FEDERAL TRADE COMMISSION 

16 CFR Part 463 

RIN 3084-AB72 

Combating Auto Retail Scams Trade Regulation Rule 

AGENCY: Federal Trade Commission. 

ACTION: Final rule. 

SUMMARY: The Federal Trade Commission (“FTC” or “Commission”) is issuing this 

Combating Auto Retail Scams Trade Regulation Rule (“CARS Rule,” “Rule,” or “Final 

Rule”) and Statement of Basis and Purpose (“SBP”) related to the sale, financing, and 

leasing of covered motor vehicles by covered motor vehicle dealers. The Final Rule, 

among other things, (i) prohibits motor vehicle dealers from making certain 

misrepresentations in the course of selling, leasing, or arranging financing for motor 

vehicles, (ii) requires accurate pricing disclosures in dealers’ advertising and sales 

communications, (iii) requires dealers to obtain consumers’ express, informed consent for 

charges, (iv) prohibits the sale of any add-on product or service that confers no benefit to 

the consumer, and (v) requires dealers to keep records of certain advertisements and 

customer transactions. 

DATES: This rule is effective July 30, 2024. 

ADDRESSES: Copies of this document are available on the Commission’s website, 

www.ftc.gov. 

FOR FURTHER INFORMATION CONTACT: Daniel Dwyer or Sanya Shahrasbi, 

Division of Financial Practices, Bureau of Consumer Protection, Federal Trade 

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Commission, 202-326-2957 (Dwyer), 202-326-2709 (Shahrasbi), ddwyer@ftc.gov, 

sshahrasbi@ftc.gov. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Background 

A. Statutory Authority 

B. Commission Actions Following the Dodd-Frank Act and the Rulemaking 

Process 

II. Motor Vehicle Financing and Leasing 

A. Overview of the Motor Vehicle Marketplace 

B. Deceptive and Unfair Practices in the Motor Vehicle Marketplace 

1. Bait-and-Switch Tactics 

2. Unlawful Practices Relating to Add-on Products or Services and 

Hidden Charges 

C. Law Enforcement and Other Responses 

III. Section-by-Section Analysis 

A. § 463.1: Authority 

B. § 463.2: Definitions 

1. Overview 

2. Definition-by-Definition Analysis 

a) Add-on or Add-on Product(s) or Service(s) 

b) Add-on List 

c) Cash Price Without Optional Add-ons 

d) Clearly and Conspicuously 

e) Motor Vehicle (finalized as “‘Covered Motor Vehicle’ or 

‘Vehicle’”) 

f) Dealer or Motor Vehicle Dealer (finalized as “‘Covered Motor 

Vehicle Dealer’ or ‘Dealer’”) 

g) Express, Informed Consent 

h) GAP Agreement 

l) Government Charges 

j) Material or Materially

 k) Offering Price 

C. § 463.3: Prohibited Misrepresentations 

1. General Comments 

2. Paragraph-by-Paragraph Analysis of § 463.3 

a) The Costs or Terms of Purchasing, Financing, or Leasing a 

Vehicle 

b) Any Costs, Limitation, Benefit, or Any Other Aspect of an Addon Product or Service 

c) Whether Terms Are, or Transaction Is, for Financing or a 

Lease 

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d) The Availability of Any Rebates or Discounts that are Factored 

into the Advertised Price but Not Available to All Consumers 

e) The Availability of Vehicles at an Advertised Price 

f) Whether Any Consumer Has Been or Will Be Preapproved or 

Guaranteed for Any Product, Service, or Term 

g) Any Information on or About a Consumer’s Application for 

Financing 

h) When the Transaction Is Final or Binding on All Parties, & 

i) Keeping Cash Down Payments or Trade-in Vehicles, Charging 

Fees, or Initiating Legal Process or Any Action If a 

Transaction Is Not Finalized or If the Consumer Does Not 

Wish To Engage in a Transaction 

i) Keeping Cash Down Payments or Trade-in Vehicles, Charging 

Fees, or Initiating Legal Process or Any Action If a 

Transaction Is Not Finalized or If the Consumer Does Not 

Wish To Engage in a Transaction 

j) Whether or When a Dealer Will Pay Off Some or All of the 

Financing or Lease on a Consumer’s Trade-in Vehicle 

k) Whether Consumer Reviews or Ratings Are Unbiased, 

Independent, or Ordinary Consumer Reviews or Ratings of the 

Dealer or the Dealer’s Products or Services 

l) Whether the Dealer or Any of the Dealer’s Personnel or 

Products or Services Is or Was Affiliated with, Endorsed or 

Approved by, or Otherwise Associated with the United States 

Government or Any Federal, State, or Local Government 

Agency, Unit, or Department, Including the United States 

Department of Defense or its Military Departments 

m) Whether Consumers Have Won a Prize or Sweepstakes 

n) Whether, or Under What Circumstances, a Vehicle May Be 

Moved, Including Across State Lines or Out of the Country 

o) Whether, or Under What Circumstances, a Vehicle May Be 

Repossessed 

p) Any of the Required Disclosures Identified in this Part 

D. § 463.4: Disclosure Requirements 

1. Overview 

2. Paragraph-by-Paragraph Analysis of § 463.4 

a) Offering Price 

b) Add-on List 

c) Add-ons Not Required 

d) Total of Payments and Consideration for a Financed or Lease 

Transaction 

e) Monthly Payments Comparison 

E. § 463.5: Dealer Charges for Add-Ons and Other Items 

1. Overview 

2. Paragraph-by-Paragraph Analysis of § 463.5 

a) Add-ons that Provide No Benefit 

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b) Undisclosed or Unselected Add-ons 

c) Any Item Without Express, Informed Consent 

F. § 463.6: Recordkeeping 

G. § 463.7: Waiver Not Permitted 

H. § 463.8: Severability 

I. § 463.9: Relation to State Laws 

IV. Effective Date 

V. Paperwork Reduction Act 

A. Add-on List Disclosures 

B. Disclosures Relating to Cash Price Without Optional Add-ons 

C. Prohibited Misrepresentations and Required Disclosures 

D. Recordkeeping 

E. Capital and Other Non-Labor Costs 

1. Disclosures 

2. Recordkeeping 

VI. Regulatory Flexibility Act 

A. Significant Impact Analysis 

1. Comments on Significant Impact 

2. Certification of the Final Rule 

a) Industry Averages 

b) Dealer Size Based on the Number of Employees 

B. Initial and Final Regulatory Flexibility Analysis 

1. Comments on the Initial Regulatory Flexibility Analysis 

a) Description of the Reasons Why Action by the Agency Is Being 

Considered 

b) Succinct Statement of the Objectives of, and Legal Basis for, 

the Proposed Rule 

c) Description of and, Where Feasible, Estimate of the Number of 

Small Entities to Which the Proposed Rule Will Apply 

d) Description of the Projected Reporting, Recordkeeping, and 

Other Compliance Requirements of the Proposed Rule 

e) Duplicative, Overlapping, or Conflicting Federal Rules 

f) Description of Any Significant Alternatives to the Proposed 

Rule Which Accomplish the Stated Objectives of Applicable 

Statutes and Which Minimize Any Significant Economic Impact 

of the Proposed Rule on Small Entities 

2. Final Regulatory Flexibility Analysis 

a) Statement of the Need for, and Objectives of, the Rule 

b) Issues Raised by Comments, Including Comments by the Chief 

Counsel for Advocacy of the SBA, the Commission’s 

Assessment and Response, and Any Changes Made as a Result 

c) Description and Estimate of the Number of Small Entities to 

Which the Final Rule Will Apply or an Explanation of Why No 

Such Estimate Is Available 

d) Description of the Projected Reporting, Recordkeeping, and 

Other Compliance Requirements 

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e) Description of the Steps the Commission Has Taken To 

Minimize the Significant Economic Impact on Small Entities 

Consistent with the Stated Objectives of Applicable Statutes 

VII. Final Regulatory Analysis Under Section 22 of the FTC Act 

A. Introduction 

B. Estimated Benefits of Final Rule 

1. Consumer Time Savings When Shopping for Motor Vehicles 

2. Reductions in Deadweight Loss 

3. Framework 

4. Estimation 

5. Benefits Related to More Transparent Negotiation 

C. Estimated Costs of Final Rule 

1. Prohibited Misrepresentations 

2. Required Disclosure of Offering Price in Advertisements and in 

Response to Inquiry 

3. Disclosure of Add-on List and Associated Prices 

4. Required Disclosure of Total of Payments for Financing/Leasing 

Transactions 

5. Prohibition on Charging for Add-ons that Provide No Benefit 

6. Requirement to Obtain Express, Informed Consent Before Any 

Charges 

7. Recordkeeping 

D. Other Impacts of Final Rule 

E. Conclusion 

F. Appendix: Derivation of Deadweight Loss Reduction 

G. Appendix: Uncertainty Analysis 

VIII. Other Matters 

I. Background 

A. Statutory Authority 

The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank 

Act”) was signed into law in 2010.1

 Section 1029 of the Dodd-Frank Act authorizes the 

FTC to prescribe rules with respect to unfair or deceptive acts or practices by motor 

vehicle dealers.2 The FTC is authorized to do so under the FTC Act and in accordance 

1

 Pub. L. 111-203, 124 Stat. 1376 (2010). 

2 12 U.S.C. 5519(d). See 12 U.S.C. 5519(f)(1) and (2) for definitions of the terms “motor vehicle” and 

“motor vehicle dealer” under Section 1029 of the Dodd-Frank Act, respectively. 

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with Section 553 of the Administrative Procedure Act (“APA”).3 The grant of APA 

rulemaking authority set forth in Section 1029 of the Dodd-Frank Act became effective 

as of July 21, 2011—the designated “transfer date” established by the Treasury 

Department.4 

B. Commission Actions Following the Dodd-Frank Act and the Rulemaking 

Process 

Following enactment of the Dodd-Frank Act, the Commission published in the 

Federal Register a notice discussing its authority to prescribe rules with respect to unfair 

or deceptive acts or practices by motor vehicle dealers and announcing that it would be 

hosting a series of public roundtables to explore consumer protection issues pertaining to 

motor vehicle sales and leasing, including what consumer protection issues, if any, exist 

that could be addressed through a possible rulemaking.5

 The Commission sought 

participation from regulators, consumer advocates, industry participants, and other 

interested parties and ultimately held three such public roundtables.6 

3 See 12 U.S.C. 5519(a) (discussing the authority over “motor vehicle dealer[s] that [are] predominantly 

engaged in the sale and servicing of motor vehicles, the leasing and servicing of motor vehicles, or both”); 

12 U.S.C. 5519(d) (“Notwithstanding section 57a of title 15, the Federal Trade Commission is authorized 

to prescribe rules under sections 45 and 57a(a)(1)(B) of title 15[] in accordance with section 553 of title 5, 

with respect to a person described in subsection (a).”); 5 U.S.C. 553. Because the Commission has 

authority to promulgate this Rule in accordance with the APA, it is not required to include a statement as to 

the prevalence of the acts or practices treated by the Rule under Section 18(d) of the FTC Act. Compare 12 

U.S.C. 5519(d) and (a) (providing the FTC with APA rulemaking authority for purposes of Section 1029 of 

the Dodd-Frank Act), with 15 U.S.C. 57a(b)(3) (requiring a statement as to prevalence for certain 

rulemaking proceedings by the Commission under non-APA procedures), and 15 U.S.C. 57a(b)(1) 

(establishing that certain rulemaking proceedings by the Commission under non-APA procedures are 

subject to requirements in addition to those under the APA). 

4 See 12 U.S.C. 5411(a). 5 76 FR 14014, 14015 (Mar. 15, 2011). 

6 See Fed. Trade Comm’n, “The Road Ahead: Selling, Financing & Leasing Motor Vehicles” (Apr. 12, 

2011), https://www.ftc.gov/news-events/events/2011/04/road-ahead-selling-financing-leasing-motorvehicles (providing materials from roundtable in Detroit, Michigan); Fed. Trade Comm’n, “The Road 

Ahead: Selling, Financing & Leasing Motor Vehicles” (Aug. 2, 2011), https://www.ftc.gov/newsevents/events/2011/08/road-ahead-selling-financing-leasing-motor-vehicles (providing materials from 

roundtable in San Antonio, Texas); Fed. Trade Comm’n, “The Road Ahead: Selling, Financing & Leasing 

Motor Vehicles” (Nov. 17, 2011), https://www.ftc.gov/news-events/events/2011/11/road-ahead-selling6 
 

 

 

The Commission subsequently focused on enforcement and business guidance in 

the motor vehicle dealer marketplace. As discussed in SBP II.C,7

 however, certain unfair 

and deceptive acts or practices have persisted, despite more than a decade of enforcement 

and education. Accordingly, on June 23, 2022, the Commission announced a Notice of 

Proposed Rulemaking (“NPRM”) addressing unfair or deceptive acts or practices by 

motor vehicle dealers.8 That notice was published in the Federal Register on July 13, 

2022.9

 The NPRM, among other things, proposed to (i) prohibit motor vehicle dealers 

from making certain misrepresentations, (ii) require accurate pricing disclosures, (iii) 

prohibit the sale of any add-on product or service that confers no benefit to the consumer, 

(iv) require express, informed consent for add-ons and other charges, and (v) impose 

certain recordkeeping requirements. The comment period for the NPRM closed on 

September 12, 2022. 

In response to the NPRM and proposed rule, the Commission received more than 

27,000 comments from stakeholders representing a wide range of viewpoints.10 These 

financing-leasing-motor-vehicles (providing materials from roundtable in Washington, District of 

Columbia).

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 As used herein, references to the “Statement of Basis and Purpose” or “SBP” refer to the portions of this 

document that precede the regulatory text of the Final Rule. References to the “Rule,” “Final Rule,” or 

“CARS Rule” refer to the text in part 463—Combating Auto Retail Scams (“CARS”) Trade Regulation 

Rule. Because the Final Rule is narrower than the proposed Motor Vehicle Dealers Trade Regulation Rule 

in the NPRM, the Commission has modified the Rule title to reflect the more limited scope. 

8 See Press Release, Fed. Trade Comm’n, “FTC Proposes Rule to Ban Junk Fees, Bait-and-Switch Tactics 

Plaguing Car Buyers” (June 23, 2022), https://www.ftc.gov/news-events/news/press-releases/2022/06/ftcproposes-rule-ban-junk-fees-bait-switch-tactics-plaguing-car-buyers. 

9 See Fed. Trade Comm’n, Notice of Proposed Rulemaking, Motor Vehicle Dealers Trade Regulation Rule, 

87 FR 42012 (released June 23, 2022; published July 13, 2022) [hereinafter NPRM], 

https://www.govinfo.gov/content/pkg/FR-2022-07-13/pdf/2022-14214.pdf. 10 The Commission received 27,349 comment submissions filed online in response to its NPRM. See Gen. 

Servs. Admin., Dkt. No. FTC-2022-0046, Proposed Rule, Motor Vehicle Dealers Trade Regulation Rule 

(July 13, 2022), https://www.regulations.gov/document/FTC-2022-0046-0001 (noting comments received). 

To facilitate public access, over 11,000 such comments have been posted publicly on Regulations.gov at 

https://www.regulations.gov/document/FTC-2022-0046-0001/comment (noting posted comments). As 

explained at Regulations.gov, agencies may choose to redact or withhold certain submissions (or portions 

thereof) such as those containing private or proprietary information, inappropriate language, or 

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stakeholders included numerous individual consumers who described deceptive practices 

during recent car purchases and many who discussed current or former military service 

and deceptive and predatory practices common near military installations.11 Commenters 

also included dealerships and their employees, industry groups, consumer and community 

groups, and Federal and State lawmakers and law enforcement agencies. Many 

commenters, such as consumers, some dealers and dealer employees, consumer groups, 

and lawmakers and enforcers, were supportive of the proposed rule in whole or in part. 

Many of these commenters also urged the FTC to include additional protections for 

consumers and law-abiding businesses, while others, such as industry groups, dealers, 

and dealer employees, asked questions or criticized the proposal.12 These comments and 

duplicate/near duplicate examples of a mass-mail campaign. See Gen. Servs. Admin., Regulations.gov 

Frequently Asked Questions, Find Dockets, Documents, and Comments FAQs, “How are comments 

counted and posted to Regulations.gov?,” https://www.regulations.gov/faq?anchor=downloadingdata (last 

visited Dec. 5, 2023). The Commission has considered all timely and responsive public comments it 

received in response to its NPRM. 

11 See, e.g., Individual commenter, Doc. No. FTC-2022-0046-4648 (“As a young Marine stationed in a 

military town I was taken advantage of by a dealership when purchasing my first car. It set me back 

financially for years. I know of many young military people who purchased vehicle[]s and we[]re instantly 

so far upside down after leaving the dealership with thousands of dollars in add on junk charges . . . .”); 

Individual commenter, Doc. No. FTC-2022-0046-0542 (“As a former member of the Military, the amount 

of scams and horror stories I have heard regarding young service members buying cars is absurd. . . . 

Someone shouldn’t have to do hours of research on how to buy a car so they don’t get taken advantage 

of.”); Individual commenter, Doc. No. FTC-2022-0046-0637 (“As a small business owner and active duty 

military member I have played the role of both a buyer, toiling for hours to just reach fair deals on vehicles, 

as well as that of an advocate for my Sailors who have been preyed upon by local dealerships. Nowhere 

else in our society do so many average citizens have to mentally prepare for a battle over fair pricing and 

treatment for something that is realistically a modern necessity.”); Individual commenter, Doc. No. FTC2022-0046-9840 (“I can’t list the number of times I have either seen, or have stepped in a situation, where 

car dealers have either attempted to take, or have successfully taken, advantage of a young military member 

or their family by baiting and switching when it came to the price of a car, or stated that the price was one 

amount, only to be charged, and over-charged a higher amount. These dealers have even attempted to pull 

unethical tricks on me and my wife, even after they found out that I was a military member, a combat 

veteran, that was serving this great nation.”); Individual commenter, Doc. No. FTC-2022-0046-0845 

(“Predatory practices like [bait-and-switch pricing] are common near military installations . . . .”). 12 Industry commenters claimed that many of the areas covered by the proposed rule are already addressed 

in industry guidance. The Commission notes that, although industry guidance can provide helpful 

information to dealers, dealers who choose not to follow such guidance, or who engage in deceptive or 

unfair practices, subject their customers to significant harm. The Rule addresses such practices, thus 

protecting consumers and law-abiding dealers. 

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responses to comments are discussed primarily in the discussion of the Final Rule in 

SBP III. 

The Commission notes that it has undertaken careful review and consideration of 

each of the comments it received in response to its NPRM. The Commission has 

dedicated the majority of its section-by-section analysis to descriptions of, and responses 

to, comments or portions thereof that were critical of the Commission’s proposal or that 

urged the Commission to adopt additional requirements. Thus, to ensure that this 

document also reflects the many comments in the public record from stakeholders who 

supported the proposal as is, the Commission has excerpted a number of such comments 

in portions of its SBP. 

II. Motor Vehicle Financing and Leasing 

A. Overview of the Motor Vehicle Marketplace 

For many consumers, buying or leasing a motor vehicle is essential, expensive, 

and time-consuming.13 Americans rely on their vehicles for work, school, childcare, 

groceries, medical visits, and many other important tasks in their daily lives.14 These 

vehicles have become increasingly costly: the average price of a new vehicle sold at a 

13 Unless otherwise indicated, the terms “auto,” “automobile,” “car,” “motor vehicle,” and “vehicle,” as 

used in this SBP and the Commission’s final regulatory analysis, refer to “Covered Motor Vehicle” as 

defined in this part.

14 During 2017 to 2022, an average of 91% of American workers who did not work from home drove to 

work. See U.S. Census Bureau, “American Community Survey: Means of Transportation to Work by 

Selected Characteristics, 2022: ACS 1-Year Estimates Subject Tables” (2023), 

https://data.census.gov/table?q=Commuting&tid=ACSST1Y2022.S0802 (reporting 110,245,368 workers 

16 years and over who drove alone to work in a car, truck, or van, and 13,881,067 workers 16 years and 

over who drove by carpool to work in a car, truck or van, together accounting for 91% of the total of 

136,196,004 workers 16 years and over who did not work from home); U.S. Census Bureau, “American 

Community Survey: Means of Transportation to Work by Selected Characteristics, 2021: 2017-2021 ACS 

5-Year Estimates Subject Tables” (2022), 

https://data.census.gov/table?q=Commuting&tid=ACSST5Y2021.S0802 (reporting 113,724,271 workers 

16 years and over who drove alone to work in a car, truck, or van, and 13,340,838 workers 16 years and 

over who drove by carpool to work in a car, truck or van, together accounting for 91% of the total of 

140,223,271 workers 16 years and over who did not work from home). 

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new car dealership in 2022 was more than $46,000,15 while the average price of a used 

vehicle sold at such dealerships was more than $30,000.16 By the second quarter of 2023, 

the average monthly payment for used cars reached $533, and the average monthly 

payment for new cars reached $741—both record highs.17 Vehicles are now many 

consumers’ largest expense—on a par with housing, child care and food, and accounting 

for 16% of the median annual household income before taxes.18 In 2022 alone, 

Americans spent more than $720 billion on motor vehicles and vehicle parts.19 

Given these costs, many consumers who purchase a motor vehicle rely on 

financing to complete their purchases. According to public reports, 81% of new motor 

vehicle purchases, and nearly 35% of used vehicle purchases, are financed.20 By the first 

quarter of 2023, Americans had more than 107 million outstanding auto financing 

accounts and owed more than $1.56 trillion thereon,21 making auto finance the thirdlargest source of debt for U.S. consumers, and the second-largest for U.S. consumers ages 

15 Nat’l Auto. Dealers Ass’n, “NADA Data 2022” 7, https://www.nada.org/media/4695/download?inline 

(noting average retail selling price of $46,287 for new vehicles sold by dealerships in 2022).

16 Id. at 10 (noting average retail selling price of $30,736 for used vehicles sold by new-vehicle dealerships 

in 2022). 

17 Lydia DePillis, “How the Costs of Car Ownership Add Up,” N.Y. Times (Oct. 6, 2023), 

https://www.nytimes.com/interactive/2023/10/07/business/car-ownership-costs.html (citing average 

monthly payment figures from TransUnion).

18 Id. (citing data from AAA and the U.S. Census Bureau). 19 Bureau of Econ. Analysis, “National Data: National Income and Product Accounts, Personal 

Consumption Expenditures by Major Type of Product” tbl. 2.3.5, 

https://apps.bea.gov/iTable/?reqid=19&step=2&isuri=1&categories=survey#eyJhcHBpZCI6MTksInN0ZX 

BzIjpbMSwyLDNdLCJkYXRhIjpbWyJjYXRlZ29yaWVzIiwiU3VydmV5Il0sWyJOSVBBX1RhYmxlX0x 

pc3QiLCI2NSJdXX0= (last revised July 27, 2023) (listing estimated annual expenditure rates of between 

$713.1 billion and $737.1 billion in 2022). 

