Dealers' Associations Ask Courts to Block FTC's Ban On Hidden Fees
While most car dealerships are honest, legitimate businesses, some don’t hold their customers in such high regard, charging more than they should without the right disclosures about what the fees are for. Hidden fees aren’t just annoying and shady, though, they can be very expensive, and last year, a Federal Trade Commission ruling aimed to shut the practice down.
The National Automobile Dealers Association protested the decision, joining the Texas Auto Dealers Association in filing a petition in the Fifth Circuit Court of Appeals, leading to a pause on the FTC's rule.
Known as Combatting Auto Retail Scams (CARS), the rule was set to take effect on July 30 this year, but it will remain on hold until the legal process moves forward. The groups requested to expedite the court’s decision, which could mean a ruling by the end of 2024. They’re arguing that the FTC had no jurisdiction to make the decision and are asking the court to block it.
CARS is tremendously unpopular with car dealers, so much so that they’ve also asked Congress to step in with laws to limit the FTC’s involvement in regulating their business. Though it said rule-following dealers have nothing to worry about, the FTC’s suggested fines for running afoul of the rules are significant and could be an enormous burden for smaller businesses. Dealers found to be violating CARS rules could see fines of $50,120 for every offense.
[Image: Daniel J. Macy via Shutterstock]
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Chris grew up in, under, and around cars, but took the long way around to becoming an automotive writer. After a career in technology consulting and a trip through business school, Chris began writing about the automotive industry as a way to reconnect with his passion and get behind the wheel of a new car every week. He focuses on taking complex industry stories and making them digestible by any reader. Just don’t expect him to stay away from high-mileage Porsches.
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Can you believe the balls on these clowns?
Pre pandemic I bought a new 2019 Ram pickup truck. After we entered the den of the "business manager" he attempted to sell us an extended warranty by sneaking a $3k charge on the sales contract without mentioning it. A resounding no! sent him scurrying from the room and he returned with an offer of $1.8k for the warranty. We bought, the only time i have I ever bought an extended warranty. Turns out, three years later the truck had a severe software glitch to the tune of a $1.8k charge, which was covered under the extended warranty. Nobody made money on this deal, and it was the only time I ever got over an F&I guy.