FTC Dealer Crackdown Means Transparency Needed in Pricing

Car dealers have always been held to a higher standard when it comes to pricing their vehicles to consumers. Unlike most industries, dealers must divulge the path through which they came to a purchase price before actually selling a vehicle to a customer. Now, the FTC is cracking down on the way that the cars are advertised as well.

The mandate for transparency of vehicle pricing has been in effect since 2013, but few states have been enforcing it yet. The FTC has recently started taking the measure into their own hands, finding dealers that are not transparent in the way they come to a price in their traditional and digital advertising.

In essence, a vehicle’s advertised price needs to be calculated out on their website and other marketing venues. For example, if the dealership reaches a price or payment based upon factory incentives or special programs, that path to the price must be visible in the advertising. This poses a big potential problem for dealers today because the majority of website providers do not have that functionality in their inventory without manual effort on the part of the dealership.

Website plugin company Automark is the only one that we’ve found that automates that process. By pulling in data from multiple sources to tie directly into the dealer’s inventory listings, they keep the dealership in FTC compliance by detailing how the dealership came to a sale price on their vehicles.

“We don’t want any of our customers feeling like they can’t understand the pricing on the Web or on any of our ads,” said Andrew White, vice president of Don White’s Timonium. “Instead of disclosing all rebates included, we now break down the rebates that are involved in the discount.”

As transparency in pricing continues to move from a best practice to a mandate from the federal and state governments, dealers will need to adjust their advertising practices to stay in compliance.