20 Melinda Zabritski, Experian Info. Sols., Inc., “State of the Automotive Finance Market Q4 2020” 5, 

https://www.experian.com/content/dam/marketing/na/automotive/quarterly-webinars/credit-trends/2020-

quarterly-trends/v2-2020-q4-state-automotive-market.pdf (on file with the Commission). 21 Fed. Rsrv. Bank of N.Y., “Quarterly Report on Household Debt and Credit, 2023: Q1” 3-4 (May 2023), 

https://www.newyorkfed.org/medialibrary/interactives/householdcredit/data/pdf/HHDC_2023Q1; Fed. 

Rsrv. Bank of N.Y., “Data Underlying Report” on “Page 3 Data” and “Page 4 Data” tabs, 

https://www.newyorkfed.org/medialibrary/interactives/householdcredit/data/xls/HHD_C_Report_2023Q1 

(last visited Dec. 5, 2023) (listing number of open “Auto Loan” accounts and total outstanding balance in 

such accounts). 

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40 and over.22 Servicemembers have an average of twice as much auto debt as civilians— 

particularly young servicemembers, who generally require vehicles for transportation 

while living on military bases.23 By the age of 24, around 20 percent of young 

servicemembers have at least $20,000 in auto debt, which equates to nearly two-thirds of 

an enlisted soldier’s typical base salary at that age.24 

In addition to the expense, the process of buying or leasing a vehicle is often timeconsuming and arduous. It can take several hours or days to finalize a transaction,25 on 

top of the hours it can take, particularly in rural areas, to drive to a dealership.26 

Consumers may need to take time off work or arrange childcare, and families with a 

22 Fed. Rsrv. Bank of N.Y., “Quarterly Report on Household Debt and Credit, 2023: Q1” 3, 21 (May 2023), 

https://www.newyorkfed.org/medialibrary/interactives/householdcredit/data/pdf/HHDC_2023Q1; Fed. 

Rsrv. Bank of N.Y., “Data Underlying Report” on “Page 3 Data” and “Page 21 Data” tabs, 

https://www.newyorkfed.org/medialibrary/interactives/householdcredit/data/xls/HHD_C_Report_2023Q1 

(last visited Dec. 5, 2023) (listing total “Auto Loan” debt balance compared to other product type 

categories).

23 See Consumer Fin. Prot. Bureau, “Financially Fit? Comparing the Credit Records of Young 

Servicemembers and Civilians” 27 (July 2020), 

https://files.consumerfinance.gov/f/documents/cfpb_financially-fit_credit-young-servicememberscivilians_report_2020-07.pdf. 

24 See Consumer Fin. Prot. Bureau, “Protecting Servicemembers from Costly Auto Loans and Wrongful 

Repossessions” (July 18, 2022), https://www.consumerfinance.gov/about-us/blog/protectingservicemembers-from-costly-auto-loans-and-wrongful-repossessions/. 25 Mary W. Sullivan, Matthew T. Jones & Carole L. Reynolds, Fed. Trade Comm’n, “The Auto Buyer 

Study: Lessons from In-Depth Consumer Interviews and Related Research” 15 (July 2020) [hereinafter 

Auto Buyer Study], https://www.ftc.gov/system/files/documents/reports/auto-buyer-study-lessons-depthconsumer-interviews-related-research/bcpreportsautobuyerstudy.pdf (noting that the purchase transactions 

in the FTC’s qualitative study often took 5 hours or more to complete, with some extending over several 

days); Cf. Cox Auto., “2020 Cox Automotive Car Buyer Journey” 6 (2020) [hereinafter 2020 Cox 

Automotive Car Buyer Journey], https://b2b.autotrader.com/app/uploads/2020-Car-Buyer-JourneyStudy.pdf (reporting average consumer time spent shopping for a vehicle at 14 hours, 53 minutes); Cox 

Auto., “2022 Car Buyer Journey: Top Trends Edition” 6 (2023) [hereinafter 2022 Car Buyer Journey], 

https://www.coxautoinc.com/wp-content/uploads/2023/01/2022-Car-Buyer-Journey-Top-Trends.pdf 

(reporting average consumer time spent shopping for a vehicle at 14 hours, 39 minutes). 26 For example, consumers have complained about going to a dealership based on an offer that the dealer 

refuses to honor only after they have spent hours driving there and additional time on the lot. See, e.g., 

Complaint ¶¶ 23-26, Fed. Trade Comm’n v. N. Am. Auto. Servs., Inc., No. 1:22-cv-0169 (N.D. Ill. Mar. 31, 

2022) (alleging that many consumers drive hours to dealerships based on the advertised prices; that testdriving and selecting a vehicle, and negotiating the price and financing terms, is an often hours-long 

process; and that, after this time, dealers falsely told consumers that add-on products or packages were 

required to purchase or finance the vehicle, even though they were not included in the low prices advertised 

or disclosed to consumers who called to confirm prices). 

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single vehicle may be forced to delay other important appointments due to the length of 

the vehicle-buying or -leasing process. 

Most consumers—approximately 70%—finance vehicle purchases through a 

motor vehicle dealer,27 using what is known as dealer-provided “indirect” financing.28 

This financing is typically offered through dealers’ financing and insurance (“F&I”) 

offices, which may also offer leasing and add-on products or services. In the dealerprovided financing scenario, the dealer collects financial information about the consumer 

and forwards that information to prospective motor vehicle financing entities. These 

financing entities evaluate this information and, in the process, determine whether, and 

on what terms, to provide credit.29 These terms include the “buy rate”: a risk-based 

finance charge that reflects the interest rate at which the entity will finance the deal.30 

Dealers often add a finance charge called a “dealer reserve” or “markup” to the buy 

rate.31 Unlike the buy rate, the markup is not based on the underwriting risk or credit 

27 Unless otherwise indicated, the terms “dealer,” “dealership,” and “motor vehicle dealer” as used in this 

SBP and the Commission’s final regulatory analysis refer to “‘Covered Motor Vehicle Dealer’ or ‘Dealer’” 

as defined in this part.

28 See Nat’l Auto. Dealers Ass’n, “Dealer-Assisted Financing Benefits Consumers,” 

https://www.nada.org/autofinance/ 

[https://web.archive.org/web/20220416131718/https://www.nada.org/autofinance/] (Apr. 16, 2022) (noting 

that 7 out of 10 consumers finance through their dealership). This is also known as “dealer financing,” 

because consumers obtain financing through the dealer that partners with other entities in the financing 

process.

29 Dealers often originate the contract governing the extension of retail credit or retail leases and then sell, 

or otherwise assign, these contracts to unaffiliated third-party finance or leasing sources, including such 

third parties the dealer may have contacted in the course of arranging dealer-provided “indirect” financing. 

See Consumer Fin. Prot. Bureau, “Automobile Finance Examination Procedures” 3 (Aug. 2019), 

https://files.consumerfinance.gov/f/documents/201908_cfpb_automobile-finance-examinationprocedures.pdf. 

30 See Nat’l Auto. Dealers Ass’n, Nat’l Ass’n of Minority Auto. Dealers & Am. Int’l Auto. Dealers Ass’n, 

“Fair Credit Compliance Policy & Program” 2 (2015), https://www.nada.org/media/4558/ 

download?inline. (defining “buy rate” as “the rate at which the finance source will purchase the credit 

contract from the dealer”). 

31 See, e.g., id. at 1 n.4 & accompanying text. 

12 
 

 

 

characteristics of the applicant, and dealers retain the markup as profit.32 New vehicle 

dealers average a gross profit of about $2,444 per vehicle,33 more than half of which 

comes from the dealers’ F&I offices. Independent used vehicle dealers averaged a gross 

profit of more than $6,000 per vehicle, as of 2019.34 While some used vehicle dealerships 

do not have a separate F&I office, more than half of such dealerships sell add-on 

products.35 

Six to eight percent of financed vehicle purchases use what is called “buy here, 

pay here” dealers.36 In this scenario, consumers typically borrow from, and make their 

payments directly to, the dealership. 

The remainder of financed vehicle transactions use what is commonly referred to 

as “direct” financing, provided by a credit union, bank, or other financing entity.37 In this 

scenario, consumers typically receive an interest rate quote from the financing entity 

prior to arriving at a dealership to purchase a vehicle, and use the financing to pay for 

32 Id. (describing this as the amount dealers earn for arranging financing, measured as the difference 

between the consumer’s annual percentage rate (“APR”) and the wholesale “buy rate” at which a finance 

source buys the finance contract from the dealer, and noting that finance sources typically permit dealers to 

retain the dealer participation). 

33 Nat’l Auto. Dealers Ass’n, “Average Dealership Profile” 1 (2020), https://www.nada.org/media/4136/ 

download?attachment 

[http://web.archive.org/web/20220623204158/https://www.nada.org/media/4136/download?attachment] 

(June 23, 2022). 

34 Nat’l Indep. Auto. Dealers Ass’n, “NIADA Used Car Industry Report 2020” 21 (2020). 

35 Id. at 8, 10. 36 Melinda Zabritski, Experian Info. Sols., Inc., “State of the Automotive Finance Market Q2 2020” 8 

(2020), https://www. 

experian.com/content/dam/marketing/na/automotive/quarterly-webinars/credit-trends/2020-q2-safmfinal.pdf 

[http://web.archive.org/web/20201106002015/https://www.experian.com/content/dam/marketing/na/autom 

otive/quarterly-webinars/credit-trends/2020-q2-safm-final.pdf] (Mar. 6, 2023). 

37 Consumer Fin. Prot. Bureau, “Automobile Finance Examination Procedures” 4 (Aug. 2019), 

https://files.consumerfinance.gov/f/documents/201908_cfpb_automobile-finance-examinationprocedures.pdf. 

13 
 

 

their chosen vehicle.38 Dealerships do not profit on the financing portion of the vehicle 

sale transaction when a consumer arranges financing directly. 

Finally, consumers may choose to lease a vehicle from a dealership rather than 

purchase one. In this scenario, consumers may drive a vehicle for a set period of time— 

typically around three years39—and for a certain maximum number of miles—typically 

10,000-15,000 miles per year—in exchange for an upfront payment, a monthly payment, 

and fees before, during, and at the end of the lease, including for excess wear and usage 

over the mileage limit.40 When consumers lease a vehicle, they do not own it, and they 

must return the vehicle when the lease expires, though they may have the option to 

purchase the vehicle at the end of the lease period. Nearly 27% of new vehicles are 

leased, as are just over 8% of used vehicles.41 

38 Consumer Fin. Prot. Bureau, “Consumer Voices on Automobile Financing” 5 (June 2016), 

https://files.consumerfinance.gov/f/documents/201606_cfpb_consumer-voices-on-automobilefinancing.pdf.

39 Melinda Zabritski, Experian Info. Sols., Inc., “State of the Automotive Finance Market Q4 2020” 26 

(2020), https://www.experian.com/content/dam/marketing/na/automotive/quarterly-webinars/credittrends/2020-quarterly-trends/v2-2020-q4-state-automotive-market.pdf 

[http://web.archive.org/web/20210311174922/https://www.experian.com/content/dam/marketing/na/autom 

otive/quarterly-webinars/credit-trends/2020-quarterly-trends/v2-2020-q4-state-automotive-market.pdf] 

(Mar. 6, 2023). 40 See Fed. Trade Comm’n, “Financing or Leasing a Car,” https://www.consumer.ftc.gov/articles/0056-

financing-or-leasing-car (last visited Dec. 5, 2023) (“The annual mileage limit in most standard leases is 

15,000 or less.”); Consumer Fin. Prot. Bureau, “What should I know about the differences between leasing 

and buying a vehicle?,” https://www.consumerfinance.gov/ask-cfpb/what-should-i-know-about-thedifferences-between-leasing-and-buying-a-vehicle-en-815/ (last visited Aug. 24, 2023) (“Most leases 

restrict your mileage to 10,000-15,000 miles per year.”). 41 Melinda Zabritski, Experian Info. Sols., Inc., “State of the Automotive Finance Market Q4 2020” 5 

(2020), https://www.experian.com/content/dam/marketing/na/automotive/quarterly-webinars/credittrends/2020-quarterly-trends/v2-2020-q4-state-automotive-market.pdf 

[https://www.experian.com/content/dam/marketing/na/automotive/quarterly-webinars/credit-trends/2020-

quarterly-trends/v2-2020-q4-state-automotive-market.pdf] (Mar. 6, 2023). 

14 
 

 

 

 

 

B. Deceptive and Unfair Practices in the Motor Vehicle Marketplace 

Section 5 of the Federal Trade Commission Act (“FTC Act”), as amended (15 

U.S.C. 45), authorizes the FTC to address deceptive or unfair acts or practices in or 

affecting commerce, including in the motor vehicle marketplace. 

An act or practice is deceptive if there is a representation, omission, or other 

practice that is likely to mislead consumers acting reasonably under the circumstances 

and is material to consumers—that is, it is likely to affect consumers’ conduct or 

decisions with regard to a product or service.42 Deceptive conduct can involve omission 

of material information, the disclosure of which is necessary to prevent the claim, 

practice, or sale from being misleading.43 

An act or practice is considered unfair under Section 5 of the FTC Act if: (1) it 

causes, or is likely to cause, substantial injury to consumers; (2) the injury is not 

reasonably avoidable by consumers; and (3) the injury is not outweighed by 

countervailing benefits to consumers or to competition.44 

In each of the past four years, the FTC received more than 100,000 complaints 

regarding motor vehicle sales, financing, service & warranties, and rentals & leasing.45 

This industry is also consistently at or near the top of private sources of consumer 

42 See Fed. Trade Comm’n, “FTC Policy Statement on Deception” 2, 5, 103 F.T.C. 174 (1984) [hereinafter 

FTC Policy Statement on Deception] (appended to Cliffdale Assocs., Inc., 103 F.T.C. 110, 183 (1984)), 

https://www.ftc.gov/system/files/documents/public_statements/410531/831014deceptionstmt.pdf. 43 Id. 44 15 U.S.C. 45(n). 45 See, e.g., Fed. Trade Comm’n, “Consumer Sentinel Network Data Book 2022” app. B3 at 85 (Feb. 2023) 

[hereinafter Consumer Sentinel Network Data Book 2022], 

https://www.ftc.gov/system/files/ftc_gov/pdf/CSN-Data-Book-2022.pdf (reporting complaints about new 

and used motor vehicle sales, financing, service & warranties, and rentals & leasing, collectively, of more 

than 100,000 in 2020, 2021, and 2022); Fed. Trade Comm’n, “Consumer Sentinel Network Data Book 

2021” app. B3 at 85 (Feb. 2022) [hereinafter Consumer Sentinel Network Data Book 2021], 

https://www.ftc.gov/system/files/ftc_gov/pdf/CSN%20Annual%20Data%20Book%202021%20Final%20P 

DF.pdf (reporting complaints about new and used motor vehicle sales, financing, service & warranties, and 

rentals & leasing, collectively, of more than 100,000 in 2019, 2020, and 2021). 

15 
 

 

 

 

 

 

complaints.46 Many of these complaints concerned deceptive or unfair acts or practices 

affecting U.S. consumers. Complaints about motor vehicle transactions are regularly in 

the top ten complaint categories tracked by the FTC.47 For military consumers as well, 

auto-related complaints are among the top 10 complaint categories outside of identity 

theft.48 

Moreover, law enforcement experience shows that complaints are just the tip of 

the iceberg.49 The Commission’s recent enforcement action against a large, multistate 

dealership group is illustrative of this point in the motor vehicle marketplace: in that 

matter, the Commission received 391 complaints—about add-ons and other issues—over 

a several-month period prior to filing a complaint against the thirteenth largest dealership 

46 According to commenters, complaints to the Better Business Bureau about new and used auto dealers, 

when combined, have been either the first or second highest regarding any industry in the U.S. for the past 

twenty years. See Comment of Nat’l Consumer L. Ctr. et al., Doc. No. FTC-2022-0046-7607 at ii; see also 

Better Bus. Bureau, “BBB Complaint and Inquiry Statistics,” https://www.bbb.org/all/bbb-complaintstatistics (last visited Dec. 5, 2023) (listing complaint statistics from 2010 through 2022, sorted by 

industry). In addition, for the past seven years annual surveys of State and local consumer protection 

agencies have reported that auto-related complaints were the top complaint received from consumers. See 

Comment of Nat’l Consumer L. Ctr. et al., Doc. No. FTC-2022-0046-7607 at 13; Consumer Fed’n of Am., 

“2022 Consumer Complaint Survey Report” 4-5 (May 2023), https://consumerfed.org/wpcontent/uploads/2023/05/2022-Consumer-Complaint-Survey-Report.pdf (“For the seventh year in a row, 

auto sales, leases and repairs are the #1 complaint category. Consumers filed complaints about add-on 

products and services, bait and switch pricing, and mechanical condition issues.”). 

47 See Consumer Sentinel Network Data Book 2021, supra note 45, at 8 (listing vehicle-related complaints 

as the seventh most common report category, outside of identity theft, in 2021); Consumer Sentinel 

Network Data Book 2022, supra note 45, at 8 (listing motor vehicle-related complaints as the fifth most 

common report category, outside of identity theft, in 2022). 

48 See Consumer Sentinel Network Data Book 2021, supra note 45, at 18 (listing vehicle-related complaints 

as the eighth most common complaint category for military consumers, outside of identity theft categories, 

in 2021); Consumer Sentinel Network Data Book 2022, supra note 45, at 18 (listing vehicle-related 

complaints as the ninth most common complaint category for military consumers, outside of identity theft 

categories, in 2022). 

49 See, e.g., United States v. Brien, 617 F.2d 299, 308 (1st Cir. 1980); United States v. Offs. Known as 50 

State Distrib. Co., 708 F.2d 1371, 1374-75 (9th Cir. 1983); Keith B. Anderson, Fed. Trade Comm’n, 

“Consumer Fraud in the United States: An FTC Survey” 80 (2004), 

https://www.ftc.gov/sites/default/files/documents/ 

reports/consumer-fraud-united-states-ftc-survey/040805confraudrpt.pdf (staff report noting consumers who 

reported they were victims of fraud complained to an official source only 8.4 percent of the time, filing 

complaints with the BBB in 3.5 percent of incidents and to a Federal agency, including the FTC, in only 1.4 

percent of cases). 

16 
 

 

 

 

 

 

 

group in the country by revenue as of 2020.50 However, in a survey of the dealer’s 

customers over the same time period, 83% of respondents—or at least 16,848 

customers—indicated they were subject to the dealer’s unlawful practices related to addons alone.51 

Similarly, in other contexts where companies were charged with making 

misrepresentations or engaging in misconduct regarding add-on products, information 

obtained after filing has shown widespread harm far beyond the initial consumer 

complaint volumes reported prior to filing.52 

As examined in greater detail in the paragraphs that follow, consumers in the 

motor vehicle marketplace are confronted with chronic deceptive or unfair practices, 

including bait-and-switch tactics and hidden charges.53 

1. Bait-and-Switch Tactics 

Advertisements for motor vehicles are often consumers’ first contact in the 

vehicle-buying or -leasing process. Dealers utilize a variety of means to reach consumers, 

50 See Complaint, Fed. Trade Comm’n v. N. Am. Auto. Servs., Inc., No. 1:22-cv-0169 (N.D. Ill. Mar. 31, 

2022); see also WardsAuto, “WardsAuto 2020 Megadealer 100,” 

https://www.wardsauto.com/dealers/wardsauto-2020-megadealer-100-industry-force (last visited Dec. 5, 

2023) (listing Napleton Automotive Group as the 13th-ranked dealership group by total revenue).

51 Complaint ¶ 27, Fed. Trade Comm’n v. N. Am. Auto. Servs., Inc., No. 1:22-cv-0169 (N.D. Ill. Mar. 31, 

2022) (alleging that defendants buried charges for add-ons in voluminous paperwork, making them difficult 

to detect); see Press Release, Fed. Trade Comm’n, “FTC Returns Additional $857,000 To Consumers 

Harmed by Napleton Auto’s Junk Fees and Discriminatory Practices” (Nov. 20, 2023), 

https://www.ftc.gov/news-events/news/press-releases/2023/11/ftc-returns-additional-857000-consumersharmed-napleton-autos-junk-fees-discriminatory-practices. 52 For example, in a recent action involving deceptive pre-approval claims, the FTC had received roughly 

30 complaints about the company’s pre-approval conduct in the five-year period prior to announcing its 

action. But in the five months following announcement of the action, more than 900 additional consumers 

came forward with complaints about the conduct. See Press Release, Fed. Trade Comm’n, “FTC 

Announces Claims Process for Consumers Harmed by Credit Karma ‘Pre-Approved’ Offers for Which 

They Were Denied” (Dec. 5, 2023), https://www.ftc.gov/news-events/news/press-releases/2023/12/ftcannounces-claims-process-consumers-harmed-credit-karma-pre-approved-offers-which-they-were 

(“[W]ithin five months of that announcement, the agency received nearly 900 more such complaints”). 53 While other issues exist in the motor vehicle sales, financing, and leasing space, including issues 

involving discrimination, financing application falsification, data privacy and security, and yo-yo financing, 

this Rule’s core focus is on misrepresentations and add-on and pricing practices. 

17 
 

 

 

 

 

 

 

including social media and online advertisements, television and radio commercials, and 

direct mail marketing. New vehicle dealers spend an average of more than $700 on 

advertising per vehicle sold54—more than two-thirds of which goes toward online 

advertising.55 

The FTC has brought many law enforcement actions involving motor vehicle 

dealers’ deceptive advertising and other unlawful tactics. Such actions have charged 

dealers with, inter alia, making misrepresentations regarding the price of a vehicle, the 

availability of discounts and rebates, the monthly payment amount for a financed 

purchase or lease, the amount due at signing, and whether an offer pertains to a purchase 

or a lease.56 Other such actions have charged dealers with misrepresentations regarding 

whether the dealer or consumer is responsible for paying off “negative equity,” i.e., the 

outstanding debt on a vehicle that is being “traded in” as part of another vehicle 

purchase.57 And in other FTC actions, some dealers have lured potential buyers through 

54 Nat’l Auto. Dealers Ass’n, “NADA Data 2022” 15, https://www.nada.org/media/4695/download?inline 

(listing average dealership advertising per new vehicle sold of $718 in 2022, and $602 in 2021). 

