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The FTC is almost ready to tackle car dealer fees and add-ons

Chris Teague

Chris Teague

car dealer fees

If you’ve bought a car from a dealership in the last few years, you may have been surprised at how many steps are involved in the process from start to finish. Once you decide to buy the vehicle, you’re faced with the dreaded F&I office, or finance and insurance, where the person behind the desk tries to drive your purchase price even higher with added-cost options and packages. The Federal Trade Commission has had enough, and for most of 2022, the agency worked to define what it calls junk fees. That effort has since expanded to several other areas of the economy. 

The FTC originally planned to accept public comments on its fee crackdown through January 9, but businesses and representatives from the automotive industry and beyond requested and received an extension to February 8. If you’re interested in entering a comment, head here before the deadline.

car dealer fees

What are junk car dealer fees?

In the automotive world, it means items that cost the dealer nothing to add that end up being foisted on buyers at the F&I desk. The FTC laid out eight conditions that it used to determine whether a dealer’s behavior and charges constitute a junk fee:

  • The dealer misrepresented or not “clearly and conspicuously” disclosing the entire cost of a good or service in advertising
  • The dealer failed to disclose unavoidable fees or charges in advertising
  • The dealer did not disclose if the fees and other charges are optional or required
  • The dealer failed to reveal any limitations or shortcomings that could come as a result of not paying additional fees
  • The dealer charges customers for items or services they did not receive
  • The dealer charged a fee without the buyer’s consent
  • The dealer charged fees for products and services that have “little or no added value”
  • The dealer failed to disclose the “nature or purpose of any fees, interest, charges, or other costs
car dealer fees

If you were hoping this work would lead to a ban on dealer markups, it won’t. Dealers and automakers have agreements on which prices can and can’t be advertised, so we’ll continue seeing cars listed at MSRP that end up costing thousands more. That said, markups, or ADM (additional dealer markup), could be considered junk fees under the second point above, so the FTC may mandate listing the markup clearly to avoid confusion.

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1 thought on “The FTC is almost ready to tackle car dealer fees and add-ons”

  1. Saurabh Shah

    I bought 2022 Bmw R18 motorcycle and dealer charge me freight fee n prep free on demo model. Isn’t it illegal for double dipping.

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