The Expert Podcast

…So you're starting to see some more availability in the new car market Some vehicles on new car dealers lots maybe some offerings that are not marked up over MSRP, but according to our friends over at Jalopnik. The new car deals might not be as good as they seem many deals that are advertised under MSRP are too good to be true What do they mean by that And more importantly, at the same time there's more inventory…at the end of 2022 There's new laws that make some of the pricing. Tactics by dealerships illegal the federal trade commission. Has put some new rules out or interpretation of existing rules that may be make it illegal for the dealership Not to give you a good deal Think about that. It might be required under federal law for a new car dealership to give you a good deal on a car. You know how you need to know how to ask for it. You need to know how to expect it, but it might be a new law. That a car dealership gives you a good deal on a car So let's dive into it We're going to look at the federal register, the FTC policy. but let's first take a look at what Jalopnik is talking about with the, the pricing They give an example of a car that they saw happen to be a Volkswagen for sale with a price that seemed like it was pretty good. It had the price the payment, all the details And then it had the small print and they went through it all It said the pricing is after a trade incentive of a thousand dollars, which means that if the customer doesn't have a trade in. You don't have that discount. Right So by trading in a vehicle, Volkswagen would give you an additional thousand dollar dealer arranged financing. Also, you have to have financing with the dealer So if you finance it yourself, Or through a credit union or pay cash you don't get that. You have to do it through VW credit at a non-subsidized APR What that means is you have to pay a higher interest rate in order to get that deal So there's two things about this deal that don't apply to everybody. Here's another deal they looked at that had in the fine print, includes a thousand dollar customer discount for conventional financing. from the dealership through a lender of our choice. And it has dealer installed items. 8 99 for paint protection window 10 for 7 99. Vehicle theft protection of 2 99. Dent and ding protection of 2 99 and three years of paid maintenance for 8 95. So you're talking three or $4,000 worth of ad-ons to get this deal. If a customer doesn't take the dealers loan. With a higher rate and take all those things. That means you got to pay another $4,000 for the car. Right. So what you're finding is they're showing you a price on their ad. Which gets your attention but then you find these smaller details that NA now you might say well, I wouldn't fall for that. I would find that out Well you're probably right. You may as a consumer, find out these extra charges and not buy the car but according to the FTC, Just offering that misleading price. Might be illegal. Even if you find out the price is not what it's supposed to be and you walk away. That caused harm to you because you spent time, you diverted yourself from a competitor and they consider that to be anti-competitive. Activity under section five of the FTC commission act unfair methods of competition. Include doing something to get your attention away from another competitor. By making it seem like you're a better deal or a better offering. Even if later on you say well we just made that up and it's really not that price. The diversion of your attention from the competitor was an unfair practice and are going to start cracking down on this this entire 16 page document talks about what conduct is an unfair method of competition. And it's now been adjudicated This is relatively new This is November of 2022 unfair conduct Isn't just. Whether or not you. lie about a competitor or you do something underhanded. If you divert. The initial attention. Of a consumer. From a competitor to you. Even if you own up to it later. That's unfair. How does this apply to dealerships while on the federal register, they talk about more motor vehicle dealers, trade regulation rule. Right. And what they're talking about is very specifically. Prohibiting dealers from making certain misrepresentations in the course of selling leasing, financing or arranging financing. Require accurate pricing disclosures. And more importantly, prohibit the sale of any ad-on product or service that confers no benefit to the consumer. And require dealers to keep records of advertising and consumer transactions. So a dealer can't do an ad and then delete it and then say it never existed You have to keep records of those And they get into your time being valuable as a consumer buying or leasing a vehicles not only inexpensive in price but the transaction is time consuming and arduous. This is. A common complaint about dealers It's like hard process You don't want to go through the hassle of dealing with a motor vehicle dealership a car dealership. And part of that hassle is to make to wear you down as a consumer Well the FTC is dealing with this They say that consumers who purchase a vehicle may spend five hours or more at a dealership doing this. Doesn't include the time spent visiting dealerships when they do not make a purchase So think about that. You may go to multiple dealerships and not make a purchase. And maybe it's not just comparing prices or comparing. Models It might be that you went to a dealership thinking one thing and then you wasted your time because when you got there the vehicle wasn't available or the deal wasn't the way it was supposed to be described. And not including financing That's section one they talk about deception and unfairness. in the motor vehicle marketplace, just because they get away with something and you signed for it doesn't mean it's fair And the FTC is addressing that And here's where they talk about diverting You misleading advertisements can cause significant consumer harm and it's not just if you pay too much even if you walk away from that deal. You end up selecting that dealership instead of others and spending time visiting it and transacting with it under false pretenses So even just visiting the dealership. Can steer you away from an honest dealership that says here's an honest price. I'm willing to sell it for that. And they talk about what are the unlawful practices. For ad-ons and deceptive pricing. The protracted paperwork process can make it difficult for consumers to spot ad-ons, especially when the advertised price didn't have it. If the consumer finances the vehicle, and then they do a separate. finance process you have to sign 20 or 30 documents and they can hide stuff in there. And what happens a lot of times when you get to the end of the process many hours later you would just want to get out of there. You're so tired You worn down You don't want to be there anymore You just want to get it done and over with and they take advantage of that. So they add on something that wasn't agreed to in the original negotiation or an original price. And you just say fine I'll just deal with it I