55 Id. at 16 (listing 68.2% of estimated advertising expenditures by medium as internet expenditures). 56 See, e.g., Complaint, Timonium Chrysler, Inc., No. C-4429 (F.T.C. Jan. 28, 2014) (alleging dealership 

advertised internet prices and dealer discounts that were only available through rebates not applicable to the 

typical consumer); Complaint, Ganley Ford West, Inc., No. C-4428 (F.T.C. Jan. 28, 2014) (alleging 

dealership advertised discounts on vehicle prices, but failed to disclose that discounts were only available 

on the most expensive models); Complaint, Progressive Chevrolet Co., No. C-4578 (F.T.C. June 13, 2016) 

(alleging deceptive failure to disclose material conditions of obtaining the lease monthly payment in their 

online and print advertising); Complaint ¶¶ 38-46, Fed. Trade Comm’n v. Tate’s Auto Ctr. of Winslow, Inc., 

No. 3:18-cv-08176-DJH (D. Ariz. July 31, 2018) (alleging that company issued advertisements for 

attractive terms but concealed that the terms were only applicable to lease offers); Complaint ¶¶ 36-38, 

United States v. New World Auto Imports, Inc., No. 3:16-cv-02401-K (N.D. Tex. Aug. 18, 2016) (alleging 

misrepresentation that terms were for financing instead of leasing); Complaint ¶¶ 85-87, Fed. Trade 

Comm’n v. Universal City Nissan, Inc., No. 2:16-cv-07329 (C.D. Cal. Sept. 29, 2016) (alleging that 

dealerships claimed consumers could finance the purchase of vehicles with attractive terms and buried 

disclosures indicating that such terms were applicable to leases only). 

57 Complaint ¶¶ 82-84, Fed. Trade Comm’n v. Universal City Nissan, Inc., No. 2:16-cv-07329 (C.D. Cal. 

Sept. 29, 2016) (alleging misrepresentation that dealer would pay off a consumer’s trade-in when in fact 

consumers were still responsible for outstanding debt on trade-in vehicles); Complaint ¶¶ 17-19, TXVT Ltd. 

P’ship, No. C-4508 (F.T.C. Feb. 12, 2015) (alleging misrepresentation in leasing advertising that the 

dealership would pay off the negative equity of a consumer’s trade in vehicle, when in fact, it was merely 

rolled into the financed amount for the consumer’s newly financed vehicle). 

18 
 

 

financial incentives incidental to the purchase, such as deceptive promises of a valuable 

prize that is redeemable only by visiting the dealership.58 

Deceptive tactics can cause significant consumer harm and impede competition, 

competitively disadvantaging law-abiding dealers. When dealerships advertise prices, 

discounts, or other terms that are not actually available to typical consumers, consumers 

who select that dealership instead of others spend time visiting the dealership or 

otherwise interacting with the dealership under false pretenses. 

2. Unlawful Practices Relating to Add-on Products or Services and 

Hidden Charges 

Another key consumer protection concern is the sale of add-on products or 

services in a deceptive or unfair manner. Add-ons in connection with the sale or 

financing of motor vehicles include extended warranties, service and maintenance plans, 

payment programs, guaranteed automobile or asset protection (“GAP”) agreements, 

emergency road service, VIN etching and other theft protection devices, and 

undercoating. Individual add-ons can cost consumers thousands of dollars and can 

significantly increase the overall cost to the consumer in the transaction.59 Moreover, in 

the past two years, dealers have substantially increased prices for these add-ons, 

notwithstanding that such products or services largely are not constrained by supply.60 

58 See, e.g., Complaint ¶¶ 12, 17-19, Traffic Jam Events, LLC, No. 9395 (F.T.C. Aug. 7, 2020); Complaint 

¶¶ 4, 7-9, Fowlerville Ford, Inc., No. C-4433 (F.T.C. Feb. 20, 2014). 59 See, e.g., Complaint ¶¶ 25, 27-28, Fed. Trade Comm’n v. N. Am. Auto. Servs., Inc., No. 1:22-cv-0169 

(N.D. Ill. Mar. 31, 2022). 

60 See Ben Eisen, “Car Dealer Markups Helped Drive Inflation, Study Finds,” Wall St. J., Apr. 23, 2023, 

https://www.wsj.com/articles/car-dealer-markups-helped-drive-inflation-study-finds-7c1d5a2d; U.S. 

Bureau of Labor Statistics, “Automotive Dealerships 2019-2022: Dealer Markup Increases Drive NewVehicle Consumer Inflation” (Apr. 2023), https://www.bls.gov/opub/mlr/2023/article/automotivedealerships-markups.htm. 

19 
 

 

 

 

 

A significant consumer protection concern is consumers paying for add-ons 

without knowing about, or expressly agreeing to, these products or services.61 This type 

of payment packing has been a particular concern in the military community.62 The 

protracted and paperwork-heavy vehicle-buying or -leasing process can make it difficult 

for consumers to spot add-on charges, particularly when advertised prices or payment 

terms do not mention add-ons.63 If consumers are financing or leasing the vehicle, they 

undergo a separate financing process after selecting a vehicle, which can include wading 

through a thick stack of dense paperwork filled with fine print.64 For example, according 

to an FTC law enforcement action, consumers visiting one large dealership group were 

required to complete a stack of paperwork that ran more than sixty pages and required 

61 See Nat’l Consumer L. Ctr., “Auto Add-ons Add Up: How Dealer Discretion Drives Excessive, 

Arbitrary, and Discriminatory Pricing” (Oct. 1, 2017), https://www.nclc.org/images/pdf/car_sales/reportauto-add-on.pdf; Adam J. Levitin, “The Fast and the Usurious: Putting the Brakes on Auto Lending 

Abuses,” 108 Geo. L.J. 1257, 1265-66 (2020), https://www.law.georgetown.edu/georgetown-lawjournal/wp-content/uploads/sites/26/2020/05/Levitin_The-Fast-and-the-Usurious-Putting-the-Brakes-onAuto-Lending-Abuses.pdf (discussing “loan packing” as the sale of add-on products that are falsely 

represented as being required in order to obtain financing); Complaint ¶¶ 12-19, Fed. Trade Comm’n v. 

Liberty Chevrolet, Inc., No. 1:20-cv-03945 (S.D.N.Y. May 21, 2020) (alleging deceptive and unauthorized 

add-on charges in consumers’ transactions); Complaint ¶¶ 59-64, Fed. Trade Comm’n v. Universal City 

Nissan, Inc., No. 2:16-cv-07329 (C.D. Cal. Sept. 29, 2016) (alleging deceptive and unauthorized add-on 

charges in consumers’ transactions); Complaint ¶¶ 6, 9, TT of Longwood, Inc., No. C-4531 (F.T.C. July 2, 

2015) (alleging misrepresentations regarding prices for added features); see also Auto Buyer Study, supra 

note 25, at 14 (“Several participants who thought that they had not purchased add-ons, or that the add-ons 

were included at no additional charge, were surprised to learn, when going through the paperwork, that they 

had in fact paid extra for add-ons. This is consistent with consumers’ experiencing fatigue during the 

buying process or confusion with a financially complex transaction, but would also be consistent with 

dealer misrepresentations.”). 

62 Consumers for Auto Reliability and Safety, Comment Letter on Motor Vehicle Roundtables, Project No. 

P104811 at 2-3 (Apr. 1, 2012), https://www.ftc.gov/sites/default/files/documents/public_comments/publicroundtables-protecting-consumers-sale-and-leasing-motor-vehicles-project-no.p104811-00108/00108-

82875.pdf (citing a U.S. Department of Defense data call summary that found that the vast majority of 

military counselors have clients with auto financing problems and cited “loan packing” and yo-yo financing 

as the most frequent auto lending abuses affecting servicemembers). 63 Complaint ¶¶ 17-19, Fed. Trade Comm’n v. Liberty Chevrolet, Inc., No. 1:20-cv-03945 (S.D.N.Y. May 

21, 2020); Complaint ¶ 60, Fed. Trade Comm’n v. Universal City Nissan, Inc., No. 2:16-cv-07329 (C.D. 

Cal. Sept. 29, 2016); Carole L. Reynolds & Stephanie E. Cox, Fed. Trade Comm’n, “Buckle Up: 

Navigating Auto Sales and Financing” (2020) [hereinafter Buckle Up], https://www.ftc.gov/reports/bucklenavigating-auto-sales-financing.

64 See, e.g., Buckle Up, supra note 63, at 10-11 (noting the long, complex transaction process); Complaint 

¶¶ 23-28, Fed. Trade Comm’n v. N. Am. Auto. Servs., Inc., No. 1:22-cv-01690 (N.D. Ill. Mar. 31, 2022) 

(same). 

20 
 

 

 

 

 

 

 

more than a dozen signatures.65 This paperwork can include hidden charges for add-on 

products or services, causing consumers to purchase those add-ons without knowing 

about or agreeing to them, or without knowing or agreeing to their costs or other key 

terms.66 Unscrupulous dealers are able to slip the often considerable additional costs for 

these items past consumers unnoticed and into purchase contracts through a variety of 

65 Complaint ¶ 24, Fed. Trade Comm’n v. N. Am. Auto. Servs., Inc., No. 1:22-cv-01690 (N.D. Ill. Mar. 31, 

2022); see also Buckle Up, supra note 63, at 10-11. 66 Complaint ¶¶ 25, 27, 29-32, Fed. Trade Comm’n v. N. Am. Auto. Servs., Inc., No. 1:22-cv-01690 (N.D. 

Ill. Mar. 31, 2022); see also Complaint ¶¶ 17-19, Fed. Trade Comm’n v. Liberty Chevrolet, Inc., No. 1:20-

cv-03945 (S.D.N.Y. May 21, 2020); Dale Irwin, Slough Connealy Irwin & Madden LLC, Comment Letter 

on Public Roundtables: Protecting Consumers in the Sale and Leasing of Motor Vehicles, Project No. 

P104811, Submission No. 558507-00060 (Dec. 29, 2011), https://www.regulations.gov/comment/FTC2022-0036-0051 (consumer protection lawyer noting “payment packing” among problems “that cry out for 

scrutiny and regulation”); Michael Archer, Comment Letter on Public Roundtables: Protecting Consumers 

in the Sale and Leasing of Motor Vehicles, Project No. P104811, Submission No. 558507-00041 at 3 (Aug. 

6, 2011), https://www.regulations.gov/comment/FTC-2022-0036-0014 (workshop panelist stating, “I have 

seen cases wherein the dealer uses financing to pack in extra costs or to wipe out trade-in value.”); Dawn 

Smith, Comment Letter on Public Roundtables: Protecting Consumers in the Sale and Leasing of Motor 

Vehicles, Project No. P104811, Submission No. 558507-00027 (July 27, 2011), 

https://www.regulations.gov/comment/FTC-2022-0036-0043 (“Confusing or misleading sales terms[.] 

Extra fees was [sic] added at the time of purchase and to this day I still do not understand what the fee was 

for; it made the payment higher.”); Carrie Ferraro, Legal Servs. of N.J., Comment Letter on Public 

Roundtables: Protecting Consumers in the Sale and Leasing of Motor Vehicles, Project No. P104811, 

Submission No. 558507-00061 (Dec. 29, 2011), https://www.regulations.gov/comment/FTC-2022-0036-

0059 (citing “[d]ealers engage[d] in packing” as an example of the common consumer complaints of carsales-related fraud received by LSNJ’s legal advice hotline); Rosemary Shahan, Consumers for Auto 

Reliability and Safety, Comment Letter on Public Roundtables: Protecting Consumers in the Sale and 

Leasing of Motor Vehicles, Project No. P104811, Submission No. 558507-00069 at 3 (Jan. 31, 2012), 

https://www.regulations.gov/comment/FTC-2022-0036-0069 (noting that “[m]any common auto scams do 

not generate complaints in proportion to how pervasive or costly the practices are, simply because the 

consumers generally remain unaware they have been scammed,” including as a result of “[l]oan packing”); 

Mary W. Sullivan, Matthew T. Jones & Carole L. Reynolds, Fed. Trade Comm’n, “The Auto Buyer Study: 

Lessons from In-Depth Consumer Interviews and Related Research,” Supplemental Appendix: Redacted 

Interview Transcripts at 525 (2020) [hereinafter Auto Buyer Study: Appendix], 

https://www.ftc.gov/system/files/documents/reports/buckle-navigating-auto-salesfinancing/bcpstaffreportautobuyerstudysuppappendix.pdf (Study participant 169810: consumer had 

“additional items” charges on contract that consumer could not identify); id. at 730, 740-42 (Study 

participant 188329: dealer did not tell consumer about GAP or service contract but consumer was charged 

$599 and $1950 for those add-ons, respectively); Press Release, N.Y. State Att’y Gen., “A.G. 

Schneiderman Announces Nearly $14 Million Settlement with NYC and Westchester Auto Dealerships for 

Deceptive Practices that Resulted in Inflated Car Prices” (June 17, 2015), https://ag.ny.gov/pressrelease/2015/ag-schneiderman-announces-nearly-14-million-settlement-nyc-and-westchester-auto (“This 

settlement is part of the [New York] attorney general’s wider initiative to end the practice of ‘jamming,’ 

unlawfully charging consumers for hidden purchases by car dealerships.”). 

21 
 

 

 

 

 

means, including by not mentioning them at all,67 or by focusing consumers’ attention on 

other aspects of the complex transaction, such as monthly payments, which might 

increase only marginally with the addition of prorated add-on costs, or may even be made 

to decrease if the financing term is extended.68 This type of conduct can target 

immigrants, communities of color, and servicemembers.69 In other instances, dealers 

might wait until late in the transaction to mention add-ons, and then do so in a misleading 

manner. For example, participants in an FTC qualitative study on consumers’ car-buying 

67 Under the Truth in Lending Act (“TILA”) and its implementing Regulation Z, required add-on products 

or services must be factored into the APR and the finance charge disclosed during the transaction. See 15 

U.S.C. 1605, 1606, 1638; 12 CFR 226.4, 226.18(b), (d), (e), and 226.22. It is legally impermissible for 

dealers to include charges for such products in a consumer’s contract without disclosing them. See, e.g., 

Complaint ¶¶ 57-60, Fed. Trade Comm’n v. Stewart Fin. Co. Holdings, Inc., No. 1:03-CV-2648 (N.D. Ga. 

Sept. 4, 2003) (alleging violations for failure to include the cost of required add-on products in the finance 

charge and annual percentage rate disclosed to consumers).

68 See, e.g., Buckle Up, supra note 63, at 6; Fed. Trade Comm’n, Military Consumer Financial Workshop, 

Panel 1, Tr. 19:25-41 (July 19, 2017), https://www.ftc.gov/news-events/events-calendar/military-consumerworkshop; Fed. Trade Comm’n, “The Road Ahead: Selling, Financing & Leasing Motor Vehicles,” Public 

Roundtable, Session 2, Tr. at 40-41 (Aug. 2 2011), https://www.ftc.gov/news-events/events/2011/08/roadahead-selling-financing-leasing-motor-vehicles (noting that optional products and services are often already 

included in the monthly payment prices advertised or quoted); Christopher Kukla, Ctr. for Responsible 

Lending, Comment Letter on Public Roundtables: Protecting Consumers in the Sale and Leasing of Motor 

Vehicles, Project No. P104811, Submission No. 558507-00071 at 10 (Feb. 1, 2012), 

https://www.regulations.gov/comment/FTC-2022-0036-0068 (discussing how dealers conceal packing by 

expressing an increase in price in terms of monthly payment); Att’ys General of 31 States & DC, Comment 

Letter on Public Roundtables: Protecting Consumers in the Sale and Leasing of Motor Vehicles, Project 

No. P104811, Submission No. 558507-00112 at 5 (Apr. 13, 2012), 

https://www.regulations.gov/comment/FTC-2022-0036-0124 (discussing the “age-old auto salesperson’s 

trick” of quoting monthly payment prices without disclosing that the quote includes the cost of optional 

items that the customer has not yet agreed to purchase). 

69 See, e.g., Complaint ¶¶ 9, 26, Fed. Trade Comm’n v. Liberty Chevrolet, Inc., No. 1:20-cv-03945 

(S.D.N.Y. May 21, 2020) (charging defendants with discriminating on the basis of race, color, and national 

origin by charging higher interest rates and inflated fees); Press Release, N.Y. State Att’y Gen., “Attorney 

General James Delivers Restitution to New Yorkers Cheated by Auto Dealership” (Nov. 17, 2020), 

https://ag.ny.gov/press-release/2020/attorney-general-james-delivers-restitution-new-yorkers-cheated-autodealership (dealership targeted Chinese speakers for unlawful payment packing or “jamming”); Military 

Consumer Financial Workshop, Tr. 19:21 (July 19, 2017), https://www.ftc.gov/newsevents/events/2017/07/military-consumer-workshop (panelist discussing servicemembers experiencing 

payment packing); see also Fed. Trade Comm’n, “Staff Perspective: A Closer Look at the Military 

Consumer Financial Workshop” 2-3 (Feb. 2018), 

https://www.ftc.gov/system/files/documents/reports/closer-look-military-consumer-financial-workshopfederal-trade-commission-staff-perspective/military_consumer_workshop_-_staff_perspective_2-2-18.pdf 

(explaining the unique situation of servicemembers whose steady paychecks make them attractive 

customers for dealers, while having no or minimal credit history, meaning they qualify for less 

advantageous credit terms and higher interest rate financing). 

22 
 

 

 

 

 

 

experiences cited situations where dealers waited until the financing stage to mention 

add-ons, after consumers believed they had agreed on terms, and even though many addons have nothing to do with financing and were not mentioned at all during the sales 

process or when prices were initially negotiated.70 According to FTC enforcement 

actions, dealers also have represented that add-ons are required when in fact they are 

not,71 have misrepresented the purported benefits of add-ons, and have failed to disclose 

material limitations.72 

Indeed, as previously noted, in a recent FTC enforcement action, the Commission 

cited a survey finding that 83% of consumers from the named dealers were charged for 

70 See, e.g., Buckle Up, supra note 63, at 6 (observing that the introduction of “add-ons during financing 

discussions caused several participants’ total sale price to balloon from the cash price”); id. at 9 (observing 

that, for most consumers in the study, “add-ons did not come up until the financing process, if at all, after a 

long car-buying process and at a time when the consumer often felt pressure to close the deal”); id. (noting 

that most study participants’ contracts included add-ons charges, but that many “were unclear what those 

add-ons included, and sometimes did not realize they had purchased any add-ons at all”); id. at 7 

(explaining situations where the consumer reached the financing office after negotiating with the sales staff 

and were then told that the agreed upon price was not compatible with key financing terms—for example, a 

promised rebate or discount could not be combined with an advertised interest rate).

71 Complaint ¶¶ 12-19, Fed. Trade Comm’n v. Liberty Chevrolet, Inc., No. 1:20-cv-03945 (S.D.N.Y. May 

21, 2020) (alleging deceptive and unauthorized add-on charges in consumers’ transactions); Complaint 

¶¶ 59-64, Fed. Trade Comm’n v. Universal City Nissan, Inc., No. 2:16-cv-07329 (C.D. Cal. Sept. 29, 2016) 

(alleging deceptive and unauthorized add-on charges in consumers’ transactions); Complaint ¶¶ 6, 9, TT of 

Longwood, No. C-4531 (F.T.C. July 2, 2015) (alleging misrepresentations regarding prices for added 

features); see also Auto Buyer Study, supra note 25, at 14. 72 Complaint ¶¶ 4-14, Nat’l Payment Network, Inc., No. C-4521 (F.T.C. May 4, 2015) (alleging failure to 

disclose fees associated with financing program; misleading savings claims in advertisements); Complaint 

¶¶ 4-13, Matt Blatt Inc., No. C-4532 (F.T.C. July 2, 2015) (alleging failure to disclose fees associated with 

financing program; misleading savings claims); Buckle Up, supra note 63, at 10 (noting that some Auto 

Buyer Study participants did not fully understand material aspects of extended warranties or service plans 

they purchased and “were surprised to discover during the interview that their plans had unexpected 

limitations” or that “they had to pay out-of-pocket for repairs or services that were not covered”; for 

example, one “consumer purchased a ‘Lifetime’ maintenance plan, only to discover later that he received a 

one-year plan that covered periodic oil changes”). Cf. Consent Order ¶¶ 10-16, Santander Consumer USA, 

Inc., CFPB No. 2018-BCFP-0008 (Nov. 20, 2018) (finding that defendant sold GAP product allegedly 

providing “full coverage” to consumers with loan-to-value ratios (“LTVs”) above 125%, when in fact 

coverage was limited to 125% of LTV). 

23 
 

 

 

add-on products or services that they did not authorize or as a result of deceptive 

claims.73 

One participant in an FTC qualitative study of consumers’ car-buying experiences 

summed up these issues during an interview after having purchased a vehicle.74 The 

consumer purchased a $2,000 service contract that the dealer falsely said was free, and a 

$900 GAP agreement that the dealer falsely said was mandatory. The consumer only 

learned about these purchases during the study interview. This consumer remarked: 

I feel I’ve been taken advantage of, to be honest with you. Even 

though I thought that I was getting a great deal with the interest 

rate, but I know [sic] see that they’re also very sneaky about 

putting stuff on your paperwork. They only let you skim through 

the paperwork that you have to sign and they just kind of tell you 

what it is. This is this, this is that, this is this, and then you just 

sign it away. You’re so tired, you’re so worn down, you don’t want 

to be there no more. You just want to get it done and over with. 

They take advantage of that. Yes, they still play this friendly card, 

you know, thank you for your business card kind of thing. Like I 

said, they never lose. They never lose.75 

Similarly, in response to the Commission’s Notice of Proposed 

Rulemaking, thousands of commenters described issues they faced when 

purchasing, financing, or leasing a vehicle. Many comments the Commission 

received in support of the NPRM were from self-identified military consumers 

73 Complaint ¶ 27, Fed. Trade Comm’n v. N. Am. Auto. Servs., Inc., No. 1:22-cv-01690 (N.D. Ill. Mar. 31, 

2022). 

74 The study is described in the Commission’s reports: Auto Buyer Study, supra note 25, and Buckle Up, 

supra note 63. Some industry commenters critiqued the FTC’s reliance on this qualitative study. The 

Commission notes that the study provides helpful qualitative insight from consumer interviews regarding 

their recent motor vehicle purchases and is one of the many sources the Commission has considered, 

including consumer complaints, enforcement actions, outreach and dialogue with stakeholders and 

consumer groups, among others, as described in this SBP and in the NPRM. 

75 Auto Buyer Study: Appendix, supra note 66, at 130 (Study participant 152288); see also id. at 202-03 

(Study participant 180267: dealership included a charge for GAP in the final paperwork but not in retail 

sales contract); id. at 296 (Study participant 146748: consumer learned during interview with FTC that 

consumer purchased GAP: “maybe they’re just throwing that in there without telling you”). 

