Take a look at the ad to the left promising $12,000 off MSRP for a 2013 Ford F-150. That’s a heck of an offer for a truck that starts at around $24,000. But what you don’t see — and what you don’t find out until you try to buy the vehicle — is that the discount only applies to the $47,000 F-150 Lariat version, so instead of getting a 50% discount on a reasonably priced new truck, you learn that it’s around a 25% savings on a high-end vehicle.
The situation described here isn’t hypothetical. It’s actually Exhibit A in the Federal Trade Commission’s complaint against a Ford dealership in Cleveland.
According to the FTC this dealership has “failed to disclose that these specific dealer discounts are only available for some, but not all, of the Ford models advertised.” Given that this is the kind of information a consumer would require in order to understand the offer, the FTC considers this ad and others like it to be deceptive, which is a violation of Section 5(a) of the FTC Act.
The FTC also recently charged a Chrysler dealership in Cockeysville, MD, with similar violations. In that case [PDF], the dealership was accused of hiding the fact that most customers could not qualify for some advertised discounts.
For example, the dealership’s website advertised a 2013 Chrysler 200 Limited (MSRP $27,320) for $19,821 after a $7,499 “Dealer Discount.”
In the fine print for the deal, it reveals that “Some incentives may be included, but not all customers will qualify for all incentives,” though it also suggests that customers “Please ask for additional incentives that are not listed in the price.”
“In numerous instances, the advertised discount and price are subject to various qualifications or restrictions,” writes the FTC in its complaint.
Qualifying for all of these incentives would take a very interesting person, as they often required that the buyer be in the military, a recent college grad, have a bank account at a specific bank, all while currently owning a vehicle with a lien on it.
Sometimes, even if consumers could meet all those requirements, “they cannot obtain the advertised discount and price,” claims the FTC.
Since these discounts are not generally available to consumers, the FTC considers such offers as misleading and in violation of the FTC Act.
The FTC has proposed a settlement with each of the dealers, barring them from advertising prices or discounts “unless accompanied by clear disclosures of any required qualifications or restrictions.”
The dealers are also barred from misrepresenting:
-the existence or amount of any discount, rebate, bonus, incentive, or price;
-the existence, price, value, coverage, or features of any product or service associated with the motor vehicle purchase;
-the number of vehicles available at particular prices; or
-any other material fact about the price, sale, financing, or leasing of motor vehicles.
The settlement also requires the dealerships to maintain and make available copies of all advertisements and promotional materials to the FTC Commission for inspection upon request for the next five years.
To help guide consumers through the hazards of buying a car, the FTC has put together this list of questions to ask yourself and the dealer about everything from car loans to trade-ins to rustproofing.