The Federal Trade Commission (FTC) sent warning letters to 97 dealer groups representing more than 500 dealership locations in March, putting the automotive industry on notice about compliance with advertising standards, according to Jim Ganther, Vice President of Ascent Dealer Services.
Joining us on the latest episode of Training Camp, host Adam Marburger sits down with Ganther, who outlines the six steps dealers should take to mitigate risk.
“I think this was a warning shot. And the next time, the FTC will be firing for effect.”
According to Ganther, the letter is a warning, not a CID (civil investigation demand) or subpoenas. He then dives into the six main advertising compliance risks the FTC believes may violate federal standards, such as:
- Advertising a price that does not reflect all required fees
- Advertising rebates or discounts that are not available to all customers
- Advertising that fails to account for the required down payment
- Conditioning the advertised price on dealer financing
- Requiring consumers to buy additional items not reflected in the advertised price
- Advertising unavailable or non-existent vehicles (bait and switch)
Ganther expressed that the FTC’s interpretation marks a shift from common industry practice, in which dealers often itemize fees separately as long as they are clearly disclosed.
The warning also comes as states begin adopting elements of the federal vehicle sales rule, commonly referred to as the CARS rule. Ganther pointed to California’s Cars Act as a subset of the federal framework, noting that it incorporates key provisions related to pricing transparency while introducing additional requirements.
Among those is a three-day right of return for used vehicles priced at $50,000 or less, a policy Ganther said could affect dealership cash flow and inventory risk. Therefore, he asserts that dealers may need to factor in potential returns and reconditioning costs when pricing vehicles, particularly since contracts cannot be finalized until the return window closes.
Moreover, Ganther said the broader impact of the FTC’s warning could extend beyond individual dealerships to the infrastructure supporting digital retail. Updating pricing compliance would require widespread changes to dealership websites, many of which rely on a small number of platform providers.
“There are only four or five companies that do 95% of all dealer websites,” he said. “They’ve got to redesign all of them. That’s not going to happen overnight.”
To address the issue, the FTC and the National Automobile Dealers Association (NADA) have scheduled a joint webinar for April 6 to provide further guidance. Ganther expects the session to reinforce the agency’s current stance rather than introduce major changes.
Looking ahead, he said the industry may be given a defined compliance timeline, similar to California’s October 1 enforcement date for its Cars Act. Once that deadline passes, enforcement actions could follow.