24 
and dealership employees. Examples of supportive comments include the 

following: 

 As a young Marine stationed in a military town I was taken advantage of 

by a dealership when purchasing my first car. It set me back financially for 

years. I know of many young military people who purchased vehicle[]s 

and we[]re instantly so far upside down after leaving the dealership with 

thousands of dollars in add on junk charges . . . . Please make it more 

difficult for dishonest dealers like these to financially burden young 

Americans and Americans of any age for that matter.76 

 Imagine going to a restaurant franchise and order[ing] a burger and fries 

for $10 and the franchise employees say[,] ‘Sorry that will be $25 dollars, 

there is a $10 restaurant adjustment price due to market conditions and $5 

for us to place and document your order.’ You would walk away without 

hesitation because that would [be] absolutely ridiculous. Yet, dealerships 

are allowed to do exactly that . . . . IT IS TIME TO CHANGE AND 

PROTECT CONSUMERS[.]77 

 As in many other areas, it is the vulnerable in our society who are 

probably most affected by such deceptive practices. . . . Sadly, it is often 

these very people who desperately need a dependable, affordable car for 

transportation to work, school, shopping, or medical care. To entice, 

pressure, or trick people into buying a car that is more than they can afford 

sets them up for financial failure, not only in possibly having a needed car 

repossessed, but in long-term damage to their credit. . . . In closing, I 

would be extremely happy to see rules such as those described above 

enacted, and don’t think these could come a day too soon. It’s a step in the 

right direction for the protection of the consumer.78 

 None of us working here at the dealership in sales benefit from [unfair and 

deceptive practices]. We cringe as much as every customer and have to 

show up to work every[ ]day and hope we are not forced to screw 

someone with these BS products . . . . I would hope when [t]he regulators 

are making their decisions, they understand the positive implications this 

would have for dealership employees both financially and mentally.79 

 Generally, I’m not a person in favor of government regulation. However, 

as a potential customer and cash buyer, I feel there is certainly a need to 

bring car dealers back into check. I’m just looking for a more honest and 

transparent process. I don’t want to be taken advantage of. I certainly 

76 Individual commenter, Doc. No. FTC-2022-0046-4648. 

77 Individual commenter, Doc. No. FTC-2022-0046-0016. 

78 Individual commenter, Doc. No. FTC-2022-0046-1216. 

79 Individual commenter, Doc. No. FTC-2022-0046-3615. 

25 
 

don’t want my family members or [s]oldiers to be taken advantage of. 

Therefore, I feel it is in the best interest of future customers to support this 

regulation.80 

 I cannot stress enough my support for these new rules. Currently, 

dealerships across the US, including the one I work for, have made the car 

buying process needlessly confusing, expensive, and frustrating by 

engaging in false advertising and hidden add-on products.81 

 I can tell you after many years of car buying I have NEVER walked out of 

a dealership feeling good. Even worse, I’ve never purchased a car feeling 

like I fully understood what I was getting. . . . Looking forward to seeing 

the change happen SOON!82 

 When I buy a gallon of milk from the store, the price is written next to the 

milk. When I go pay, I pay the price advertised next to the milk. Would it 

be OK if I go up to pay and that gallon of milk had anywhere between 1% 

and 1,200% markup depending on the day, what you look like, what you 

drove to the store in, if you’re a man or a woman?83 

 We ended up having to drive 3 hours to the [vehicle we] wanted. Upon 

arriving to pick[ ]up the car we were told there was a [$]4300 increase 

over MSRP. We were told if we didn’t take it they had someone else 

waiting to purchase it. We needed the car and didn’t have time to hunt 

down another one so ended up purchasing it. Very disappointed in the 

long and awful process.84 

 The worst is dealing with car dealers. You never know what the real price 

is on a vehicle until you spend a few hours with them. Mandatory add[-] 

on[]s, market availability surcharges, doc fees that vary from dealer to 

dealer. . . . Then dealing with the finance manager who tr[ie]s to sell you 

everything you don’t[]need. They high pressure the consumer on 

purchasing extend[ed] warranties. There needs [to be] some sort of 

policing [of] these unscrupulous car dealers to protect the buyers.85 

 This is a good start to making car purchasing a better experience. . . . I 

remember looking at a Lexus and being told by the dealership, the only 

one in the state, that [S]cotchguard and undercoating were mandatory and 

they refused to sell any vehicles without them. There were two Acura 

dealerships in town and one of them included ‘free’ lifetime oil changes 

80 Individual commenter, Doc. No. FTC-2022-0046-7366. 

81 Individual commenter, Doc. No. FTC-2022-0046-3693. 

82 Individual commenter, Doc. No. FTC-2022-0046-3678. 

83 Individual commenter, Doc. No. FTC-2022-0046-1479. 

84 Individual commenter, Doc. No. FTC-2022-0046-1878. 

85 Individual commenter, Doc. No. FTC-2022-0046-0825. 

26 
 

 

 

that I didn’t learn about until negotiating the price and had already spent 

two hours in negotiations. All of these services/price adjustments were not 

disclosed at the start of the negotiation and were only revealed either in 

the manager’s office or when the purchase agreement was presented to me 

by the salesperson. After spending time on the test drive and negotiating 

the price, it felt that these last minute price adjustments were being 

revealed that late in the process so that I wouldn’t leave.86 

 Please enact and enforce these regulations to protect vulnerable consumers 

from predatory business practices enjoyed by dealers. Our family 

experienced such practices when trying to purchase a vehicle in early 

2022. It was only after five hours at the dealership that we discovered the 

dealer had added on a $3000 market adjustment and $3100 in other addons (nitrogen-filled tires, LoJack, paint protection) to MSRP. This raised 

the price by about $6000 and caused us to use extra PTO over that week to 

find a new vehicle at a price within our budget. Greater transparency in the 

car-buying process is desperately needed to protect vulnerable 

consumers—who usually lack any bargaining power—against power 

dealer networks and their special interest groups . . . .87 

C. Law Enforcement and Other Responses 

The Commission has taken action to protect consumers from deceptive and unfair 

acts or practices in the motor vehicle marketplace. As noted in the NPRM, the 

Commission has brought more than 50 auto law enforcement actions;88 led two law 

86 Individual commenter, Doc. No. FTC-2022-0046-4833. 

87 Individual commenter, Doc. No. FTC-2022-0046-1690. 

88 Complaint, Fed. Trade Comm’n v. Rhinelander Auto Ctr., Inc., No. 3:23-cv-00737 (W.D. Wis. Oct. 24, 

2023); Complaint, Fed. Trade Comm’n v. Passport Auto. Grp., Inc., No. 8:22-cv-02670-GLS (D. Md. Oct. 

18, 2022); Complaint, Fed. Trade Comm’n v. N. Am. Auto. Servs., Inc., No. 1:22-cv-01690 (N.D. Ill. Mar. 

31, 2022); Complaint, Traffic Jam Events, LLC, No. 9395 (F.T.C. Aug. 7, 2020); Complaint, Fed. Trade 

Comm’n v. Liberty Chevrolet, Inc., No. 1:20-cv-03945 (S.D.N.Y. May 21, 2020); Complaint, FederalMogul Motorparts LLC, No. C-4717 (F.T.C. May 12, 2020); Complaint, LightYear Dealer Techs., LLC, 

No. C-4687 (F.T.C. Sept. 3, 2019); Complaint, Fed. Trade Comm’n v. Passport Imports, Inc., No. 8:18-cv03118 (D. Md. Oct. 10, 2018); Complaint, Fed. Trade Comm’n v. Tate’s Auto Ctr. of Winslow, Inc., No. 

3:18-cv-08176-DJH (D. Ariz. July 31, 2018); Complaint, Cowboy AG, LLC, No. C-4639 (F.T.C. Jan. 4, 

2018); Complaint, Fed. Trade Comm’n v. Norm Reeves, Inc., No. 8:17-cv-01942 (C.D. Cal. Nov. 3, 2017); 

Complaint, Asbury Auto. Grp., Inc., No. C-4606 (F.T.C. Mar. 22, 2017); Complaint, CarMax, Inc., No. C4605 (F.T.C. Mar. 22, 2017); Complaint, West-Herr Auto. Grp., Inc., No. C-4607 (F.T.C. Mar. 22, 2017); 

Complaint, Fed. Trade Comm’n v. Volkswagen Grp. of Am., Inc., No. 3:16-cv-01534 (N.D. Cal. Jan. 31, 

2017); Complaint, Fed. Trade Comm’n v. Uber Techs., Inc., No. 3:17-cv-00261 (N.D. Cal. Jan. 19, 2017); 

Complaint, Gen. Motors LLC, No. C-4596 (F.T.C. Dec. 8, 2016); Complaint, Jim Koons Mgmt. Co., No. C4598 (F.T.C. Dec. 8, 2016); Complaint, Lithia Motors, Inc., No. C-4597 (F.T.C. Dec. 8, 2016); Complaint, 

Fed. Trade Comm’n v. Universal City Nissan, Inc., No. 2:16-cv-07329 (C.D. Cal. Sep. 29, 2016); 

27 
 

 

enforcement sweeps, including one that involved 181 State enforcement actions;89 

published two reports on a qualitative study of consumer experiences while purchasing 

motor vehicles; and held workshops with various stakeholders to discuss the motor 

vehicle marketplace.90 

Complaint, United States v. New World Auto Imports, Inc., No. 3:16-cv-02401-K (N.D. Tex. Aug. 18, 

2016); Complaint, Progressive Chevrolet Co., No. C-4578 (F.T.C. June 13, 2016); Complaint, BMW of N. 

Am., LLC, No. C-4555 (F.T.C. Oct. 21, 2015); Complaint, United States v. Tricolor Auto Acceptance, LLC, 

No. 3:15-cv-3002 (N.D. Tex. Sept. 15, 2015); Complaint, JS Autoworld, Inc., No. C-4535 (F.T.C. Aug. 13, 

2015); Complaint, TC Dealership, L.P., No. C-4536 (F.T.C. Aug. 13, 2015); Complaint, Matt Blatt Inc., 

No. C-4532 (F.T.C. July 2, 2015); Complaint, TT of Longwood, Inc., No. C-4531 (F.T.C. July 2, 2015); 

Complaint, Fin. Select, Inc., No. C-4528 (F.T.C. June 2, 2015); Complaint, First Am. Title Lending of Ga., 

LLC, No. C-4529 (F.T.C. June 2, 2015); Complaint, City Nissan Inc., No. C-4524 (F.T.C. May 4, 2015); 

Complaint, Jim Burke Auto., Inc., No. C-4523 (F.T.C. May 4, 2015); Complaint, Nat’l Payment Network, 

Inc., No. C-4521 (F.T.C. May 4, 2015); Complaint, TXVT Ltd. P’ship, No. C-4508 (F.T.C. Feb. 12, 2015); 

Complaint, Fed. Trade Comm’n v. Regency Fin. Servs., LLC, No. 1:15-cv-20270-DPG (S.D. Fla. Jan. 26, 

2015); Complaint, United States v. Billion Auto, Inc., No. 5:14-cv-04118-MWB (N.D. Iowa Dec. 11, 

2014); Complaint, Fed. Trade Comm’n v. Ramey Motors, Inc., No. 1:14-cv-29603 (S.D. W. Va. Dec. 11, 

2014); Complaint, Fed. Trade Comm’n v. Consumer Portfolio Servs., Inc., No. 14-cv-00819 (C.D. Cal. 

May 28, 2014); Complaint, Nissan N. Am., Inc., No. C-4454 (F.T.C. May 1, 2014); Complaint, TBWA 

Worldwide, Inc., No. C-4455 (F.T.C. May 1, 2014); Complaint, Bill Robertson & Sons, Inc., No. C-4451 

(F.T.C. Apr. 11, 2014); Complaint, Paramount Kia of Hickory, LLC, No. C-4450 (F.T.C. Apr. 11, 2014); 

Complaint, Fed. Trade Comm’n v. Abernathy Motor Co., No. 3:14-cv-00063-BRW (E.D. Ark. Mar. 12, 

2014); Complaint, Fowlerville Ford, Inc., No. C-4433 (F.T.C. Feb. 20, 2014); Complaint, Infiniti of 

Clarendon Hills, Inc., No. C-4438 (F.T.C. Feb. 20, 2014); Complaint, Luis Alfonso Sierra, No. C-4434 

(F.T.C. Feb. 20, 2014); Complaint, Mohammad Sabha, No. C-4435 (F.T.C. Feb. 20, 2014); Complaint, 

Norm Reeves, Inc., No. C-4436 (F.T.C. Feb. 20, 2014); Complaint, Ganley Ford West, Inc., No. C-4428 

(F.T.C. Jan. 28, 2014); Complaint, Timonium Chrysler, Inc., No. C-4429 (F.T.C. Jan. 28, 2014); 

Complaint, Courtesy Auto Grp., Inc., No. 9359 (F.T.C. Jan. 7, 2014); Complaint, Franklin’s Budget Car 

Sales, Inc., No. C-4371 (F.T.C. Oct. 3, 2012); Complaint, Fed. Trade Comm’n v. Matthew J. Loewen, No. 

2:12-cv-01207-MJP (W.D. Wash. July 13, 2012); Complaint, Key Hyundai of Manchester, LLC, No. C4358 (F.T.C. May 4, 2012); Complaint, Billion Auto, Inc., No. C-4356 (F.T.C. May 1, 2012); Complaint, 

Frank Myers AutoMaxx, LLC, No. C-4353 (F.T.C. Apr. 19, 2012); Complaint, Ramey Motors, Inc., No. C4354 (F.T.C. Apr. 19, 2012); Complaint, Fed. Trade Comm’n v. Hope for Car Owners, LLC, No. 2:12-cv00778-GEB-EFB (E.D. Cal. Mar. 27, 2012); Complaint, Fed. Trade Comm’n v. NAFSO VLM, Inc., No. 

2:12-cv-00781-KJM-EFB (E.D. Cal. Mar. 27, 2012); Complaint, Fed. Trade Comm’n v. Stewart Fin. Co. 

Holdings, Inc., No. 1:03-CV-2648 (N.D. Ga. Sept. 4, 2003); Complaint, Pacifico Ardmore, Inc., No. C3920 (F.T.C. Feb. 7, 2000). 

89 Operation Steer Clear and Operation Ruse Control, brought with State law enforcement partners around 

the nation and Canada, encompassed 252 enforcement actions. See Press Release, Fed. Trade Comm’n, 

“Multiple Law Enforcement Partners Announce Crackdown on Deception, Fraud in Auto Sales, Financing 

and Leasing” (Mar. 26, 2015), https://www.ftc.gov/news-events/press-releases/2015/03/ftc-multiple-lawenforcement-partners-announce-crackdown. 90 For example, the FTC has held public workshops: (1) in conjunction with the National Highway Traffic 

Safety Administration to examine the consumer privacy and security issues posed by automated and 

connected motor vehicles, see Fed. Trade Comm’n, “Connected Cars: Privacy, Security Issues Related to 

Connected, Automated Vehicles” (June 28, 2017), https://www.ftc.gov/news-events/eventscalendar/2017/06/connected-cars-privacy-security-issues-related-connected; (2) to explore competition and 

related issues in the U.S. motor vehicle distribution system including how consumers and businesses may 

28 
 

 

 

 

 

 

 

 

 

 

As discussed in the NPRM, the Commission’s law enforcement partners have also 

brought actions addressing unfair, abusive, and deceptive practices in the motor vehicle 

industry. For example, the Consumer Financial Protection Bureau (“CFPB”) has taken 

action against third-party motor vehicle financing entities in matters that raise similar, 

and sometimes identical, claims of deceptive and unfair acts or practices as have been at 

issue in FTC enforcement actions.91 

be affected by State regulations and emerging trends in the industry, see Fed. Trade Comm’n, “Auto 

Distribution: Current Issues & Future Trends” (Jan. 19, 2016), https://www.ftc.gov/news-events/eventscalendar/2016/01/auto-distribution-current-issues-future-trends; (3) on military consumer financial issues, 

including automobile purchases, financing, and leasing, see Fed. Trade Comm’n, “Military Consumer 

Workshop” (July 19, 2017), https://www.ftc.gov/news-events/events-calendar/military-consumerworkshop; and (4) through a series of three roundtables on numerous issues in selling, financing, and 

leasing automobiles, see Fed. Trade Comm’n, “The Road Ahead: Selling, Financing & Leasing Motor 

Vehicles” (Apr. 12, 2011), https://www.ftc.gov/news-events/events-calendar/2011/04/road-ahead-sellingfinancing-leasing-motor-vehicles; Fed. Trade Comm’n, “The Road Ahead: Selling, Financing & Leasing 

Motor Vehicles” (Aug. 2, 2011), https://www.ftc.gov/news-events/events-calendar/2011/08/road-aheadselling-financing-leasing-motor-vehicles; Fed. Trade Comm’n, “The Road Ahead: Selling, Financing & 

Leasing Motor Vehicles” (Nov. 17, 2011), https://www.ftc.gov/news-events/events-calendar/2011/11/roadahead-selling-financing-leasing-motor-vehicles; see also Consumers for Auto Reliability and Safety, 

Comment Letter on Motor Vehicle Roundtables, Project No. P104811, at 6 (Apr. 1, 2012), 

https://www.ftc.gov/sites/default/files/documents/public_comments/public-roundtables-protectingconsumers-sale-and-leasing-motor-vehicles-project-no.p104811-00108/00108-82875.pdf (stating that the 

Director of the Navy-Marine Corps Relief Society in San Diego indicated before the California Assembly 

Committee on Banking and Finance that “the number one issue they are confronted with is used car dealers 

who are taking advantage of military personnel”). These events, and others, have included speakers 

representing consumers, dealers, regulators, and other industry stakeholders. 

91 The CFPB has brought at least 23 enforcement actions involving motor vehicles, financing, or add-on 

products or services. See Consent Order ¶¶ 3, 13-57, Toyota Motor Credit Corp., CFPB No. 2023-CFPB0015 (Nov. 20, 2023) (finding auto lender engaged in unfair or abusive acts or practices by making it 

unreasonably difficult for consumers to cancel unwanted add-ons; failing to ensure consumers received 

refunds of payments they had made for certain add-ons that had become void and worthless; and failing to 

provide refunds owed to consumers who canceled their vehicle service agreements); Complaint ¶¶ 75-104, 

CFPB v. USASF Servicing, LLC, No. 1:23-cv-03433-VMC (N.D. Ga. Aug. 2, 2023) (alleging auto loan 

servicer illegally disabled and repossessed consumers’ vehicles, wrongfully double-billed consumers, 

misapplied payments, and failed to ensure refunds of unearned GAP premiums to which consumers were 

entitled); Consent Order ¶¶ 7-33, TMX Finance LLC, CFPB No. 2023-CFPB-0001 (Feb. 23, 2023) (finding 

auto lender understated and inaccurately disclosed the finance charge and annual percentage rate on loans 

and unfairly charged borrowers for a product that provided no benefit); Complaint ¶¶ 33-135, 171-226, 

CFPB v. Credit Acceptance Corp., No. 1:23-cv-00038 (S.D.N.Y. Jan. 4, 2023) (alleging indirect auto 

lender misrepresented key terms of loans provided to subprime and deep-subprime consumers and 

substantially assisted dealers in the deceptive sale of add-on products); Consent Order ¶¶ 7-22, Wells Fargo 

Bank, N.A., CFPB No. 2022-CFPB-0011 (Dec. 20, 2022) (finding bank incorrectly applied borrowers’ auto 

loan payments, erroneously assessed fees and interest, wrongly repossessed borrowers’ vehicles, and failed 

to ensure borrowers received refunds of unearned GAP fees at early payoff); Consent Order ¶¶ 4-55, 

Hyundai Capital America, CFPB No. 2022-CFPB-0005 (July 26, 2022) (finding auto finance company 

29 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

In addition, States have engaged in enforcement actions alleging similar dealer 

misconduct in the motor vehicle dealer marketplace, and have implemented legislative 

and regulatory measures to address corresponding consumer protection issues. With 

regard to law enforcement, State regulators and Attorneys General have participated in 

law enforcement sweeps with the FTC, and have filed hundreds of actions alleging 

unlawful conduct by motor vehicle dealerships across the country.92 Furthermore, with 

furnished inaccurate information about consumers to credit reporting agencies); Consent Order ¶¶ 4-14, 3rd 

Generation, Inc., CFPB No. 2021-CFPB-0003 (May 21, 2021) (finding subprime auto loan servicer 

charged interest on late payments of fees without the knowledge or consent of consumers); Consent Order 

¶¶ 8-50, Santander Consumer USA Inc., CFPB No. 2020-BCFP-0027 (Dec. 22, 2020) (finding auto finance 

company provided inaccurate records to credit reporting agencies); Consent Order ¶¶ 11-52, Nissan Motor 

Acceptance Corp., CFPB No. 2020-BCFP-0017 (Oct. 13, 2020) (finding auto finance company 

misrepresented financing extension agreements, repossessions, and limitations to consumer bankruptcy 

protections); Consent Order ¶¶ 8-22, Lobel Fin. Corp., CFPB No. 2020-BCFP-0016 (Sept. 21, 2020) 

(finding auto-loan servicer unfairly charged delinquent consumers add-on charges in the form of Loss 

Damage Waiver premiums); Consent Order ¶¶ 6-30, Santander Consumer USA Inc., CFPB No. 2018-

BCFP-0008 (Nov. 20, 2018) (finding auto finance company sold GAP to consumers with LTV over 125%, 

misrepresenting that such consumers would be fully covered with total loss); Consent Order ¶¶ 27-39, 

Wells Fargo Bank, N.A., CFPB No. 2018-BCFP-0001 (Apr. 20, 2018) (finding bank imposed duplicative or 

unnecessary forced-placed auto loan insurance on consumers); Consent Order ¶¶ 12-23, Toyota Motor 

Credit Corp., CFPB No. 2016-CFPB-0002 (Feb. 2, 2016) (finding auto finance company engaged in 

discriminatory pricing markup for motor vehicle financing, without regard to creditworthiness); Consent 

Order ¶¶ 73-75, Y King S Corp., CFPB No. 2016-CFPB-0001 (Jan. 21, 2016) (finding used car dealer failed 

to disclose mandatory add-ons as financing charges); Consent Order ¶¶ 12-51, Interstate Auto Grp., Inc., 

CFPB No. 2015-CFPB-0032 (Dec. 17, 2015) (finding dealership and financing company reported 

information they knew or had reasonable cause to believe was inaccurate to credit reporting entities, 

harming consumer credit); Consent Order ¶¶ 7-90, Westlake Servs., LLC, CFPB No. 2015-CFPB-0026 

(Sept. 30, 2015) (finding indirect auto financing entity used illegal debt collection tactics); Consent Order 

¶¶ 8-23, Fifth Third Bank, CFPB No. 2015-CFPB-0024 (Sept. 28, 2015) (finding discrimination against 

loan applicants in credit applications based on characteristics such as race and national origin); Consent 

Order ¶¶ 9-24, Am. Honda Fin. Corp., CFPB No. 2015-CFPB-0014 (July 14, 2015) (same); Consent Order 

¶¶ 4-60, DriveTime Auto. Grp., Inc., CFPB No. 2014-CFPB-0017 (Nov. 19, 2014) (finding buy-here-payhere dealership made harassing debt collection calls and provided inaccurate credit information to credit 

reporting agencies); Consent Order ¶¶ 4-37, First Investors Fin. Servs. Grp., Inc., CFPB No. 2014-CFPB0012 (Aug. 20, 2014) (finding auto financing company provided inaccurate records to credit reporting 

agencies); Consent Order ¶¶ 7-27, Ally Fin. Inc., CFPB No. 2013-CFPB-0010 (Dec. 20, 2013) (finding auto 

lender engaged in discriminatory pricing); Consent Order ¶¶ 14-29, U.S. Bank Nat’l Ass’n, CFPB No. 

