FTC Addressing Auto Sale Add-ons, Price and Financing Disclosures, Yo-Yo Sales, and More
The Federal Trade Commission (FTC) is a federal agency that actively aims to provide American consumers with the proper and needed protections across many different industries including the Auto Sales industry. Additionally, the FTC has also established regulations for car dealerships regarding auto sales add-ons, price and finance disclosures, and so-called, “yo-yo sales.”
However, these are concerns that need not overwhelm the auto industry or car dealerships. Here are some ways in which a car dealership can manage these FTC regulations:
- Auto Sales Add-Ons: Car dealerships should always ensure they clearly and conspicuously disclose all add-ons, such as extended warranties and any maintenance plans, before finalizing the sale. They should also provide customers with a separate document outlining the costs and terms associated with these additional add-ons. Dealerships should also avoid using misleading or deceptive advertising practices, such as implying certain add-ons are required to receive financing approval.
- Price and Finance Disclosures: Car dealerships should likewise provide their customers with accurate information concerning the total cost of their vehicle, and they should also include any fees or charges, including all financing terms, such as interest rates and monthly payments. Furthermore, car dealerships should also disclose any information likely to impact the customer’s decision, such as the vehicle’s history or condition. They should avoid using deceptive or confusing language in their advertising or sales pitches.
- “Yo-Yo Sales”: Car dealerships need to be sure that they aren’t engaging in what’s known as, “yo-yo sales,” where a car dealership leads their customer to believe that they’ve finalized the purchase and financing of a vehicle, and then afterward tells that customer that their financing has fallen through, and so, they need to either return the vehicle or come back and sign a new contract with less favorable terms, costing the consumer more money. Car dealerships should be certain that any financing is secured and completely finalized before allowing the customer to actually drive off the lot. And if a financing issue should happen to arise, dealerships should immediately work with the customer to find an honest, fair, and transparent solution to this issue.
Generally, auto dealerships can follow all of these FTC regulations easily by simply:
- Being transparent and honest in all of their vehicle sales practices
- Proactively providing information for their customers that’s clear and accurate
- Avoid engaging in any deceptive practices
- Carefully work with their customers (if and when they need to resolve any issues)
By operating in such an above-reproach manner car dealerships are also able to build up a solid level of trust allowing them to establish long-term relationships with their customers. And, remember that our partner Bay Country Finance offers additional products in support of our dealer partners and their customers. From loans to help with occasional repairs, or extended warranty support, Bay Country and Bay Motor Finance are here to stay and offer our partners consistent support.
