Written By: Alysha Webb
On March 13, the Federal Trade Commission (FTC) sent letters to 97 dealerships warning that advertised vehicle prices must reflect the total price consumers are required to pay, including all mandatory fees. The warning serves as an important reminder for dealerships nationwide to review their advertising and pricing practices and ensure they are complying with the FTC’s requirements.
During Rosenfield & Company’s July webinar, Clear Pricing, Stronger Dealerships: Navigating the FTC’s Focus on Transparency, panelists Bert Rasmussen, shareholder at Los Angeles-based law firm Scali Rasmussen, and Matthias Stoever, co-founder and CEO of The RockED Company, discussed the legal implications of the FTC’s letter and strategies for building a culture of compliance within the dealership.
The legal aspect covered the practices the FTC’s letter seeks to prevent, as well as key details dealerships should pay close attention to when reviewing their pricing and advertising practices. Both panelists emphasized that building a culture of compliance through ongoing training and leading by example is the most effective way to support long-term compliance. Stoever also outlined practical steps dealerships can take to foster that culture.
How We Got Here: The FTC’s Focus on Pricing Transparency
As consumers increasingly begin their vehicle shopping journey online, the number of platforms where they can find vehicle pricing has grown significantly. “Regulators expect those prices to be meaningful,” Rasmussen said.
Pricing transparency is not a new concept for the automotive industry. The FTC’s now-vacated Combating Auto Retail Scams (CARS) Rule sought to require dealerships to disclose all mandatory fees included in a vehicle’s advertised price. The rule was vacated by the U.S. Court of Appeals in January 2025 after the court found that the FTC had not followed the required rulemaking procedures.
However, similar transparency requirements remain in place in California. Rasmussen noted that the state’s own CARS Act incorporates many of the same concepts and is scheduled to take effect in October. “It’s coming online and come this October, it’s going to pretty much require California car dealers do what the original FTC CARS rule was,” he said.
What the FTC’s Pricing Expectations Mean for Dealers
"If a product has a penetration rate above 85%, it could raise a red flag with the FTC. They’re going to look askance at your claim that it is truly optional."
With its new letter, the FTC has approached pricing transparency from a different angle. For dealers wanting to know if their pricing practices are compliant, Rasmussen offered a simple question to consider: Can a customer purchase the vehicle exactly as it sits for the advertised price?
That includes all dealer-installed accessories, appearance and protection products, and other installed equipment. Dealer-installed equipment is nothing new; many dealerships have long used supplemental stickers to identify these items. Rasmussen cautioned, however, that when dealer-installed equipment is separately disclosed, dealerships still need to ensure the pricing remains clear and consistent.
Given that different states have different requirements for supplemental stickers, Rasmussen recommended using the all-in price as the starting point. “Probably the best thing that can be done is to have the all-in price as the starting line on the supplemental sticker, then, if the state mandates that the add-ons be disclosed, they can be disclosed with a price of zero,” he said.
The advertised price must also include all required fees. “This is where I think the announcement raised the most hackles in the dealer community,” Rasmussen said. He explained that documentary fees are treated differently from state to state, creating additional complexity for dealerships. The advertised price also cannot include discounts or rebates that are not available to every potential buyer, Rasmussen said.
The advertised price must also account for any additional required down payment. The FTC has also made clear that dealerships cannot condition the advertised price on a consumer using dealer financing. That’s a big no-no. Similarly, consumers cannot be required to purchase additional products or services that are not reflected in the advertised price. Ultimately, the consumer must be able to purchase the vehicle exactly as it sits for the advertised price, with only taxes and government charges added to that amount.
F&I products remain an important source of revenue for dealerships and are not eliminated by the new transparency requirements. However, the vehicle price must be established first, with additional products then offered as a genuine choice for the customer. “They still can be priced, but this is going to have to be in a regime of much more demonstrable, provable optionality,” Rasmussen said.
To test whether optional products are truly being presented as an optional choice, Rasmussen suggested dealerships examine their penetration rates. If a product has a penetration rate above 85%, he cautioned that it could raise a red flag with the FTC. “They’re going to look askance at your claim that it is truly optional,” he said. Rasmussen recommended that dealerships take a closer look at any product with a high penetration rate and “put it under a microscope for a bit to see how you’re handling it.”
Pricing transparency is an operational issue, Rasmussen warned, and compliance must extend across every dealership department, including inventory, marketing, sales and F&I. Training is the best compliance tool, he said. Dealerships should reinforce one fundamental principle: Could a customer purchase the vehicle exactly as advertised? That principle should be supported through standardized pricing practices, management oversight and consistent documentation.
Five practical takeaways from Rasmussen were:
- Can the customer buy the vehicle exactly as advertised?
- Does the advertised price include everything already on the vehicle?
- Are only taxes and government charges added to the advertised price?
- Are optional products presented separately from the vehicle price?
- Can the dealership consistently support the price it advertises?
What Counts as Advertising?
That raises a “giant question” for dealerships: What constitutes advertising in an environment where vehicle prices appear across third-party websites, social media and other digital platforms? Rasmussen said the definition is broad and can extend well beyond a dealership’s own website.
“Well, advertising is anything that you’re communicating publicly or even directly. So, it’s not only your own website, but also the follow-on websites of the aggregators and the others who are putting out vehicles that you have for sale, or it’s your sales force that maybe is working deals by text or social or anything of that kind,” he said.