2013-CFPB-0004 (June 26, 2013) (finding bank failed to properly disclose all the fees charged to 

participants in the companies’ Military Installment Loans and Educational Services auto loans program, 

and misrepresented the true cost and coverage of add-on products financed along with the auto loans); 

Consent Order ¶¶ 10-22, Dealers’ Fin. Servs., LLC, CFPB No. 2013-CFPB-0004 (June 26, 2013) (finding 

financing company made deceptive statements regarding the cost of add-on products and the scope of 

coverage of the vehicle service contract). 92 Operation Steer Clear and Operation Ruse Control, brought with State law enforcement partners around 

the nation and Canada, encompassed 252 enforcement actions. See Press Release, Fed. Trade Comm’n, 

30 
 

 

 

 

regard to legislative and regulatory efforts, at least four States have enacted consumer 

protection measures relating to pricing or add-ons by motor vehicle dealers.93 For 

example, to “ensure that dealers do not add in hidden or undisclosed costs after the price 

for a vehicle has been advertised,” Oregon promulgated a rule that requires dealerships to 

state an “offering price” that is the actual offer and amount the consumer can pay to own 

the vehicle, excluding only taxes and other specific items.94 California and Wisconsin 

have similarly enacted laws that make it unlawful for dealerships to advertise a total price 

without including additional costs to the purchaser outside the mandatory tax, title, and 

registration fees.95 Other States, such as Indiana, have enacted codes that prohibit the sale 

of add-ons in certain circumstances.96 

The Commission and its law enforcement partners also regularly provide business 

guidance and consumer education regarding the motor vehicle marketplace. The 

Commission has compiled its motor vehicle business guidance into a portal on its 

website, with links to guidance documents, frequently asked questions, and legal 

resources.97 Likewise, the Commission provides a webpage for consumers to learn more 

“Multiple Law Enforcement Partners Announce Crackdown on Deception, Fraud in Auto Sales, Financing 

and Leasing” (Mar. 26, 2015), https://www.ftc.gov/news-events/press-releases/2015/03/ftc-multiple-lawenforcement-partners-announce-crackdown. Separately, the California Attorney General’s office sued a 

dealership chain under State consumer protection laws for deceiving consumers about add-on product 

charges and misrepresenting consumers’ income on credit applications; the alleged practices specifically 

targeted low-income consumers with subprime credit. Complaint ¶¶ 37-86, People v. Paul Blanco’s Good 

Car Co. Auto Grp., No. RG-19036081 (Cal. Super. Ct. Sept. 23, 2019). 93 See, e.g., Cal. Veh. Code 11713.1(b), (c); Or. Admin. R. 137-020-0020(3)(c); Wis. Admin. Code Trans. 

139.03(3); Ind. Code 24-4.5-3-202. 

94 Or. Admin. R. 137-020-0020(3)(c); Official Commentary, Or. Admin. R. 137-020-0020(3)(c). 

95 Cal. Veh. Code 11713.1(b), (c); Wis. Admin. Code Trans. 139.03(3). 

96 Ind. Code 24-4.5-3-202(3)(e)(ix) (prohibiting the sale of any GAP coverage when the LTV is less than 

80%); Cal. Civ. Code 2982.12(a)(5)(B) (prohibiting the sale of any GAP waiver in three scenarios, 

including when the amount financed for the vehicle exceeds the amount covered by the GAP waiver). 97 See Fed. Trade Comm’n, Business Guidance, “Automobiles,” https://www.ftc.gov/businessguidance/industry/automobiles (last visited Dec. 5, 2023). 

31 
 

 

 

 

 

 

about buying, financing, and leasing motor vehicles.98 Several States have published 

similar such guidance manuals for motor vehicle dealers,99 while others have provided 

online consumer education resources.100 

While some commenters stated that existing Federal and State efforts are 

sufficient, recent Commission and partner actions indicate that misconduct has persisted 

despite prior law enforcement and other efforts, and despite the NPRM’s detailed 

description of chronic problems relating to bait-and-switch tactics and hidden add-on and 

other charges. For example, in a recent enforcement action, filed after publication of the 

NPRM, the Commission charged several auto dealer locations in an auto dealership 

group with misrepresenting the price of vehicles. According to the complaint, the dealers 

advertised one price to lure consumers to their dealerships, then charged them hundreds 

to thousands of dollars more than the advertised price by tacking on bogus extra fees for 

inspection, reconditioning, preparation, and certification.101 The action also addressed the 

practice of dealers charging Black and Latino consumers these fees more often and in 

higher amounts.102 

98 See Fed. Trade Comm’n, “Buying and Owning a Car,” https://consumer.ftc.gov/shopping-anddonating/buying-and-owning-car (last visited Dec. 5, 2023). 

99 See, e.g., Ill. Sec’y of State Police, Dealer Handbook (Apr. 2022), 

https://www.ilsos.gov/publications/pdf_publications/sos_dop66.pdf; Wis. DOT – Div. of Motor Vehicles, 

Motor Vehicle Salesperson Manual – 2020, https://wisconsindot.gov/Documents/dmv/shared/salesmanual20.pdf; Enf’t Div. of the Tex. Dep’t of Motor Vehicles, Motor Vehicle Dealer Manual (2017), 

https://www.txdmv.gov/sites/default/files/body-files/Motor_Vehicle_Dealer_Manual.pdf. 100 See, e.g., Cal. Dept. of Just., “Buying and Maintaining a Car,” https://oag.ca.gov/consumers/general/cars 

(last visited Dec. 5, 2023); Fla. Highway Safety & Motor Vehicles, “Buying from a Licensed Dealer,” 

https://www.flhsmv.gov/safety-center/consumer-education/buying-vehicle-florida/buying-licensed-dealer 

(last visited Dec. 5, 2023); Or. Dep’t of Just., “Buying a Vehicle,” https://www.doj.state.or.us/consumerprotection/motor-vehicles/buying-a-vehicle/ (last visited Dec. 5, 2023).

101 Complaint ¶ 17, Fed. Trade Comm’n v. Passport Auto. Grp., Inc., No. 8:22-cv-2670 (D. Md. Oct. 18, 

2022). 

102 Id. ¶ 18. Recent actions outside the auto marketplace, even in transactions that may not be as complex 

and time consuming as motor vehicle transactions, further illustrate unfair and deceptive practices related to 

advertising, add-ons, and hidden charges. In one such action, the court noted “the realities of the disparate 

32 
 

 

 

 

 

 

 

Multiple actions by partners since publication of the Commission’s NPRM have 

involved auto add-ons. The Commission and the State of Wisconsin alleged that a 

dealership group, its current and former owners, and its general manager deceived 

consumers by tacking on hundreds or even thousands of dollars for add-ons without those 

consumers’ authorization or by leading the consumers to believe the add-ons were 

mandatory, and doing so disproportionately more frequently with American Indian 

customers.103 The CFPB and the New York State Office of the Attorney General alleged 

that a subprime auto lender knew or recklessly disregarded that dealers were tricking 

borrowers into purchasing add-on products without their knowledge or consent and had 

incentivized such behavior.104 In addition, the Commonwealth of Massachusetts has 

brought two recent cases involving unfair add-on pricing practices.105 In one such case, 

Massachusetts emphasized the dynamics of auto transactions that frequently lead to 

bargaining power” between the corporate defendant and its customers, adding that customers “might have 

believed the [add-on] fees were mandatory,” and “might not have had the time” to negotiate or complain 

about them. Fed. Trade Comm’n v. FleetCor Techs., Inc., 1:19-cv-5727, 2022 WL 3350066, at *13 (N.D. 

Ga. Aug. 9, 2022) (granting the Commission’s motion to exclude the defendant’s expert testimony); see 

also Fed. Trade Comm’n v. FleetCor Techs., Inc., 620 F. Supp. 3d 1268, 1337 (N.D. Ga. 2022) (finding on 

summary judgment that (1) defendants did not tell consumers about fees at sign-up; (2) disclosures about 

fees in contractual documents were inadequate; and (3) defendants failed to get consent to add-on charges); 

id. at 1334 (concluding that defendants had “charged a slew of fees that: were never discoverable to 

customers [and] were obscured by undecipherable language”); Complaint ¶¶ 41-43, Fed. Trade Comm’n v. 

Harris Originals of NY, Inc., No. 2:22-cv-4260 (E.D.N.Y. July 20, 2022) (alleging that a jewelry company 

charged military consumers for add-on products without their consent or under false pretenses); Complaint 

¶¶ 61-73, Fed. Trade Comm’n v. Benefytt Techs., Inc., No. 8:22-cv-1794 (M.D. Fla. Aug. 8, 2022) (alleging 

illegal add-on charges by healthcare companies); Complaint ¶¶ 1-4, Fed. Trade Comm’n v. First Am. 

Payment Sys., LP, No. 4:22-cv-654 (E.D. Tex. July 29, 2022) (alleging that a payment processing company 

misrepresented the terms and costs of its services, resulting in unexpected and unauthorized fees); Fed. 

Trade Comm’n, Notice of Proposed Rulemaking, Trade Regulation Rule on Unfair or Deceptive Fees, 88 

FR 77420, 77435-37 (released Oct. 11, 2023; published Nov. 9, 2023), 

https://www.govinfo.gov/content/pkg/FR-2023-11-09/pdf/2023-24234.pdf. 103 Complaint ¶¶ 3-5, 11-18, 33-43, 48-51, Fed. Trade Comm’n v. Rhinelander Auto Ctr., Inc., No. 3:23-cv00737 (W.D. Wis. Oct. 24, 2023). 

104 Complaint ¶¶ 128-30, CFPB v. Credit Acceptance Corp., No. 1:23-cv-38 (S.D.N.Y. Jan. 4, 2023). 105 Complaint ¶ 3, Massachusetts v. Jaffarian’s Serv., Inc., No. 2277-cv-881 (Mass. Super. Ct. Sept. 15, 

2022); Assurance of Discontinuance ¶¶ 7-9, In re Hometown Auto Framingham, Inc., No. 2384-cv-116 

(Mass. Super. Ct. Jan. 17, 2023). 

33 
 

 

 

deceptive and unfair practices, particularly with respect to add-ons, noting that add-on 

products “are often sprung on consumers in the final steps of completing a transaction” 

after “multiple rounds of negotiation on the price of a car and/or car financing.”106 

Efforts to combat deceptive and unfair practices in the motor vehicle industry 

since the NPRM have gone beyond enforcement actions. The CFPB announced that it 

uncovered several unlawful practices through supervisory examinations, including auto 

loan servicers charging for add-ons that provide no benefit to the consumer107 and failing 

to ensure consumers received refunds for add-on products that no longer offered any 

benefits.108 In addition, the State of California enacted new legislation that regulates a 

particular type of add-on product—GAP agreements.109 A press release introducing the 

legislation cited concerns about unfair practices in the sale of GAP agreements, stating 

that this add-on has little value and is often targeted at consumers with lower incomes 

and subprime credit.110 California’s law requires several disclosures related to GAP 

agreements, including disclosures pertaining to their financed cost and informing 

106 Complaint ¶ 5, Massachusetts v. Jaffarian’s Serv., Inc., No. 2277-cv-881 (Mass. Super. Ct. Jan. 17, 

2023). 

107 Consumer Fin. Prot. Bureau, “Supervisory Highlights: Issue 24, Summer 2021” 3-4 (June 2021), 

https://files.consumerfinance.gov/f/documents/cfpb_supervisory-highlights_issue-24_2021-06.pdf (finding 

servicers added and maintained unnecessary collateral protection insurance (CPI) when consumers had 

adequate insurance and thus the CPI provided no benefit to the consumers, and also when consumers’ 

vehicles had been repossessed even though no actual insurance protection was provided after repossession). 108 Consumer Fin. Prot. Bureau, “Supervisory Highlights: Issue 28, Fall 2022” 4-5 (Nov. 2022), 

https://files.consumerfinance.gov/f/documents/cfpb_supervisory-highlights_issue-28_2022-11.pdf (finding 

consumers paid off their vehicle financing early but servicers failed to ensure consumers received refunds 

for unearned fees related to add-on products which no longer offered any possible benefit to consumers 

after payoff). 

109 Cal. Civ. Code 2982.12. 110 Press Release, Off. of the Att’y Gen. of Cal., “Attorney General Bonta and Assemblymember 

Maienschein Announce Legislation to Strengthen Protections for Car Buyers” (Feb. 16, 2022), 

https://oag.ca.gov/news/press-releases/attorney-general-bonta-and-assemblymember-maienscheinannounce-legislation. 

34 
 

 

consumers that such products are optional.111 The law also prohibits the sale of GAP 

agreements that will not actually cover consumers’ debt.112 

Despite the array of actions by the Commission and its partners, unfairness and 

deception continue in the motor vehicle marketplace, including (1) deceptive or unfair 

sales and advertising tactics and (2) hidden charges, particularly with respect to add-on 

products or services. To address the harm these issues inflict on consumers and on lawabiding dealers, the Final Rule, in general: 

 Prohibits dealers from making misrepresentations regarding material 

information, including about the cost of the vehicle, the financing terms, and 

the availability of rebates or discounts; 

 Requires dealers to disclose the offering price of the vehicle—its full cash 

price, provided that dealers may exclude required government charges; that 

optional add-ons are not required; the total of payments for the vehicle when 

making a representation about monthly payment; and that a discussed lower 

monthly payment will increase the total amount the consumer will pay, if 

true; 

 Prohibits dealers from charging for add-on products or services that provide 

no benefit to the consumer; and 

 Requires dealers to obtain express, informed consent from the consumer for 

any charge. 

As discussed in the section-by section analysis in SBP III and in response to comments, 

the Commission is declining to finalize certain provisions proposed in the NPRM, 

including the provision that dealers must disclose a list of prices for all optional add-on 

products or services, and the provision that dealers must obtain certain signed 

declinations from consumers prior to charging for optional add-on products or services. 

The Commission also is finalizing the defined terms “Covered Motor Vehicle” and 

111 Cal. Civ. Code 2982.12. 112 Id. 

35 
 

 

 

 

“Covered Motor Vehicle Dealer” to reflect edits to narrow the scope of these definitions 

compared to the scope of the terms “Motor Vehicle” and “Motor Vehicle Dealer” in the 

NPRM. 

III. Section-by-Section Analysis 

The following discussion provides a section-by-section analysis that states the 

provisions proposed in the NPRM, and discusses the comments received, the 

Commission’s responses to comments, and the provisions adopted in the Final Rule.113 

A. § 463.1: Authority 

Section 463.1 states that the Final Rule is promulgated pursuant to Section 1029 

of the Dodd-Frank Act, and that it is an unfair or deceptive act or practice within the 

meaning of Section 5(a)(1) of the FTC Act to violate, directly or indirectly, any provision 

of the Final Rule, including the recordkeeping requirements, which are necessary to 

prevent such unfair or deceptive acts or practices and to enforce this Rule.114 The 

prohibition against violating any applicable provision “directly or indirectly” applies to 

each section of part 463. As discussed in SBP I.A, Section 1029 authorizes the FTC to 

prescribe rules under Sections 5 and 18(a)(1)(B) of the FTC Act with respect to motor 

vehicle dealers predominantly engaged in the sale and servicing of motor vehicles, the 

113 Regarding the thousands of comments received, the Commission notes that many commenters raised 

similar concerns or addressed overlapping issues. To avoid repetition, the Commission has endeavored to 

respond to issues raised in similar comments together. Responses provided in any given section apply 

equally to comments addressing the same subject in the context of other sections. Moreover, throughout the 

SBP, the Commission discusses justifications for the Final Rule that are informed by its careful 

consideration of all comments received, even where that discussion is not linked to a particular comment. 114 The proposed authority provision in the NPRM omitted the second reference to “unfair” acts or practices 

with regard to the proposed recordkeeping requirements; the Final Rule consistently refers to both “unfair” 

and “deceptive” acts or practices together. 

36 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

leasing and servicing of motor vehicles, or both.115 The Final Rule defines with 

115 One industry group argued that the proposed rule violated the APA because it did not comply with the 

FTC’s rule requiring publication of an Advance Notice of Proposed Rulemaking (“ANPR”), 16 CFR 1.10. 

Section 1.10, however, like the rest of subpart B of part 1 of the Commission’s Rules of Practice, applies 

only to “proceedings for the promulgation of rules as provided in section 18(a)(1)(B) of the Federal Trade 

Commission Act.” 16 CFR 1.7. The ANPR requirement in Section 1.10 implements Section 18(b)(2) of the 

FTC Act, which requires an ANPR when the Commission promulgates rules under the procedures set forth 

in that section. In this case, the FTC is acting under statutory authority under Section 1029(d) of the DoddFrank Act, see NPRM at 42031, which authorizes the Commission to promulgate rules using the APA’s 

informal notice-and-comment procedure, see 5 U.S.C. 553, notwithstanding the additional procedural 

requirements set forth in Section 18. Accordingly, this rulemaking is governed by subpart C of part 1 of the 

Commission’s Rules of Practice, which “sets forth procedures for the promulgation of rules under authority 

other than section 18(a)(1)(B) of the FTC Act.” 16 CFR 1.21. Neither subpart C nor the APA requires 

publication of an ANPR. 

This is consistent with Commission practice in prior notices to issue or amend regulations, 

including with the Made in USA Labeling Rule, the Children’s Online Privacy Protection Act Rule, and the 

Telemarketing Sales Rule. See, e.g., Fed. Trade Comm’n, Notice of Proposed Rulemaking, Made in USA 

Labeling Rule, 85 FR 43162 (July 16, 2020), https://www.govinfo.gov/content/pkg/FR-2020-07-

16/pdf/2020-13902.pdf (issuing original notice of proposed rulemaking that was not preceded by an 

advance notice of proposed rulemaking); Fed. Trade Comm’n, Notice of Proposed Rulemaking, Children’s 

Online Privacy Protection Rule, 64 FR 22750 (Apr. 27, 1999), https://www.govinfo.gov/content/pkg/FR1999-04-27/pdf/99-10250.pdf (same); Fed. Trade Comm’n, Notice of Proposed Rulemaking, 

Telemarketing Sales Rule, 60 FR 8313 (Feb. 14, 1995), https://www.govinfo.gov/content/pkg/FR-1995-02-

14/pdf/95-3537.pdf (same); Fed. Trade Comm’n, Notice of Proposed Rulemaking, Telemarketing Sales 

Rule, 78 FR 41200 (July 19, 2013), https://www.govinfo.gov/content/pkg/FR-2013-07-09/pdf/2013-

12886.pdf (issuing notice of proposed rulemaking for rule amendment that was not preceded by an advance 

notice of proposed rulemaking); Fed. Trade Comm’n, Proposed Rule, Children’s Online Privacy Protection 

Rule, 76 FR 59804 (Sept. 27, 2011), https://www.govinfo.gov/content/pkg/FR-2011-09-27/pdf/2011-

24314.pdf (same); Fed. Trade Comm’n, Notice of Proposed Rulemaking, Telemarketing Sales Rule, 74 FR 

41988 (Aug. 19, 2009), https://www.govinfo.gov/content/pkg/FR-2009-08-19/pdf/E9-19749.pdf (same); 

Fed. Trade Comm’n, Notice of Proposed Rulemaking, Children’s Online Privacy Protection Rule, 70 FR 

2580 (Jan. 14, 2005), https://www.govinfo.gov/content/pkg/FR-2005-01-14/pdf/05-877.pdf (same); Fed. 

Trade Comm’n, Notice of Proposed Rulemaking, Telemarketing Sales Rule, 69 FR 67287 (Nov. 17, 2004), 

https://www.govinfo.gov/content/pkg/FR-2004-11-17/pdf/04-25470.pdf (same); Fed. Trade Comm’n, 

Notice of Proposed Rulemaking, Telemarketing Sales Rule, 69 FR 7330 (Feb. 13, 2004), 

https://www.govinfo.gov/content/pkg/FR-2004-02-13/pdf/04-3287.pdf (same); Fed. Trade Comm’n, Notice 

of Proposed Rulemaking, Telemarketing Sales Rule, 67 FR 4492 (Jan. 30, 2002), 

https://www.govinfo.gov/content/pkg/FR-2002-01-30/pdf/02-1998.pdf (same); Fed. Trade Comm’n, Notice 

of Proposed Rulemaking, Children’s Online Privacy Protection Rule, 66 FR 54963 (Oct. 31, 2001), 

https://www.govinfo.gov/content/pkg/FR-2001-10-31/pdf/01-27390.pdf (same). This is also true of 

regulation amendments pursuant to the authority under which this Final Rule is promulgated—that which 

Congress granted to the Commission under Section 1029 of the Dodd-Frank Act, 15 U.S.C. 5519, 

pertaining to motor vehicle dealers. See, e.g., Fed. Trade Comm’n, Notice of Proposed Rulemaking, Used 

Motor Vehicle Trade Regulation Rule, 77 FR 74746, 74748 (Dec. 17, 2012), 

https://www.govinfo.gov/content/pkg/FR-2012-12-17/pdf/2012-29920.pdf (“Because the Dodd-Frank Act 

authorized the Commission to use APA procedures for notice and public comment in issuing or amending 

rules with respect to motor vehicle dealers, the FTC will not use the procedures set forth in Section 18 of 

the FTC Act, 15 U.S.C. 57a, with respect to these proposed revisions to the Used Car Rule and the Used 

Car Buyers Guide. Accordingly, the Commission is publishing this Notice of Proposed Rulemaking 

pursuant to Section 553 of the APA.”); see also Fed. Trade Comm’n, Notice of Proposed Rulemaking, 

Privacy of Consumer Financial Information Rule Under the Gramm-Leach-Bliley Act (“Privacy Rule”), 84 

FR 13150 (Apr. 4, 2019), https://www.govinfo.gov/content/pkg/FR-2019-04-04/pdf/2019-06039.pdf 

37 
 

 

 

 

 

 

 

 

 

 

specificity certain unfair or deceptive acts or practices; the Final Rule provisions are also 

“prescribed for the purpose of preventing such acts or practices.”116 

B. § 463.2: Definitions 

1. Overview 

The proposed rule included definitions for the following terms: “Add-on” or 

“Add-on Product(s) or Service(s)”; “Add-on List”; “Cash Price without Optional Addons”; “Clearly and Conspicuously”; “Dealer” or “Motor Vehicle Dealer”; “Express, 

Informed Consent”; “GAP Agreement”; “Government Charges”; “Material” or 

“Materially”; “Motor Vehicle”; and “Offering Price.” In the definition-by-definition 

(issuing notice of proposed rulemaking for rule amendment that was not preceded by an advance notice of 

proposed rulemaking). 

