FTC Enforcement Action Lessons to Drive Your Compliance Strategy

Dealers are feeling relief after the Fifth Circuit threw out the Vehicle Shopping Rule, but the ruling doesn't mean you should become complacent in your compliance efforts. Past enforcement actions prove the FTC still has many tools at its disposal to bring cases against automotive dealerships.

Learn from FTC enforcement actions

The FTC and State Attorneys General are using existing laws and regulations right now to hold dealers accountable for misconduct. In December 2024, the FTC and State of Illinois announced a historic $20 million settlement with a 10-store automotive group following allegations of systemic defraudation. This is just one of the latest enforcement actions against dealers, many of which reach up to six and seven figures.

Use these settlements as a guide for what regulatory agencies are looking for, and work with your attorneys and F&I documents provider to ensure you're taking the steps necessary to help keep yourself and your business on the right path.

5 lessons based on recent focus areas

It is difficult to predict what the FTC and other regulatory agencies may focus on to anchor an investigation. Below you'll find five quick lessons based on common focus areas from previous enforcement actions.

1. Use Proper Trade-in Language

When speaking to customers about lien payoffs, are you saying things like “don’t worry, we’ll take care of it for you”? A simple phrase, but one that could imply you’re taking on responsibilities you weren’t planning on taking.

In addition to words, the documents you use are also important. Do your Buyers and Lease Orders properly document the lien? Do you use a dedicated lien payoff worksheet? These forms and more can be found in your state-specific LAW F&I Library®.

Salesperson shaking hands with a couple buying a car.

2. Gain Express Informed Consent

Express Informed Consent is all about transparency. Dealers must inform customers what is being charged, how much the charge is, and ensure they do so in a clear and effective way so the customer can agree.

FTC actions involving express informed consent often focus on things like customers saying they were charged for add-ons they didn't know about or agree to purchase, dealers bundling add-ons to hide charges, or referring to unnecessary items as essential.

3. Avoid Junk Fees

The FTC typically breaks down "junk fees" into two key categories: 1. Hiding fees so the customer cannot find them

and 2. Misleading the customer about the nature or purpose of the charge.

Recently enforced examples include advertising a CPO vehicle for a specific price without including all the fees associated with purchasing the vehicle, charging fees communicated as "required" when they weren't, and charging double for taxes and/or document fees.

Man thinking while looking at a document.

4. Include Required Products and Services in Pricing

Products and services can be a risky area for dealers, and recent trends point toward the importance of adjusting documentation and advertising to accommodate pre-installed equipment or services.

It's ok to install truck liners, trailer hitches, and other popular items, but it's important that you include those items in the advertised price.

5. Inform Customers of Optional Products and Services

This is a commonly-scrutinized risk area within F&I transactions. Are you solely relying on your F&I Manager to clearly convey which products and services are optional?

If so, employing the concept of strategic redundancy by using the Optional Products and Services Disclosure form can help reduce your risk. This document allows you to reiterate conversations about optional products and services by creating written documentation of what was discussed.

Don't wait until tomorrow to prepare for today

Establishing protocols and training staff is a great step in reducing your compliance risk. However, you cannot control every word said during every transaction. That's why it is important to use quality documents trusted by dealers across the country. Fill out the form below to speak with a dedicated consultant to learn more about the many ways LAW can help you.

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