Dealerships “need to have a process that will rein in all those various tentacles of advertising and marketing, so they are all on the same page,” Rasmussen said.
The FTC’s increased oversight creates a more level playing field for vehicle advertising and sales, he said. “So, it’s important to be able to be the beneficiary of that by being compliant as opposed to being a potential target in any legal proceeding.”
Building a Culture of Compliance
“I do believe that a dealership that supports a culture of compliance, a culture of pricing transparency, will be a dealership that will grow faster, that will have better customer reviews, that will ultimately also be bigger, bolder and more successful in the industry compared to somebody who is non-compliant.”
While understanding the legal requirements is crucial, ensuring a dealership remains compliant requires more than simply following the rules, laws and disclosures that establish the compliance floor, said RockED’s Stoever. RockED provides dealership training, development and coaching through mobile-friendly microlearning modules.
What employees do when no one is watching is the true measure of how a company behaves, Stoever said, and that comes down to company culture and leadership. As the webinar’s title suggests, clear pricing can help create stronger dealerships by building trust and accountability throughout the organization.
“I don’t believe pricing transparency itself is a margin killer,” he said. “I think a lack of pricing transparency is actually something that creates a lot of friction, right? This is why this topic is even coming up. It is because consumers complain to the FTC.”
Stoever pointed to data from the FTC showing that automotive dealerships are a significant source of consumer complaints, underscoring the importance of addressing the issues that create friction and frustration for consumers.
Eliminating this friction caused by lack of pricing transparency is, therefore, also a way to make dealerships stronger, Stoever said. But dealerships and their employees are faced with the dilemma that competing dealerships may not be compliant. While those dealerships are a small percentage of the total, they put a burden on the entire industry and overall customer experience, he said.
That’s where the FTC comes in. “Sometimes, you need an external stimulus, or you need external help to fix a dilemma like this and to go back to operating in a situation that is really beneficial for the industry as a whole,” Stoever said.
There are well-known examples of the costs of compliance failures, including Enron, whose bankruptcy resulted in billions of dollars in losses for creditors and was rooted in a culture of deception and inadequate oversight. More recently, auto parts supplier First Brands Group has faced scrutiny over allegations of fabricated invoices and a lack of real oversight, with the company under investigation by the Department of Justice.
At the other end of the spectrum are companies such as Costco, Apple and Johnson & Johnson, which are often recognized for their strong reputations for integrity and ethical business practices.
Stoever listed 4 measures that drive a culture of compliance:
1. Leadership sets the tone.
That tone must be reinforced by managers at every level. One RockED dealer partner summed it up simply: Do the right thing. Stoever said that can serve as a useful guideline when there is no clear rule or policy to follow. “I think doing the right thing is good advice in those situations,” he said.
2. Make it safe to speak up.
Dealerships should provide a trusted, confidential way for employees to raise concerns without fear of retaliation. Just as importantly, employees should feel comfortable admitting when they have made a mistake, Stoever said.
3. Reinforce the right behaviors through everyday training.
Compliance training should be ongoing rather than limited to annual or semi-annual sessions. Regular training is particularly important for situations employees encounter in their day-to-day roles, such as how to report cash, what to do with a driver’s license or how to handle personal information. Employees need to understand not only what is expected of them, but also what behavior crosses the line. “Because sometimes, you might feel, I didn’t even know that this was wrong. And that is where training is needed,” Stoever said.
4. Align accountability with recognition.
Everyone, regardless of position, should be held accountable for their actions, while ethical behavior should be recognized and reinforced. Transparency should be recognized, Stoever said. Not just the salesperson who sells the most cars, but also an F&I manager who has very few cancellations, because that likely indicates he or she does a very good job of explaining the value and pricing of the product. The goal is to recognize employees who are “crushing it in their very different roles,” Stoever summarized.
RockED recently launched FTC Pricing Enforcement: A Dealer Information Series, a training module that covers many of the topics discussed during the webinar. The series is available through the RockED app for dealerships looking to provide their teams with additional training on FTC pricing and transparency requirements.
Building a Culture of Compliance
- Understand evolving FTC pricing expectations. Stay current on the FTC’s shifting expectations around pricing standards across the entire customer journey.
- Reinforce transparency and ethical interactions. Make honest, consistent customer conversations part of everyday dealership practices.
- Keep compliance top of mind through ongoing learning. Rather than relying on one-time training, embrace continuous learning that reinforces key compliance principles and keeps them top of mind for the team.
While questions remain about how the FTC will define and enforce pricing transparency, Stoever said dealerships that build a culture of compliance will ultimately come out on top and be better positioned for long-term success.
“I do believe that a dealership that supports a culture of compliance, a culture of pricing transparency, will be a dealership that will grow faster, that will have better customer reviews, that will ultimately also be bigger, bolder and more successful in the industry compared to somebody who is non-compliant,” he said.
For dealerships, the FTC’s focus on pricing transparency is about more than adjusting an advertisement or updating a pricing policy. It requires consistent practices across departments, clear communication with customers and ongoing training that makes compliance part of the dealership’s culture. By treating transparency as an operational priority and reinforcing it through leadership and accountability, dealerships can not only reduce compliance risk but also build greater trust with customers and strengthen their business for the long term.
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