentially illegal advertising practices. The FTC stated that “the agency is dedicated to ensuring that consumers only pay the advertised price for products and services, and are not subject to undisclosed fees, hidden charges or other illegal conduct.”
The FTC and the Connecticut Attorney General alleged that the dealership required customers to pay to “certify” used cars that the dealership had advertised as “certified pre-owned.” They further alleged that other charges, such as total loss protection, were inserted into financing agreements without the customers’ consent. A senior FTC official described the allegations in this case during an April 6 NADA webinar. (login required)
The settlement requires the dealership to advertise the total price of a vehicle clearly and conspicuously as the most prominently displayed price in any disclosure. The total price of a vehicle is the maximum total price, including all mandatory fees or charges a consumer must pay for a vehicle, except government charges.
The settlement further states that if the dealership charges a processing fee, such as a conveyance or document fee, this fee must be both included in the total price and shown separately next to the total price where separate fee disclosure is required by state law.
The settlement also requires the dealership to obtain express, informed consent before charging a consumer for any add-on product or service.
FTC settlements are only between the party and the FTC and are not an admission of guilt.
Dealers should carefully review the recent enforcement actions with an attorney familiar with federal, state, and local laws governing vehicle advertising, sales and financing, as well as with their dealership operations personnel to determine appropriate compliance measures. In addition, NADA will soon release an updated Dealer Driven Guide on federal advertising requirements.
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