This same commenter argued the FTC had not complied with the “Principles of Regulation” 

enumerated in Section 1(b) of Executive Order 12866. See Comment of Nat’l Auto. Dealers Ass’n, Doc. 

No. FTC-2022-0046-8368 at 34-36 & n.123; E.O. 12866 3(b) (defining “Agency” to mean an authority of 

the United States “other than those considered to be independent regulatory agencies”). This provision of 

the Executive Order does not apply to independent agencies such as the FTC. Regardless, the Commission 

did take into account the principles set forth in Section 1(b), as is evident throughout the NPRM. See, e.g., 

NPRM at 42015-17 (identifying problems in the marketplace); id. at 42028-42031 (soliciting comments on 

alternative approaches); id. at 42036-42044 (assessing costs and benefits). 

The same commenter also argued that the Commission’s denial of its request to extend the 

comment period prejudiced the commenter’s ability to collect and provide data pertaining to the proposed 

rule and was inconsistent with the Commission’s grant of extensions in other rulemakings. As described in 

its letter, the Commission also received requests opposing an extension of the comment period. See Letter, 

Fed. Trade Comm’n, “Duration of the Public Comment Period in Matter No. P204800” (Aug. 23, 2022), 

https://www.ftc.gov/system/files/ftc_gov/pdf/Matter%20No.%20204800%20-

%20Letter%20re%20Extension%20for%20publication.pdf. In the letter, the Commission noted its ongoing 

engagement with stakeholders on issues relating to the sale, financing, and lease of motor vehicles, since 

before its 2011 Federal Register notice inviting stakeholder feedback on these issues and continuing since 

that time. See Fed. Trade Comm’n, Public Roundtables: Protecting Consumers in the Sale and Leasing of 

Motor Vehicles, 76 FR 14,014 (Mar. 15, 2011), 

https://www.federalregister.gov/documents/2011/03/15/2011-5873/public-roundtables-protectingconsumers-in-the-sale-and-leasing-of-motor-vehicles. The Commission determined that a sixty-day 

comment period, along with an additional twenty days following the public announcement and release of 

the NPRM and prior to its publication in the Federal Register, provided meaningful opportunity to 

comment. See also Steven J. Balla, “Public Commenting on Federal Agency Regulations: Research on 

Current Practices and Recommendations to the Administrative Conference of the United States” App. A 

(2011), https://www.acus.gov/sites/default/files/documents/Consolidated-Reports-%2B-Memoranda.pdf 

(reporting data from a pool of 703 comment periods associated with actions by dozens of Federal agencies, 

and finding that the average duration of comment periods for proposed agency actions was 38.7 days, and 

45.1 days for actions that are economically significant). 116 15 U.S.C. 57a(a)(1)(B) (the Commission “may include requirements prescribed for the purpose of 

preventing” unfair or deceptive acts or practices). 

38 
 

analysis in SBP III.B.2, the Commission discusses each definition proposed in the 

NPRM, relevant comments that are not otherwise addressed in the discussion of the 

corresponding substantive provisions of the Final Rule, and the definition the 

Commission is finalizing. 

2. Definition-by-Definition Analysis 

a) Add-on or Add-on Product(s) or Service(s) 

The proposed rule defined “Add-on” or “Add-on Product(s) or Service(s)” as 

“any product(s) or service(s) not provided to the consumer or installed on the vehicle by 

the motor vehicle manufacturer and for which the Motor Vehicle Dealer, directly or 

indirectly, charges a consumer in connection with a vehicle sale, lease, or financing 

transaction.” This term appeared in the following definitions and substantive provisions 

of the rule proposal: the definitions of “Add-on List” and “Cash Price without Optional 

Add-ons”; the Prohibited Misrepresentations provision at proposed § 463.3(b); the addon list disclosure provision at proposed § 463.4(b); the requirement to disclose that addons are not required at proposed § 463.4(c); the prohibition against charging for add-ons 

that provide the consumer no benefit at proposed § 463.5(a); and the proposed provision 

relating to undisclosed or unselected add-ons at § 463.5(b). As discussed in the following 

paragraphs, in response to stakeholder comments, the Commission declines to finalize 

certain of these provisions; in the Final Rule, this term appears in paragraph (a) of the 

Prohibited Misrepresentations section (§ 463.3); the Disclosure Requirements provision 

in paragraph (c) of § 463.4; and the provision in § 463.5(a) titled “Dealer Charges for 

Add-ons and Other Items” and subtitled “Add-ons that provide no benefit.” 

39 
For the following reasons, the Commission adopts the definition of “Add-on” or 

“Add-on Product(s) or Service(s)” largely as proposed, with conforming modifications to 

reflect changes to the defined terms “‘Covered Motor Vehicle’ or ‘Vehicle’” and 

“‘Covered Motor Vehicle Dealer’ or “Dealer’” as described in more detail in the 

discussion of § 463.2(e) and (f), in SBP III.B.2(e) and (f). 

The Commission received several comments relating to the scope of its proposed 

definition for “Add-on” or “Add-on Product(s) or Service(s).” Industry association and 

other commenters recommended that the Commission broaden the definition to include 

manufacturer-provided products or services, expressing concern that exclusion of such 

products or services would put other companies that provide such items at a competitive 

disadvantage. Products or services provided by manufacturers, however, are already 

covered by several provisions of the Final Rule. Under the substantive provisions the 

Commission is finalizing, dealers are prohibited from making misrepresentations 

regarding material information, including about the “costs or terms of purchasing, 

financing, or leasing a Vehicle” (§ 463.3(a)); must disclose the vehicle’s true “Offering 

Price,” which includes any amounts dealers charge for items already installed or provided 

by the manufacturer (§§ 463.4(a) and 463.2(k)); and are required to obtain “Express, 

Informed Consent” for charges for any item (§§ 463.5(c) and 463.2(g)). The additional 

substantive add-on-specific provisions117 address harms associated with products or 

services not provided to the consumer or installed on the vehicle by the motor vehicle 

manufacturer. Commenters did not provide evidence that the proposed provisions 

covering manufacturer-provided products or services would be insufficient to address 

117 §§ 463.3(b), 463.4(c), 463.5(a). 

40 
 

 

consumer harm. Accordingly, the Commission has determined not to include 

manufacturer-provided products or services within this defined term. The Commission 

will continue to monitor this issue to determine whether additional action is warranted. 

One individual commenter expressed concern that, under the Commission’s 

proposed definition, dealers could raise the price of a vehicle by advertising additional 

products or services, such as “free lifetime benefits” with the vehicle, and that dealers 

could mislead consumers by charging more for the vehicle based on a supposedly “free” 

add-on.118 The Commission notes that the Rule the Commission is finalizing contains 

several provisions relating to this concern. For example, dealers are prohibited from 

making misrepresentations under § 463.3, including misrepresentations regarding “costs, 

limitation, benefit, or any other aspect” of add-ons.119 Furthermore, dealers are required 

to disclose a vehicle’s offering price, which must include charges for required add-ons; 

this disclosure will allow consumers to know the true price of the vehicle and comparison 

shop before selecting and visiting a particular dealership.120 

Several dealership association commenters expressed concern that the proposed 

definition was too broad, contending that it might apply to hundreds of items and include 

fees, such as a processing or document fee, that a dealer charges a consumer. As 

discussed in SBP III.B.2(b), III.D.2(b), and III.E.2(b), upon careful review of comments, 

including comments regarding the breadth of this requirement, the Commission has 

determined not to finalize the provision that would have required listing all optional addons—the “Add-on List” definition and the associated requirement that dealers disclose 

118 Individual commenter, Doc. No. FTC-2022-0046-7445 at 10-11. 119 § 463.3(b) (emphasis added). 120 See §§ 463.2(k) (defining Offering Price), 463.4(a) (requiring disclosure of Offering Price); see also 

§ 463.3(p) (prohibiting misrepresentations regarding the disclosures required by the Final Rule). 

41 
 

such a list—as well as proposed § 463.5(b) relating to undisclosed or unselected addons.121 The remaining substantive provisions that use the term “Add-ons” prohibit 

misrepresentations (§ 463.3(b)); require dealers to disclose, if true, that add-ons are not 

required (§ 463.4(c)); and prohibit charges for add-ons that provide the consumer no 

benefit (§ 463.5(a)). The law already prohibits misrepresentations, regardless of the 

product or service at issue; dealers that offer consumers additional products or services 

are already required to ask consumers if they want such products, rather than suggesting 

that such products or services are mandatory, when they are not; and any hardship 

associated with refraining from charging for products or services that provide consumers 

no benefits are outweighed by the harms to consumers and competition from permitting 

this practice, as explained in the analysis of § 463.5(a). 

Commenters including an industry association suggested limiting the definition to 

products or services sold at the “point of vehicle purchase” to clarify that indirect 

charges, such as the inclusion of a one-year subscription to a satellite radio service, need 

not be separately itemized.122 The industry association commenter suggested that, as 

proposed, the definition would include charges for which dealers and consumers “would 

otherwise not account.”123 The Commission has determined not to finalize the add-on list 

and form requirements in proposed §§ 463.4(b) and 463.5(b). For the provisions being 

finalized, excluding subscription charges, or including only items added to the vehicle at 

the “point of vehicle purchase,” would narrow the definition of “Add-on” and the 

corresponding requirements in a manner that would allow for deceptive or unfair 

121 See NPRM at 42044, 42046 (proposed §§ 463.2(b), 463.4(b), 463.5(b)). 122 Comment of Serv. Cont. Indus. Council, Guaranteed Asset Prot. All., & Motor Vehicle Prot. Prods. 

Ass’n, Doc. No. FTC-2022-0046-8113 at 13-14. 

123 Id. at 13. 

42 
practices, including by allowing dealers to represent a price that is not the offering price, 

or to deceptively state that add-ons are required. In the example provided by the 

commenter, if the satellite radio subscription service is mandatory, it needs to be included 

in the offering price of the vehicle, as required by § 463.4(a) of the Final Rule; if it is not 

mandatory, the dealer needs to disclose, when making any representations about the 

service, that it is not required under § 463.4(c). Further, regardless of whether such a 

product or service is mandatory or optional, dealers must follow other aspects of the Final 

Rule, including by not making any misrepresentations about the subscription under 

§ 463.3 and by obtaining the express, informed consent of the consumer for the 

associated charges under § 463.5(c). 

Another industry association commenter contended that add-ons sold in the 

marine industry are typically different than those offered in the context of automobile 

sales and described in the NPRM. While all motor vehicle dealers must refrain from 

engaging in deceptive or unfair conduct relating to add-ons, the Commission is excluding 

recreational boats and marine equipment from the Final Rule’s definition of “‘Covered 

Motor Vehicle’ or ‘Vehicle,’” as discussed in additional detail in the definition-bydefinition analysis of § 463.2(e) in SBP III.B.2(e). 

An industry association commenter and comments from a number of dealership 

associations noted that certain State laws already regulate the sale of add-ons, including, 

for example, laws in many States that regulate vehicle sales contracts or deceptive sales 

practices generally or that regulate insurance products. To the extent that the Final Rule’s 

add-on provisions may duplicate State law, commenters have provided no evidence that 

any such duplication in the provisions that incorporate this defined term—which prohibit 

43 
 

misrepresentations, require disclosures in the event add-ons are not required, and prohibit 

charges for add-ons from which the consumer would not benefit—will harm consumers 

or competition. Moreover, the Final Rule provides additional remedies that will benefit 

consumers who encounter conduct that is already illegal under State or Federal law, 

including by adding a mechanism for the Commission to redress consumers injured by a 

dealer’s violation of the rule, and will assist law-abiding dealers that presently lose 

business to competitors that act unlawfully. Under the Final Rule, State laws may provide 

more or less specific requirements as long as such requirements are not inconsistent with 

part 463, as set forth at § 463.9, and in the event of an inconsistency, the Rule only 

affects such State law to the extent of the inconsistency.124 

A few dealership association commenters expressed concern that the proposed 

definition of “Add-on Products or Services” would include insurance-related products, 

such as credit life and credit disability insurance, and as such, could implicate the 

McCarran-Ferguson Act’s reverse-preemption of certain Federal laws that “invalidate, 

impair, or supersede” State laws enacted “for the purpose of regulating the business of 

insurance.”125 Commenters have provided no evidence that the Rule will invalidate, 

impair, or supersede State laws enacted for the purpose of regulating the business of 

insurance.126 To the contrary, the Final Rule addresses deceptive or unfair conduct—it 

prohibits dealers, inter alia, from making misrepresentations regarding material 

information about add-ons, from failing to disclose when add-ons are not required, and 

124 See, e.g., English v. Gen. Elec. Co., 496 U.S. 72, 79 (1990). 125 See 15 U.S.C. 1012(b). 126 See Union Labor Life Ins. Co. v. Pireno, 458 U.S. 119, 129 (1982) (setting forth test for whether an 

activity constitutes the “business of insurance”); Humana Inc. v. Forsyth, 525 U.S. 299, 307-08 (1999) 

(establishing criteria for whether a Federal law operates to “invalidate, impair, or supersede” State law). 

44 
 

 

 

from charging for add-ons from which the consumer would not benefit. Nor has the 

Commission been presented with evidence that the Rule’s other substantive provisions 

(prohibiting misrepresentations; requiring disclosures of a vehicle’s offering price and 

about total of payments; and requiring consumers’ express, informed consent before 

charging them) invalidate, impair, or supersede State laws enacted for the purpose of 

regulating insurance.127 

A number of industry and dealership association commenters contended that, as 

proposed, this definition may extend to products or services that are provided by the 

manufacturer but that are installed by a distributor of motor vehicles, or alternatively, by 

the dealer, at the instruction of the manufacturer. Relatedly, a State governmental 

association commenter expressed concern that the proposed definition could create 

confusion with regard to the sale of used vehicles, where a prior owner of a vehicle may 

have added a product to the vehicle. The commenter contended that a motor vehicle 

dealer selling the used vehicle may be unaware of the added product, and further, that 

listing any such items may confuse buyers. 

To the extent the commenters’ concerns stem from the proposed provisions 

related to add-on lists and proposed § 463.5(b)’s provisions related to separate 

disclosures, the Commission is not finalizing those provisions. Under the provisions 

being finalized, if a product is provided to the dealer by the manufacturer or another 

entity, and a consumer chooses to have the product installed and pay for it, the dealer 

127 The Supreme Court has refused to interpret the McCarran Ferguson Act to invalidate Federal law when 

applied to remedy a misrepresentation and undo the harm caused by alleged deception. See SEC v. Nat’l 

Sec., Inc., 393 U.S. 453, 462 (1969). Moreover, lower courts have rejected precisely the concern raised by 

the commenter about credit life insurance. See Fed. Trade Comm’n. v. Dixie Fin. Co., 695 F.2d 926, 930 

(5th Cir. 1983) (McCarran Ferguson Act does not preclude FTC investigation of “whether the sale of 

insurance is a precondition to the arrangement of credit”); Fed. Trade Comm’n v. Mfrs. Hanover Consumer 

Servs., Inc., 567 F. Supp. 992, 94 (E.D. Pa. 1983) (same). 

45 
may install it and charge for it, as long as the dealer complies with the provisions of the 

Final Rule, including by disclosing that the product is not required and by obtaining the 

consumer’s express, informed consent for the charge. If the manufacturer requires the 

dealer to install the product or if the dealer chooses to install the product, and the dealer 

requires any consumer to pay charges for it, the amount of the charge must be included in 

the vehicle’s offering price, and the dealer must comply with other aspects of the Final 

Rule, including the express, informed consent requirement. Relatedly, regarding used 

vehicles, if a prior owner of such a vehicle installed an add-on, and the dealer that 

subsequently sells such a vehicle requires any consumer to pay charges for the add-on, 

the amount of those charges must be included in the vehicle’s offering price and the 

dealer must comply with other aspects of the Final Rule, including the express, informed 

consent requirement at § 463.5(c). If, alternatively, the dealer does not require any 

consumers to pay for the pre-installed add-on, then the dealer does not have to add that 

amount to the vehicle’s offering price, and there is no charge for that add-on for which 

the dealer must obtain express, informed consent. Thus, the definition of “Add-on” and 

the Rule requirements being finalized address deceptive or unfair price and add-on 

disclosures and hidden charges without requiring dealers to list or itemize charges that 

they do not impose on consumers. For the reasons explained in this section, the 

Commission is finalizing the definition of “Add-on” or “Add-on Product(s) or 

Service(s)” largely as proposed, with conforming modifications to reflect changes to the 

defined terms “‘Covered Motor Vehicle’ or ‘Vehicle’” and “‘Covered Motor Vehicle 

Dealer’ or ‘Dealer’” as described in more detail in the discussion of § 463.2(e) and (f), in 

SBP III.B.2(e) and (f). 

46 
b) Add-on List 

The NPRM proposed defining the term “Add-on List,” which appeared in the 

associated Add-on List disclosure provision at proposed § 463.4(b), as well as in the 

recordkeeping provision at proposed § 463.6(a)(2). Based on the following, the 

Commission has determined not to include this definition in its Final Rule. 

Several commenters supported the substantive add-on list proposal and its 

associated definition, and commenters including consumer advocacy organizations urged 

the Commission to finalize additional related restrictions or disclosures, such as requiring 

add-on prices to be fixed and non-negotiable, or requiring a distinct add-on list for each 

vehicle sold. Other commenters, including dealership associations, raised concerns that, 

as proposed, the add-on list definition could impose significant economic burdens on 

dealerships for a disclosure that, in some circumstances, might be too voluminous to be 

optimally meaningful to consumers, or permit price ranges that could be too broad to 

prevent abuses and effectively inform consumers. 

After careful consideration, and in light of the concerns raised by commenters, the 

Commission has determined not to include the add-on list disclosure provision at 

proposed § 463.4(b) or the recordkeeping provision at proposed § 463.6(a)(2) in its Final 

Rule, and therefore will not include a definition of the term “Add-on List” in its Final 

Rule. Here, as elsewhere, the Commission remains committed to promoting fair, nondeceptive, and competitive markets for consumer products and services; it will continue 

to monitor the marketplace for add-on-related acts or practices that are unfair or 

deceptive, and will evaluate whether to propose additional measures pertaining to such 

products and services. 

47 
c) Cash Price Without Optional Add-ons 

The NPRM proposed defining the term “Cash Price without Optional Add-ons,” 

which appeared in the proposed provision addressing undisclosed or unselected add-ons 

at § 463.5(b). Based on the following, the Commission is declining to finalize this 

definition. 

A number of commenters favored the proposed provision and definition, and 

several, including consumer advocacy organizations, urged the Commission to include 

additional requirements, such as requiring the proposed disclosure documents associated 

with this proposed definition to be available in different languages, while others, 

including a dealership association, raised concerns that the definition and relevant 

provision were burdensome or confusing for dealers. 

As explained in additional detail in SBP III.E.2(b) with respect to § 463.5(b), in 

light of commenter concerns that the proposed provision using this term would increase 

costs for legitimate dealers and add to the time and paperwork for consumers in an 

already lengthy, paperwork-heavy transaction, the Commission has elected not to include 

a Cash Price without Optional Add-ons disclosure requirement in its Final Rule. Thus, 

after careful consideration, and in light of the concerns raised by commenters, the 

Commission has determined not to include a definition of “Cash Price without Optional 

Add-ons” in its Final Rule. 

d) Clearly and Conspicuously 

The proposed rule defined the term “Clearly and Conspicuously” as “in a manner 

that is difficult to miss (i.e., easily noticeable) and easily understandable,” including in all 

of seven enumerated ways, listing proposed requirements for “any communication that is 

48 
solely visual or solely audible,” “[a] visual disclosure,” “[a]n audible disclosure,” and 

“any communication using an interactive electronic medium,” and providing, inter alia, 

that such disclosures “must use diction and syntax understandable to ordinary consumers 

and must appear in each language in which the representation that requires the disclosure 

appears” and “must not be contradicted or mitigated by, or inconsistent with, anything 

else in the communication.” Based on the following, the Commission is finalizing this 

definition largely as proposed, with a modification to clarify that the definition applies 

whether the term appears as an adjective or an adverb, by adding the parentheses in the 

following manner to the defined term: “Clear(ly) and Conspicuous(ly).” 

Some consumer advocacy organization commenters favored the Commission’s 

proposed definition while also suggesting that the Commission include a provision 

requiring translation of any deal consummating documents, including buyer’s orders and 

retail installment sales contracts, into the language in which the negotiations were 

conducted. This issue, however, is addressed by § 463.5(c) of the Rule, which requires 

express, informed consent for each item charged.128 As explained in additional detail in 

the paragraph-by-paragraph analysis of § 463.5(c) in SBP III.E.2(c), if a dealconsummating document is provided in a language that the consumer does not 

understand, and the document’s contents are not otherwise clearly understood by the 

consumer, then the consumer is in no position to give unambiguous assent to the charges 

described therein. The Commission therefore has determined not to add such a provision 

to its “Clear(ly) and Conspicuous(ly)” definition. However, the Commission will 

continue to monitor the marketplace and determine whether further language 

128 The language requirements, as they relate to obtaining express, informed consent, are further explained 

in the discussion of § 463.5(c) in SBP III.E.2(c). 

49 
requirements or additional measures are warranted to address deceptive or unfair 

practices—particularly those that target or otherwise disproportionately impact languageminority communities. 

