Reinforcing its focus on price transparency, the Federal Trade Commission, joined by the state of Connecticut, announced on Wednesday a $4 million settlement with an auto dealership.
Driving the news: The FTC and Connecticut filed the 29-page case against Manchester City Nissan in January 2024 for alleged deceptive and unfair violations of Section 5 of the FTC Act.
The case stated that the dealership and six individuals participated in double-charging customers certification fees for certified pre-owned vehicles and not honoring advertised low prices.
There were also accusations of attaching add-ons without the consumer's consent, totaling thousands of dollars.
Additionally, the dealership allegedly collected excessive fees for registration and taxes.
The timeline: The dealership was first contacted by the state regulators in 2021 with a civil investigative demand over its fees.
The next year, the state sent a warning letter regarding the advertising practices and fees for CPOs and conducted a safety inspection.
The case alleges that after the warning, the dealership continued to charge extra for CPO certifications and also to “mislead consumers” into believing that add-ons were required.
Penalties for the dealership: The dealership will pay $4 million to be used to repay consumers, with the first $2 million due in seven days and the other $2 million within 10 months.
Going forward, it must refrain from misrepresentations and must prominently display the maximum total price a consumer will pay for a vehicle.
Additionally, it must secure express consent from consumers for all charges.
What they’re saying: “Price transparency is essential for protecting consumers from deception and for preserving the integrity of competitive markets,” said Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection, in a press release.
“When businesses compete openly and honestly, consumers benefit from better prices, higher quality, and greater trust.”
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Why this matters: The FTC sent 97 warning letters to dealers in March about deceptive pricing and advertising practices.
Mufarrige held webinars with NADA and NIADA following the letters being sent, reinforcing the administration’s stance on price transparency, stating that dealers needed to list all fees in advertising and remove listings of sold vehicles from inventory.
Since then, multiple third-party sites have moved to all-in pricing, including fees.
Bottom line: Though the initial case in Connecticut predates the March warning letters, it details actions that the agency specifically warned dealers about. It reinforces the administration’s serious intent to pursue abuses of Section 5 of the FTC Act in regard to advertising and price transparency.
“The FTC remains committed to enforcing these principles across the marketplace, ensuring that every consumer can shop with confidence and every business can compete on a fair and equal footing,” Mufarrige said.
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