Intent vs. execution: What dealers should actually be auditing post-FTC letters

The FTC's decision to send warning letters to 97 dealership groups earlier this year generated more industry conversation than almost anything else in recent news cycles, and there are two main reasons why. 

One, dealers wanted to know who was targeted, why, and whether they needed to worry. And two, following the letters, everyone was left wondering what might come next in terms of enforcement.

For context: The FTC’s warning letters flagged six specific advertising practices.

The broader issue: With 97 groups involved, a store that didn't receive a letter might have reason to believe its practices passed the FTC’s standards in March. 

But there’s a reality in which not receiving a letter just means that the dealer group “in the clear” earlier this year just hasn’t been reviewed by the agency yet, and could be included in future warnings.

What they’re saying: “Unless a non-named dealer received a get-out-of-jail-free card from the FTC instead of a warning letter, that dealer is a target of the FTC for advertising issues,” Adam Crowell, Chief Strategy and Legal Officer with KPA, a provider of automotive compliance software, training, and services for dealerships, told CDG. “The letters were a warning to all dealers of all kinds.”

Backing that framing: Nine of the last 12 FTC enforcement actions in the auto industry have alleged failure to provide the advertised price, according to additional context provided by KPA via email.

Why this matters: When news of the warning letters dropped, there were a lot of takes online suggesting this was just a case of good vs. bad actors in the industry, and that those warned would shape up, and those unwilling would pay the price. 

However, the larger area of concern, per KPA, is the bulk of dealers who assume intent is enough to keep them out of the FTC's crosshairs.

“We recently audited a group that promoted ‘all-in pricing,’ and in many cases, that appeared to be true, but it wasn't always,” Crowell said, adding, “Doc fees were still excluded from the price, and automatically applied discounts are not available to all consumers. But at the VDP level, there were still legacy disclosures saying prices excluded dealer fees.”

What dealers can do: KPA put together a checklist, drawn from the specific problem areas referenced in the warning letters, that gives dealers a practical place to start. 

It covers pricing consistency, fees and add-ons, rebates and discounts, inventory accuracy, disclosures, cross-channel alignment, and documentation.

Some questions the audit raises: Does the advertised price match what a consumer can actually pay, and is it the same across the website, third-party listings, digital retailing tools, and in-store quotes?

A few others to consider: Are key terms visible near the offer they relate to, or are they buried in fine print or hidden behind links? Do window stickers, digital retailing tools, and third-party platforms all reflect the same pricing structure? 

Can the dealership produce historical pricing records, and do deal jackets align with advertised offers?

The list goes on…

Point being: Few events draw eyes from every corner of the industry the way these letters did. The silver lining is that the attention itself creates an opening. More dealer groups asking the right questions now means more of them doing the right thing on the other side. But getting there starts with a real audit, whether it's KPA's checklist or another framework already in use.