Commenters, including consumer advocacy organizations, expressed concern that 

proposed § 463.2(d)(5) may be read to apply only to certain disclosures with triggering 

representations and only to disclosures that are in writing. These commenters also 

requested that the Commission incorporate into its Final Rule the FTC’s policy statement 

regarding foreign language advertising and sales materials, which is separately codified at 

16 CFR 14.9.129 In response, the Commission notes that to be clear and conspicuous, the 

disclosure must be “easily understandable,” as stated in the definition. If a disclosure is 

being made in a language the consumer does not understand, it does not meet this 

requirement. Further, the disclosures highlighted by the commenters are indeed subject to 

the language requirements of § 463.2(d)(5), which requires that disclosures “appear in 

each language in which the representation that requires the disclosure appears.” With 

regard to the offering price disclosure in § 463.4(a)(1), the applicable “representation that 

requires the disclosure” is the “advertisement that references . . . a specific Vehicle”; 

thus, for example, if an advertisement that references a specific vehicle is in Spanish, the 

offering price disclosure must also be in Spanish. Similarly, in § 463.4(a)(2), the 

applicable representation that requires the disclosure is an “advertisement that represents 

. . . any monetary amount or financing term for any Vehicle.” In § 463.4(a)(3), the 

applicable representation is “any communication . . . that includes a reference . . . 

129 16 CFR 14.9 is an enforcement policy statement that provides information to advertisers about clear and 

conspicuous disclosures in foreign language advertisings and sales materials, including ensuring the 

language of the disclosure matches the language in the publication. See 16 CFR 14.9. 

50 
 

regarding a specific Vehicle, or any monetary amount or financing term for any Vehicle.” 

In § 463.4(c) and (d), “any representation” regarding an add-on product or service or a 

monthly payment for any vehicle, respectively, triggers the language requirement of 

§ 463.2(d)(5). The monthly payments comparison disclosure in § 463.4(e) is required 

when there is a “comparison between payment options . . . that includes discussion of a 

lower monthly payment.” Thus, the language requirements in § 463.2(d)(5) apply. 

In response to this concern regarding the applicability of § 463.2(d)(5) to 

disclosures that are not in writing, the Commission notes that its use of the word “appear” 

in § 463.2(d)(5) incorporates common meanings, such as “to show up,” “to come into 

existence,” or “to become evident or manifest,” which cause this provision to apply 

whether the representation requiring the disclosure appears visually, orally, or 

otherwise.130 Where the Commission instead intended a provision to be limited to a visual 

disclosure, as in § 463.2(d)(2), the Rule states so explicitly. 

In response to the request that the Commission incorporate into this Rule its 

policy statement regarding foreign language advertising and sales materials, separately 

codified at 16 CFR 14.9, the Commission emphasizes that the enforcement statement sets 

out what is already impermissible under current law and is consistent with the 

requirements the Commission is finalizing. To the extent dealers take actions that are 

inconsistent with Commission statements about such law, they are risking enforcement 

proceedings by the Commission or others. Accordingly, the Commission has determined 

130 See Appear (defs. 1b, 4, 6), Merriam-Webster.com Dictionary, https://www.merriamwebster.com/dictionary/appear (last visited Dec. 5, 2023); see also Order ¶¶ 2-3, Asbury Auto. Grp., Inc., 

No. C-4606 (F.T.C. Mar. 22, 2017) (identical usage in definition provision); Order ¶ 2, Lithia Motors, Inc., 

No. C-4597 (F.T.C. Dec. 8, 2016) (same); Order ¶¶ 2-3, Jim Koons Mgmt. Co., No. C-4598 (F.T.C. Dec. 8, 

2016) (same). 

51 
not to add to the Rule further requirements regarding foreign language advertising. The 

Commission will continue to monitor the market to determine whether further action is 

warranted. 

Industry association commenters raised concerns about how the Commission’s 

proposed definition interacts with other Federal laws, such as Regulations Z and M, 

which implement the Truth in Lending Act and the Consumer Leasing Act, respectively, 

and contended that it conflicts with a clear and conspicuous definition in Commodity 

Futures Trading Commission regulations.131 Industry and dealership association 

commenters contended that State advertising standards already address what constitutes 

“clear and conspicuous” advertising and provide guidance on disclosures, such that the 

FTC’s proposal will cause confusion or possible conflict with State law. 

The Commission’s definition of “Clear(ly) and Conspicuous(ly)” is not 

inconsistent with the existing Federal legal requirements raised by these commenters. 

Dealers can comply with these laws to the extent they apply as well as with the 

requirements that follow from the Commission’s definition. Regarding State law, 

commenters did not provide examples of actual conflicts. Further, to the extent there is 

truly an inconsistency between the operation of the Commission’s definition and any 

State law, the Commission notes that the definition is based on decades of Commission 

experience policing deceptive and unfair conduct; addresses harmful practices including 

those related to hidden disclosures and charges; and that § 463.9 of the Final Rule sets 

out the Rule’s relation to State laws. 

131 17 CFR 162.2. 

52 
 

Other industry association commenters also contended that the proposed 

definition of “Clearly and Conspicuously” would be overly broad and challenging for 

compliance, but did not explain why or suggest alternative language. In addition, some 

dealership association commenters requested more guidance to understand the definition. 

The Commission’s definition spells out, in seven subparts, what clear and conspicuous 

means, using simple terms that provide additional information about how dealers can 

make a disclosure in a manner that is easily understandable and easily noticeable to the 

consumer. The definition elaborates basic, common-sense principles, including that 

visual disclosures be in a size that consumers will easily notice and that audible 

disclosures be in a volume, speed, and cadence such that consumers will easily hear it. 

Thus, for example, disclosures in an illegible font, or that consumers cannot hear, are not 

clear and conspicuous. The Commission also notes that it did not mandate specific fonts, 

volumes, or other prescriptive measures. Thus, dealers have the flexibility to determine 

the best way to meet the definition’s requirements for their consumers under the 

circumstances. 

A dealership association commenter contended that the proposed definition does 

not include a reasonableness standard and may be interpreted as prohibiting any 

limitations and exclusions, given the requirement in proposed § 462.3(d)(7) that a 

disclosure must not be contradicted or mitigated by or inconsistent with anything else in 

the communication. The commenter further asked whether a statement such as “with 

approved credit” would impermissibly mitigate an offer of low financing under this 

proposed definition.132 The Commission responds as follows. The standard is an objective 

132 Comment of Ohio Auto. Dealers Ass’n, Doc. No. FTC- 2022-0046-6657 at 4. 

53 
 

 

one, evaluated from the perspective of a reasonable consumer.133 The definition does not 

prohibit all advertising that contains limitations and exclusions, but it does provide that if 

dealers are advertising offers that are limited in some way, they may not misrepresent 

such offers. Thus, if a dealer presents consumers with an unqualified representation of 

low financing terms, those terms must be available to typical consumers. Alternatively, a 

dealer may offer low financing terms to consumers with particular credit characteristics if 

that requirement is presented in a manner that does not deceive reasonable consumers. 

For example, a dealer may offer “0% annual percentage rate (APR) for consumers with a 

credit score above 800.” By contrast, it would be deceptive if the dealer offered “0% 

APR,” and then separately disclosed in fine print that such terms are only available to 

consumers with a credit score above 800, because the qualifying disclosure is 

inconsistent with an offer of “0% APR” that contained no limitations and thus indicated 

that 0% APR is available to the typical consumer regardless of credit score.134 Further, 

the Commission notes that to qualify as clear and conspicuous, “disclaimers or 

qualifications in any particular ad are not adequate to avoid liability unless they are 

sufficiently prominent and unambiguous to change the apparent meaning of the claims 

and to leave an accurate impression. Anything less is only likely to cause confusion by 

creating contradictory double meanings.”135 

133 See FTC Policy Statement on Deception, supra note 42, at 2-5. 134 Complaint ¶¶ 5-7, Progressive Chevrolet Co., No. C-4578 (F.T.C. June 13, 2016) (alleging ads touting 

attractive terms deceptively failed to disclose high credit score requirement). 135 Removatron Int’l Corp. v. Fed. Trade Comm’n, 884 F.2d 1489, 1496-97 (1st Cir. 1989); see also Fed. 

Trade Comm’n v. Brown & Williamson Tobacco Corp., 778 F.2d 35, 42-43 (D.C. Cir. 1985) (finding that a 

disclosure in virtually illegible form, placed in an inconspicuous corner of Barclay advertisements, did not 

eliminate deception); see Fed. Trade Comm’n v. Cap. Choice Consumer Credit, Inc., 2003 U.S. Dist. 

LEXIS 29086, at *5 (S.D. Fla. June 2, 2003) (finding that, where advertisements promised a general 

purpose credit card, such as VISA or MasterCard, “fine print on reverse side” of ad clarifying that the 

credit card was a “merchandise card and not a major bank card” was inadequate to modify net impression); 

54 
 

 

 

Lastly, another dealership association commenter asked how the proposed 

definition translates to visual, audible, and electronic media disclosures and expressed 

concern about subjectivity, characterizing the terms “easily” understood and 

“unavoidable” within the proposed definition as subjective and open to different 

interpretations, particularly in the context of websites and internet promotions. Here, the 

Commission declines to mandate more prescriptive language regarding, for example, font 

sizes, what volumes are to be used, and where exactly the language should appear on a 

website, such as on an overlay with mandated color, size, and location.136 As courts137 

have recognized, whether a disclosure is clear and conspicuous is an objective standard 

rather than a subjective one. While more prescriptive language would provide additional 

objective criteria, the Commission is concerned such language might constrain dealers 

from determining the best way to meet the definition’s requirements for their consumers 

under the circumstances involved, and might require dealers that are already making clear 

and conspicuous disclosures to change their existing disclosure materials. 

Fed. Trade Comm’n v. Cyberspace.com LLC, 453 F.3d 1196, 1200 (9th Cir. 2006) (rejecting defendant’s 

argument that truthful fine print notices on reverse side of checks, invoices, and marketing inserts cured 

deception that check/invoice was a refund rather than offer for services); Fed. Trade Comm’n v. Alcoholism 

Cure Corp., No. 3:10-cv-266-J-34JBT, 2011 WL 13137951, at *51 (M.D. Fla. Sept. 16, 2011) (finding that 

“not MD” disclaimers were inadequate to dispel net impression regarding professional qualifications of 

defendant and other employees as advertised); Fed. Trade Comm’n v. Wash. Data Res., 856 F. Supp. 2d 

1247, 1274-75 (M.D. Fla. 2012) (rejecting defendants’ argument that retainer agreement contained 

sufficient disclaimer to dispel a misrepresentation about whether a home loan was guaranteed).

136 The Commission has included such requirements elsewhere. See, e.g., Order ¶ 6, United States v. Sunkey 

Publ’g, Inc., No: 3:18-cv-1444-HNJ (N.D. Ala. Sept. 6, 2018). 137 See. e.g., Palmer v. Champion Mortg., 465 F.3d 24, 28 (1st Cir. 2006) (applying an objective standard in 

evaluating Truth in Lending Act claim regarding clear and conspicuous disclosure); Smith v. Check-N-Go 

of Ill., Inc., 200 F.3d 511, 515 (7th Cir. 1999) (same); Zamarippa v. Cy’s Car Sales, Inc., 674 F.2d 877, 879 

(11th Cir. 1982) (same); Bustamante v. First Fed. Sav. & Loan Ass’n, 619 F.2d 360, 364 (5th Cir. 1980) 

(same); see also Herrera v. First N. Sav. & Loan Ass’n, 805 F.2d 896, 900 (10th Cir. 1986) (resolving 

question of clear and conspicuous disclosure under Truth in Lending Act as a legal, rather than factual, 

matter); Dixey v. Idaho First Nat’l Bank, 677 F.2d 749 (9th Cir. 1982) (same). 

55 
 

 

 

The Commission reiterates that the definition of “Clear(ly) and Conspicuous(ly)” 

elaborates basic, common-sense principles, such as requiring visual disclosures in a size 

consumers can see and audible disclosures in a volume they can hear. Regarding the 

requirement that Internet disclosures be unavoidable, this language requires evaluating an 

objective standard—whether or not consumers could have avoided the disclosure. In 

addition, the disclosure must be easily noticeable and easily understandable, as set forth 

expressly in the definition. Disclosures that do not meet this standard include those that 

are buried in other text, including as illustrated by many FTC actions against dealers.138 

Regarding the requirement that disclosures be “easily” noticeable and understandable, the 

standard is also an objective one, evaluated from the perspective of a reasonable 

consumer. Determining how reasonable consumers are likely to respond may be resolved 

on the basis of the advertisement, context, or disclosure itself, or based on extrinsic 

evidence, such as consumer complaints.139 To this end, as noted previously, the definition 

enumerates in seven subparts the meaning of clear and conspicuous using simple terms 

that provide additional guidance on how dealers may make disclosures that are easily 

understandable and easily noticeable to the consumer. 

After carefully considering the comments, the Commission adopts § 463.2(d) with 

a modification to clarify, through the addition of parentheses—“Clear(ly) and 

138 Complaint ¶¶ 6-14, Jim Burke Auto., Inc., No. C-4523 (F.T.C. May 4, 2015); Complaint ¶¶ 6, 9, TT of 

Longwood, Inc., No. C-4531 (F.T.C. July 2, 2015); Complaint ¶ 13, City Nissan Inc., No. C-4524 (F.T.C. 

May 4, 2015); Complaint ¶¶ 17-19, Fed. Trade Comm’n v. Liberty Chevrolet, Inc., No. 1:20-cv-03945 

(S.D.N.Y. May 21, 2020); Complaint ¶¶ 4-9, 12-15, 18-20, Billion Auto, Inc., No. C-4356 (F.T.C. May 1, 

2012) (alleging false ads promising to pay off consumers’ existing motor vehicle debt and failing to 

disclose legally required financing and leasing terms); see also Complaint ¶¶ 57-60, Fed. Trade Comm’n v. 

Stewart Fin. Co. Holdings, Inc., No. 1:03-CV-2648 (N.D. Ga. Sept. 4, 2003) (alleging violations for failure 

to include the cost of required add-on products in the finance charge and annual percentage rate disclosed 

to consumers).

139 See FTC Policy Statement on Deception, supra note 42, at 2-5 (describing application of reasonable 

consumer standard). 

56 
Conspicuous(ly)”—that the definition applies whether the term is used as an adjective or 

adverb. Consistent with the Commission’s experience addressing unfair or deceptive 

conduct, the Commission has defined the term “Clear(ly) and Conspicuous(ly)” to 

include disclosures that are easily understandable and easily noticeable, while also 

providing dealers with additional information on how to meet those requirements.140 

e) Motor Vehicle (finalized as “‘Covered Motor Vehicle’ or 

‘Vehicle’”) 

The proposed rule defined the term “Motor Vehicle” as “(1) any self-propelled 

vehicle designed for transporting persons or property on a street, highway, or other road; 

(2) Recreational boats and marine equipment; (3) Motorcycles; (4) Motor homes, 

recreational vehicle trailers, and slide-in campers, as those terms are defined in 

§§ 571.3(b) and 575.103(d) of title 49, Code of Federal Regulations, or any successor 

thereto; and (5) Other vehicles that are titled and sold through Dealers.” The Commission 

has determined to finalize the definition with the modifications discussed in the following 

paragraphs. 

The Commission received several comments regarding the substance and scope of 

this proposed definition. A number of industry association commenters requested that 

certain vehicle types, including marine vehicles, motorcycles, RVs, and other recreational 

vehicles be excluded from coverage. These commenters contended that the dealerships 

that sell such vehicles function differently from automobile dealerships, and that 

recreational vehicles are discretionary, rather than essential, purchases. After careful 

140 See, e.g., Decision and Order, JS Autoworld, Inc., No. C-4535 (F.T.C. Aug. 13, 2015); Decision and 

Order, Nat’l Payment Network, Inc., No. C-4521 (F.T.C. May 4, 2015); Decision and Order, Matt Blatt 

Inc., No. C-4532 (F.T.C. July 2, 2015); Decision and Order, Ganley Ford West, Inc., No. C-4428 (F.T.C. 

Jan. 28, 2014). 

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consideration, the Commission is excluding recreational boats and marine equipment; 

motorcycles; and motor homes, recreational vehicle trailers, and slide-in campers from 

the definition of “‘Covered Motor Vehicle’ or ‘Vehicle.’” Moving forward, the 

Commission will continue to monitor for unfair and deceptive practices to determine 

whether further action is warranted to protect consumers, through law enforcement, a 

future rulemaking, or other measures. The Commission notes that no dealer may 

misrepresent material terms; deceive customers about prices, add-ons, or payments; 

charge for products that provide no benefit; or charge consumers without express, 

informed consent. To the extent that dealers engage in such conduct, they are in violation 

of the FTC Act. 

Another commenter contended it was unclear whether all-terrain vehicles, gocarts, snowmobiles, scooters, electric bicycles, and golf carts were covered by the 

proposed definition. In response, the Commission has modified the first enumerated 

subpart of the definition to refer only to vehicles designed for use on a “public” street, 

highway, or road, and to expressly exclude scooters, electric bicycles, and golf carts. The 

definition of “‘Covered Motor Vehicle’ or ‘Vehicle’” in the Final Rule does not cover allterrain vehicles, go-carts, or snowmobiles because such vehicles are not designed for use 

on a “public” street, highway, or road.141 

A number of industry association commenters claimed that the proposed 

definition conflicts with definitions of motor vehicle under various State laws, and one 

such commenter requested that, rather than finalize a definition of “Motor Vehicle,” the 

Commission defer to the definitions promulgated by each State’s department of motor 

141 According to the National Highway Traffic Safety Administration, “Public road means any road under 

the jurisdiction of and maintained by a public authority and open to public travel.” 23 CFR 1300.3. 

58 
vehicles. The commenters did not explain how the Rule’s definition may actually conflict 

with any laws, or how any alleged duplication would harm consumers or competition. To 

the extent that States have broader or narrower definitions, it is not clear why motor 

vehicle dealers covered by the Rule cannot comply with the Rule’s provisions and 

applicable State laws. Moreover, the Final Rule provides additional remedies that will 

benefit consumers who encounter conduct that is already illegal under State or Federal 

law, including by adding a mechanism for the Commission to redress consumers injured 

by a dealer’s violation of the rule, and will assist law-abiding dealers that presently lose 

business to competitors that act unlawfully. Section 463.9 provides further discussion of 

State laws. 

Thus, after careful consideration of the comments, the Commission is finalizing 

the definition of “Motor Vehicle” with modifications, including adding the word 

“Covered” to the definition to reflect the fact that the definition is narrower than the term 

“Motor Vehicle” in the NPRM and adding “or Vehicle” to the definition to clarify that all 

references in the Rule to the term “Covered Motor Vehicle” and “Vehicle” refer to the 

defined term. 

f) Dealer or Motor Vehicle Dealer (finalized as “‘Covered Motor 

Vehicle Dealer’ or ‘Dealer’”) 

The proposed rule defined the term “Dealer” or “Motor Vehicle Dealer” as “any 

person or resident in the United States, or any territory of the United States, that (1) Is 

licensed by a State, a territory of the United States, or the District of Columbia to engage 

in the sale of motor vehicles; (2) Takes title to, holds an ownership interest in, or takes 

physical custody of motor vehicles; and (3) Is predominantly engaged in the sale and 

servicing of motor vehicles, the leasing and servicing of motor vehicles, or both.” Based 

59 
on the following, the Commission is finalizing this definition in the Final Rule with 

modifications for clarity. 

Many stakeholders commented in support of the proposed rule and expressed no 

concern over this definition. Other commenters expressed views that the Commission 

examines in the following paragraphs. 

A few industry association commenters contended that parts of the proposed 

definition may have captured certain financial entities, such as financial entities that 

maintain licenses to engage in the sale of motor vehicles, and requested that the 

Commission make clear that any rule does not apply to such entities. In response, the 

Commission notes that only entities that meet all three components of the definition are 

covered “Dealers.” Thus, an entity that maintains an applicable license to engage in the 

sale of Covered Motor Vehicles but is not, for example, predominantly engaged in the 

sale or leasing of motor vehicles would not be a covered “Dealer.” 

Another industry association commenter similarly requested a “carve-out” from 

any definition of “Dealer” for trusts and trusts’ investors.142 This commenter asserted that 

trusts and their investors do not satisfy two of the definition’s components and did not 

describe how any part of the definition creates concerns or is unclear. The Commission 

reiterates that if an entity meets the three parts of the “Covered Motor Vehicle Dealer” 

definition, then it is covered; if an entity does not meet these three parts, it is not covered. 

The Commission sees no benefit to adding language stating that entities that do not meet 

the definition are not covered. 

142 Comment of Structured Fin. Ass’n, Doc. No. FTC-2022-0046-7646 at 3. 

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 Other commenters, including vehicle association commenters, claimed that 

dealerships specializing in RV, marine, motorcycles, and other recreational vehicles, 

including certain high-end recreational vehicles,143 should be excluded from coverage, 

generally contending that such dealerships operate differently from automobile 

dealerships, and that these types of vehicles are used for different purposes than are 

automobiles. As explained in the section-by-section analysis of the definition of 

“Covered Motor Vehicle” in SBP III.B.2(e), after considering stakeholder comments, the 

Commission is removing marine, motorcycle, RV, and certain other vehicles from the 

definition in § 463.2(e), and to reflect this change, finalizing the defined term as 

“‘Covered Motor Vehicle or ‘Vehicle,’” thereby excluding from the Final Rule entities 

who otherwise would have qualified as “Dealers” solely based on their sale and servicing, 

or leasing and servicing, of such vehicles. The Commission underscores that, regardless 

of the definition of “Covered Motor Vehicle” under the Final Rule, unfair and deceptive 

practices remain unlawful under the FTC Act. The Commission will continue to monitor 

all vehicle markets to determine whether additional action is warranted to protect 

consumers. 

Some dealership association commenters argued that, under the Commission’s 

proposal, this definition exempted dealers subject to the jurisdiction of the CFPB. Other 

such commenters similarly contended that, under the proposal, used car dealers that do 

not engage in extensive post-sale repairs do not “service” vehicles or that do not have 

separate service departments may have been excluded from coverage, contending further 

143 The Marine Retailers Association of the Americas requested that transactions in excess of $70,000 be 

excluded from coverage, as an alternative to excluding marine transactions altogether. See Comment of 

Marine Retailers Ass’n of the Ams., Doc. No. FTC-2022-046-9291 at 4. 

61 
 

 

that excluding such dealers would put other dealers at a competitive disadvantage. 

Contrary to these commenters’ assertions, the definition does not contain such 

exclusions. By its plain terms, the definition applies to dealers that meet its three 

enumerated components. Nowhere does the definition limit coverage of dealers based on 

CFPB jurisdictional considerations. Likewise, the definition does not condition coverage 

on whether a dealership has a service department or include any other requirement or 

limitation beyond those enumerated in § 463.2(f). By its plain meaning, the term 

“servicing” covers, for instance, “checking and repairing a vehicle, machine, etc. to keep 

it in good condition.”144 As the Commission has previously stated, the term “servicing” 

“captures activities undertaken by essentially all used car dealers.”145 Thus, the definition 

does not place dealers with separate servicing departments at a competitive disadvantage, 

and the Commission need not remove the term “servicing of motor vehicles” from the 

Final Rule. 