just want to get out of here because of your time is valuable You may not be able to take another day off from work. You may not be able to find another car and it's not even that they get you to buy a car it's even to get you to visit it. A prohibited misrepresentation. Is likely to affect the consumers choices whether to visit a dealership or not. So it's not enough that the misrepresentation made you buy something or force you to spend money. Even if a misrepresentation makes you visit a dealership. That is something that is prohibited and getting back to this Jalopnik article, if they offer you this supposedly great price, and then all of a sudden the fine print says well, it's really not true because you have to finance with us and buy all these things. That's a misrepresentation This could be construed as illegal under FTC rule five. And part of the harm is that it diverts business from reputable dealerships that provide truthful advertising. And makes you go to the dealership That's less than honorable consumers who select and travel to dealerships based on an advertised offer only to learn late in the process that the offer does not apply have often spent many hours trying to purchase a car, even if they notice and successfully resist later added fees or leave learning the discounts do not apply the misleading advertise. Advertisements caused them to waste hours driving to and visiting the dealership. For many consumers walking away is not a realistic option For example, restarting that process at another dealership might mean taking a day off from work or cannot afford a second car or second alternative transportation. The bottom line is at…The dealership is not allowed to make stuff up For example, it may be that because of this rule if you walk into a dealership or converse with them over email and ask them, is this the lowest price I can get on this car? They can't lie to you. They can't say yeah this is the best deal. If they could have sold it for less they can't say that. So if you get it documented in writing, this is the lowest price. And then you find out later they could've sold it for less That might be liability. And if they address this. If you find out after you enter the contract and spent thousands more. that could be a violation of misrepresentation. And it's very general…the rule. Would prohibit misrepresentations concerning their costs of financing purchasing or leasing a vehicle. End of story. So if you misrepresent anything about the cost. This is how much it is This is your best deal This is your payment. That's prohibited under rule five. And it gets into details around the total cost at. features. Other charges. Documentation fees transportation fees, delivery fees any of those things that are part of the total costs, the cost of price of vehicles material it's like too likely to affect the consumers conduct. And what vehicle to buy. They also can't put a price that has rebates that everybody can't get. There's some rebates that go to like college graduates or military or other types of qualified individuals. They can't put that in the price unless everybody gets it It prohibits misrepresentations concerning availability of rebates or discounts that are factored into the price but not available to all consumers. So if you advertise a price as a dealership, you have to put in only discounts that everybody can get not selected people. And what they're going to do is require a disclosure. It would require motor vehicle, motor vehicle dealer to disclose the true offering price of a vehicle. That references. The full cash price for which a dealer will sell or finance the vehicle to any consumer. Excluding only required government charges any dealer ad-ons dealership fee conveyance fee document fee. You can't add those afterwards. And it would make it a. Required disclosure to consumers. Because visiting a dealership. Ahead of that is an inconvenience for the purchaser and they review one more time that these practices are unfair because they are likely to cause substantial injury. And the first injury they talk about is customers I lose time when they pursue offers that are not available. So by making these requirements. Documented. They're eliminating that problem And that dealer still dealerships still may try to kind of, find a gray area, but you want to get everything documented So you know you're not paying too much for the vehicle and they make it very clear. If a consumer inquires about a specific vehicle. The dealer must disclose the offering price of that vehicle in writing. So if you say Hey I want to get information about stock number 1234, They have to give you a written offering for that vehicle Very very clear And it sounds like a broken record in accurate price information is likely to cause substantial injury injury for consumers who waste time. So this is something they repeat over and over and over like a broken record that you cannot give inaccurate pricing So it's real simple Ask the dealer for. Written price information and you can reference a law even under 463-4. And if you tell him you want a offering price disclosure under 463-4, they have to do it. And they get into a lot of other details about financing and fake ad-ons like rust proofing or nitrogen filled tires or gap insurance And we're not going to get into that today We'll get into that in future videos. But the important thing is that if you're looking to buy a vehicle, get a documented firm offering price from the dealership. From the beginning That way you won't be. misled later by ad-ons. This rulemaking is still a little bit in process And remember we're not attorneys we're not giving you legal advice So you might want to get more detailed information from an attorney if it's important, but use this as leverage as a buyer to very simply just ask for what's the best price on this vehicle. Document it. Do you sell it for any less than that? And then you can make a decision even to engage with that dealer more. If they avoid this or evade this you know they're not worth dealing with. If they give you straight answers, then you can proceed knowing that it's going to be very difficult for them. To try to throw something back in the mix later because the dealers has to dealership has to keep all this. Motor vehicle dealers are required. To keep for 24 months all advertisement sales scripts training materials marketing materials, financing information, and quotes to consumers. So. if you are misled by a dealer, you can go back and pull their records of what they train their salespeople to say what they told their sales department to do for presenting pricing. And they can't waive this waiver not permitted They can't say well we make, we want you to sign this to waive all these rules because that's not allowed. So…be aware as a consumer, that bad deals on cars are almost illegal now. Imagine that. Right dealers Can't evade this. and as a car buying. customer, you have a lot more rights than you did before. They may not make you aware of these at the dealership but use it to your advantage when getting a price for buying your next new vehicle.