One such commenter further contended that the proposed definition did not cover 

certain entities, including certain direct sellers or manufacturers or others not licensed in 

a particular State, or lenders who offer add-on products such as GAP agreements and 

debt suspension products. As previously discussed, the Final Rule applies to all dealers 

that meet the three parts of this definition.146 To the extent that the definition does not 

144 The Oxford Advanced American Dictionary defines “servicing” as “the act of checking and repairing a 

vehicle, machine, etc. to keep it in good condition”; see also 15 U.S.C. 5519(b)(3) (referring to “the sale, 

financing, leasing, rental, repair, refurbishment, maintenance, or other servicing of motor vehicles, motor 

vehicle parts, or any related or ancillary product or service”). 145 Used Motor Vehicle Trade Regulation Rule (“Used Car Rule”), 81 FR 81664, 81667 (Nov. 18, 2016). 146 See 12 U.S.C. 5519(a), (f). 

62 
 

 

 

 

 

 

 

 

 

apply to specific entities, this reflects the scope and bounds of the rulemaking authority 

Congress delegated to the Commission under the Dodd-Frank Act.147 

Finally, some industry and dealership association commenters posited that the 

proposal conflicted with Federal and State law or duplicated the regulatory authority of 

State enforcement agencies. These commenters did not provide information regarding 

how duplicative laws prohibiting misrepresentations, requiring disclosures, or prohibiting 

charges for items that would not benefit the consumer or for items without express, 

informed consent would create harmful consequences, and the Commission is not aware 

of any laws that allow such conduct by those that the Rule defines as “Covered Motor 

Vehicle Dealer[s].” Moreover, the Final Rule provides additional remedies that will 

benefit consumers who encounter conduct that is already illegal under State or Federal 

law, including by adding a mechanism for the Commission to redress consumers injured 

by a dealer’s violation of the Rule, and will assist law-abiding dealers that presently lose 

business to competitors that act unlawfully. To the extent the Rule may overlap with 

State law, dealers can comply with these laws and also with the requirements that follow 

from the operation, in the Rule, of the Commission’s definition. To the extent there is 

147 Section 1029(d) of the Dodd-Frank Act defines “motor vehicle dealer” as “any person or resident in the 

United States, or any territory of the United States, who— (A) is licensed by a State, a territory of the 

United States, or the District of Columbia to engage in the sale of motor vehicles; and (b) takes title to, 

holds an ownership in, or takes physical custody of motor vehicles.” 15 U.S.C. 5519(f)(2). 

Parts (A) and (B) of this definition are identical to parts (1) and (2) of the definition of “‘Covered Motor 

Vehicle Dealer’ or ‘Dealer’” in the Final Rule. 

Section 1029(d) of the Dodd-Frank Act states that the Commission “is authorized to prescribe 

rules under sections 5 and 18(a)(1)(B) of the Federal Trade Commission Act in accordance with section 

553 of title 5, United States Code, with respect to a person described in subsection (a).” 15 U.S.C. 5519(d). 

Section 1029(a) in turn, provides the CFPB “may not exercise any rulemaking, supervisory, enforcement or 

any other authority . . . over a motor vehicle dealer that is predominantly engaged in the sale and servicing 

of motor vehicles, the leasing and servicing of motor vehicles, or both.” 15 U.S.C. 5519(a). The last clause 

is identical to part (3) of the definition in the Final Rule. 

Several commenters requested that the Commission allow consumers to buy vehicles directly from 

manufacturers. Nothing in the Rule prohibits consumers from doing so. 

63 
 

truly an inconsistency between the provisions of the Final Rule and a State law, § 463.9 

sets out the Rule’s relation to State laws. 

Thus, after careful consideration of the comments, the Commission is finalizing 

the definition of “‘Covered Motor Vehicle Dealer’ or ‘Dealer’” with modifications for 

clarity. The definition in the Final Rule incorporates the phrase “including any individual 

or entity” to confirm that the term “person,” like all undefined terms in this part, is used 

according to its ordinary meaning and includes individuals and corporate entities and 

adds the word “Covered” to the definition to reflect the narrowed scope of “Covered 

Motor Vehicle.”148 

g) Express, Informed Consent 

The proposed rule defined the term “Express, Informed Consent” as “an 

affirmative act communicating unambiguous assent to be charged, made after receiving 

and in close proximity to a Clear and Conspicuous disclosure, in writing, and also orally 

for in-person transactions” of “(1) What the charge is for” and “(2) The amount of the 

charge, including, if the charge is for a product or service, all fees and costs to be charged 

to the consumer over the period of repayment with and without the product or service.” 

The proposed rule also included in this definition three examples of what does not 

148 See, e.g., Person, Black’s Law Dictionary (11th ed. 2019) (defining “person” to include “[a] human 

being” and “[a]n entity (such as a corporation) that is recognized by law as having most of the rights and 

duties of a human being.”); Person, Merriam-Webster.com Dictionary, https://www.merriamwebster.com/dictionary/person (last visited Dec. 5, 2023) (defining “person” to include “human” and “one 

(such as a human being, a partnership, or a corporation) that is recognized by law as the subject of rights 

and duties”); see also 12 U.S.C. 5481(19) (Dodd-Frank Act statutory authority for the Final Rule defining 

“person” as “an individual, partnership, company, corporation, association (incorporated or 

unincorporated), trust, estate, cooperative organization, or other entity”); 1 U.S.C. 1 (Dictionary Act 

defining “person” to include “corporations, companies, associations, firms, partnerships, societies, and joint 

stock companies, as well as individuals”). The application of covered motor vehicle dealer and dealer to 

entities also is consistent with these terms’ use in the NPRM and commenter understanding of these terms 

in the course of public comment. 

64 
constitute express, informed consent: “(i) A signed or initialed document, by itself; 

(ii) Prechecked boxes; or (iii) An agreement obtained through any practice designed or 

manipulated with the substantial effect of subverting or impairing user autonomy, 

decision-making, or choice.” In both the NPRM and in the provisions the Commission is 

finalizing, this definition is used exclusively in § 463.5(c). As such, comments regarding 

the definition are examined in the discussion of that provision in SBP III.E.2(c). As stated 

therein, the Commission is finalizing this definition substantively as proposed. 

h) GAP Agreement 

The proposed rule defined the term “GAP Agreement” as “an agreement to 

indemnify a vehicle purchaser or lessee for any of the difference between the actual cash 

value of the insured’s vehicle in the event of an unrecovered theft or total loss and the 

amount owed on the vehicle pursuant to the terms of a loan, lease agreement, or 

installment sales contract used to purchase or lease the vehicle, or to waive the unpaid 

difference between money received from the purchaser’s or lessee’s motor vehicle 

insurer and some or all of the amount owed on the vehicle at the time of the unrecovered 

theft or total loss.” The proposed definition also noted that this included “products or 

services otherwise titled ‘Guaranteed Automobile Protection Agreement,’ ‘Guaranteed 

Asset Protection Agreement,’ ‘GAP insurance,’ or ‘GAP Waiver[].’” This term appeared 

in two sections of the rule proposal: in the provision regarding dealer charges for add-ons 

from which the consumer would not benefit at proposed § 463.5(a), and in the 

recordkeeping provision at proposed § 463.6(a)(4). Comments regarding the proposed 

definition are examined in the discussion of § 463.5(a) in SBP III.E.2(a). As stated 

therein, the Commission is finalizing this definition substantively as proposed, with 

65 
typographical modifications to correct a misplaced period in the original proposal and a 

modification removing the extraneous term “insured’s” from the phrase “actual cash 

value of the insured’s Vehicle.” In addition, the Final Rule capitalizes the defined term 

“Vehicle” to conform with the revised definition of “‘Covered Motor Vehicle’ or 

‘Vehicle’” at § 463.2(e). 

i) Government Charges 

The proposed rule defined “Government Charges” as “all fees or charges imposed 

by a Federal, State or local government agency, unit, or department, including taxes, 

license and registration costs, inspection or certification costs, and any other such fees or 

charges.” This term appeared in two provisions of the rule proposal: in the proposed 

definition of “Offering Price” at § 463.2(k), which pertains to the proposed offering price 

disclosure provision at § 463.4(a); as well as in the proposed provision relating to 

undisclosed or unselected Add-ons at § 463.5(b). As explained in further detail in the 

paragraph-by paragraph analysis of § 463.5(b) in SBP III.E.2(b), the Commission has 

determined not to finalize § 463.5(b), and as such will refrain from examining this 

proposed definition in relation to that provision. Comments regarding the proposed 

definition are examined in the discussion of § 463.4(a) in SBP III.D.2(a). As stated 

therein, the Commission is finalizing this definition substantively as proposed, with a 

typographical modification to include a serial comma for consistency. 

j) Material or Materially 

The proposed rule defined “Material” or “Materially” as “likely to affect a 

person’s choice of, or conduct regarding, goods or services.” This term appeared in the 

prohibited misrepresentations provisions at § 463.3(b) and (g), and in the recordkeeping 

66 
 

 

 

 

provision at § 463.6(a). As described in detail in the section-by-section analysis of 

§ 463.3 in SBP III.C, the Final Rule modifies the introductory paragraph of § 463.3 from 

the Commission’s original proposal to add the word “Material,” such that the 

Commission’s materiality standard applies to all subparts of § 463.3. The Final Rule 

accordingly removes the word “Material” from § 463.3(b) and (g) so as to avoid 

duplication. Based on the following, the Commission is finalizing this definition, now at 

§ 463.2(j), substantively as proposed. 

A dealership association commenter noted that the proposed definition did not use 

the term “significance,” and asserted that “Material” information should be significant 

and not “rooted in personal preference.”149 The Commission notes that this definition 

adopts the meaning of the term as articulated through decades of enforcement actions150 

instead of using a different term such as “significance,” and does not use the term 

“personal preference” or rely on “personal preference” any more than the phrase “likely 

to affect” or “significant” does. Thus, the Commission is finalizing this definition 

substantively as proposed. 

k) Offering Price 

The proposed rule defined “Offering Price” as “the full cash price for which a 

Dealer will sell or finance the motor vehicle to any consumer, excluding only required 

Government Charges.” This term appeared in two provisions of the rule proposal: in the 

proposed offering price disclosure provision at § 463.4(a), as well as in the proposed 

149 Comment of Ga. Auto. Dealers Ass’n, Doc. No. FTC-2022-0046-10806 at 4. 150 See FTC Policy Statement on Deception, supra note 42, at 1-2, 5; see also Fed. Trade Comm’n v. 

Fleetcor Techs., Inc., 620 F. Supp. 3d 1268, 1303 (N.D. Ga. 2022); Fed. Trade Comm’n v. Crescent Pub. 

Grp., Inc., 129 F. Supp. 2d 311, 321 (S.D.N.Y. 2001); Thompson Med. Co., Inc., 104 F.T.C. 648, 816 

(1984). 

67 
 

provision relating to undisclosed or unselected add-ons at § 463.5(b). As explained in 

further detail in the paragraph-by-paragraph analysis of § 463.5(b) in SBP III.E.2(b), the 

Commission has determined not to finalize § 463.5(b), and as such, will refrain from 

examining this proposed definition in relation to that provision. Comments regarding the 

proposed definition are examined in the discussion of § 463.4(a) in SBP III.D.2(a).151 As 

stated therein, the Commission is finalizing this definition largely as proposed, with a 

modification to clarify that dealers may, but need not, exclude required government 

charges from a motor vehicle’s offering price. In addition, the definition in the Final Rule 

substitutes “Vehicle” for “motor vehicle” to clarify that the term conforms with the 

revised definition of “‘Covered Motor Vehicle’ or ‘Vehicle’” at § 463.2(e). 

C. § 463.3: Prohibited Misrepresentations 

1. General Comments 

The proposed rule set forth prohibitions against certain misrepresentations by 

motor vehicle dealers. Based on the following, the Commission has determined to 

finalize these prohibitions, with minor revisions.

 The following paragraphs discuss comments relating to § 463.3 generally and 

Commission responses to such comments, followed by comments relating to each 

paragraph of § 463.3 and Commission responses to such comments. 

The NPRM proposed prohibiting dealers from making any misrepresentation, 

expressly or by implication, regarding specific listed categories. The Commission 

received many comments regarding this proposal, including comments supporting such a 

151 Some commenters, including certain industry associations, requested that the Rule include additional 

definitions, including for the terms “charged,” “item,” “discount,” “rebate,” “trade-in value,” and “online 

service.” In response, the Commission notes that for terms not defined in the Rule, the plain meaning of the 

terms apply. 

68 
 

provision, comments urging the Commission to broaden the provision, and comments 

urging the Commission to limit or forgo the provision. 

Thousands of commenters expressed support for the proposed rule.152 Many of 

these commenters specifically expressed concern about misleading advertisements and 

deceptive pricing. Many individual commenters cited examples of such conduct from 

their own experiences purchasing or leasing vehicles, and many commenters with 

experience operating or working for a dealership shared their observations or 

experiences. For example: 

 I have been looking for a car at MSRP and most dealers[’] websites will 

list it at that price. [T]hen when you drive there the[y] will say well there 

is a market adjustment from 5,000 to 20,000 dollars. [N]ow . . . you need a 

car and have wasted 3-4 hours and picked out what you thought was your 

next car.153 

 I am currently in discussions with two dealerships for a new car. Both 

assure me there is absolutely no dealer markup, come to find out they are 

adding 3/5k of “mandatory” add-ons respectively once I get in the door.154 

 The last vehicle I purchased 2 years ago was a nightmare. Drove 5 hrs[.] to 

a dealer in Southern California. I called the dealer and confirmed the price 

on their website was what I was going to pay. When I arrived there, they 

had a list of $2500 [i]n additional charges that were not disclosed when I 

called and before I started driving. Purchasing a vehicle shouldn’t be such 

a stressful process.155 

 Most recently I started looking myself for a new lease, and looked at the 

RAV 4 prime. Went to my local dealer after seeing an ad on their site for 

$450 a month. Not only did they not honor the deal, but wouldn’t even 

discuss that it was on their own site. I was told the SE model was [$5000] 

over MSRP and the XSE was [$8000] over.156 

152 See Motor Vehicle Dealers Trade Regulation Rule, Comment Docket, 

https://www.regulations.gov/document/FTC-2022-0046-0001/comment. 153 Individual commenter, Doc. No. FTC-2022-0046-0036. 154 Individual commenter, Doc. No. FTC-2022-0046-0099. 155 Individual commenter, Doc. No. FTC-2022-0046-0906. 156 Individual commenter, Doc. No. FTC-2022-0046-1878. 

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 I have contacted 10 different car dealerships in the past month looking to 

purchase a new or used SUV. 9 out of the 10 dealerships I contacted 

online or visited in-person in California changed or lied about the online 

advertised price of the vehicle I was inquiring about or said the car was 

sold or not available and tried to sell me a more expensive vehicle.157 

 Once I was led to the F&I office I was told that I HAD to buy a $995 paint 

protection product that I didn[’]t want or need. I asked to see the contract 

for this product which clearly stated in bold letters ‘ACCEPTANCE OF 

THIS CONTRACT IS VOLUNTARY AND DOES NOT AFFECT THE 

FINANCING OF THE VEHICLE’ I pointed this out to the salesman and 

told him that I didn’t want this product[.] [H]e looked me in the eyes with 

my wife present and said “You have to buy it[.]”158 

 At the dealership, the salesman offered a price of $38,000, over $8,000 

more than the advertised price. When I challenged the extra cost, he said 

the advertisement included every possible rebate and discount and no one 

could receive them together (some were exclusionary with other 

discounts).159 

 While there are good honorable dealerships, far too many play games. 

Rarely is the price of [a] car advertised online or via mail EVER the actual 

price. Far too often in the F&I office the finance manager tries to [gloss] 

over add[-]ons that they just arbitrarily added on without telling you OR 

state I cannot get your loan approved without an extended warranty as an 

example I experienced. . . . I worked for a Toyota dealership many years 

ago and left the industry because it made me sick seeing the games played 

taking advantage of people. Change is needed and sooner than later.160 

 I work as a salesperson at a local Nissan dealership. . . . Currently, 

dealerships across the US, including the one I work for, have made the car 

buying process needlessly confusing, expensive, and frustrating by 

engaging in false advertising and hidden add-on products. While these 

practices are very unscrupulous, they are incredibly effective at what they 

are designed to do: drive revenue for the store. If these regulations are 

passed, they would certainly take a significant toll on my personal 

finances. But the longer I work in my position, the more I realize that no 

157 Individual commenter, Doc. No. FTC-2022-0046-3686. 158 Individual commenter, Doc. No. FTC-2022-0046-4752. 159 Individual commenter, Doc. No. FTC-2022-0046-5580. 160 Individual commenter, Doc. No. FTC-2022-0046-2378. 

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one should be allowed to engage in such exploitative conduct in the course 

of running a business.161 

 I am in the auto industry and work at a very transparent and honest 

dealership. I think most of these rules are great. I hear horror stories about 

honest people seeing a car advertised for one price, only to be told there 

are additional a[d]d-ons and markups once they arrive. I think this is 

unfair. I’m also shocked every time I hear about a dealership charging for 

mandatory window etching and nitrogen filled tires. I even know of 

reputable dealerships that add GPS tracking and theft recovery devices to 

every new car, even though these cars come with GPS theft recovery from 

the manufacturer. Stopping these practices will help restore consumers’ 

faith in car dealerships, save them money, and lead to a more honest and 

ethical industry. . . .162 

Other commenters expressed support for transparent pricing generally, stating, for 

example: 

 A consumer should be able to see a price, walk into a dealership, 

and pay that price. Plain and simple, just like ANY OTHER 

RETAILER.”163 

 If I walk into Best Buy and see a price they HAVE to sell it to me 

for that price or cheaper. These rules are long over due.164 

 I believe if they advertise a car, it should be available for sale—at 

the advertised price—just as a supermarket can’t advertise a price 

for something they don’t have, or add a ‘coupon redemption fee’ 

to it. I believe these rules are an extremely reasonable approach 

to a long-standing problem and urge you to adopt them.165 

 I used to work in the retail auto industry and these proposed rules 

will help everyone (including the dealers who are fighting them). 

Consumers will benefit from the transaction transparency, and 

over the long term even the shady dealers will benefit by treating 

consumers fairly and developing long term relations.166 

161 Individual commenter, Doc. No. FTC-2022-0046-3693. 162 Individual commenter, Doc. No. FTC-2022-0046-4959. 163 Individual commenter, Doc. No. FTC-2022-0046-0017. 164 Individual commenter, Doc. No. FTC-2022-0046-0034. 165 Individual commenter, Doc. No. FTC-2022-0046-0005. 166 Individual commenter, Doc. No. FTC-2022-0046-1935. 

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 These regulations would be the best thing to happen for consumer 

protection since the Mo[n]roney Label. I not only have had to 

navigate and negotiate erroneous fees at dealers, but I’ve also 

worked at dealers whose transparency and forthrightness put 

them at a disadvantage. Many dealers advertise vehicles that can 

not [sic] be purchased or leased at the advertised price due to 

deceptive adverts either not disclosed or in a print so fine it can’t 

be read. Please pass this ruling. My grandma shouldn’t have to 

pay more than someone else just because she’s not a good 

negotiator.167 

Consumer advocacy organization commenters and individual commenters urged 

the FTC to include additional specific provisions in § 463.3, including a prohibition 

against misrepresentations regarding the safety, mechanical or structural condition, 

odometer reading, or history of a vehicle. Similarly, commenters including a municipal 

regulator urged the Commission to specifically prohibit misrepresentations regarding 

certification of used vehicles, citing enforcement actions it brought against dealers that 

misrepresented used vehicles as “certified pre-owned” or “manufacturer certified.” The 

FTC takes seriously deception relating to the safety or condition of a vehicle and the 

practice of charging consumers more based on false claims or reassurances.168 Depending 

on the claim made by the dealership and the specific facts at issue, deceptive conduct in 

either of these areas may be covered by the enumerated misrepresentation paragraphs the 

167 Individual commenter, Doc. No. FTC-2022-0046-10441. 168 See, e.g., Complaint, CarMax, Inc., No. C-4605 (F.T.C. Mar. 22, 2017) (alleging Defendants misled 

consumers by representing that the used motor vehicles Defendants sold had been subject to rigorous 

inspection but omitting important safety information about recalls); Complaint, West-Herr Auto. Grp., Inc., 

No. C-4607 (F.T.C. Mar. 22, 2017) (alleging Defendants failed to disclose, or disclose adequately, that 

used motor vehicles it sold were subject to open recalls for safety issues); Complaint, Asbury Auto. Grp., 

Inc., No. C-4606 (F.T.C. Mar. 22, 2017) (alleging deceptive failure to disclose material information about 

the safety of used motor vehicles sold by Defendants); Complaint ¶¶ 20-24, Fed. Trade Comm’n v. 

Passport Imports, Inc., No. 8:18-cv-03118 (D. Md. Oct. 10, 2018) (alleging Defendants misled consumers 

by mailing “Urgent Recall” notices that were similar to and had the same color scheme as notices 

manufacturers are required by the U.S. Department of Transportation’s NHTSA to use when sending 

information about vehicle recalls, even though in the “vast majority of instances” the recipients’ cars were 

not subject to an open recall). 

72 
Commission is finalizing, such as by § 463.3(a) if it relates to the terms of the purchase, 

lease, or financing. The FTC will continue to monitor dealer misrepresentations to 

determine whether additional action is needed. 

In addition, a number of credit union commenters requested that the Commission 

explicitly address misrepresentations involving dealers’ refusal to accept outside 

financing to purchase a vehicle. These commenters cited several examples of consumers 

being told that they could not use outside financing, that they would not receive a lower 

interest rate from an outside financial institution, or that a particular interest rate was the 

best rate the consumer can get. The Rule already covers such conduct. For example, 

§ 463.3(a) of the Rule, which prohibits dealers from misrepresenting the cost or terms of 

financing a vehicle, covers these and other misrepresentations regarding financing, 

including the availability of outside or “indirect” financing terms, or the costs of such 

financing as compared to those of any dealer-provided financing. 

Two individual commenters posited that any language prohibiting 

misrepresentations should explicitly include the word “omissions,” in order to ensure that 

dealers do not sneak in additional costs without consumers’ consent or understanding. 

The Commission appreciates this concern, and notes that the Rule has many provisions 

prohibiting such misconduct, including the required disclosures regarding price, add-ons, 

and total amount of payments in § 463.4 of the Final Rule, as well as the requirement in 

§ 463.5(c) to obtain consumers’ express, informed consent before charging for any items. 

Other commenters, including dealership associations, individual commenters, and 

a United States Representative, questioned whether certain of the proposed 

misrepresentation provisions were duplicative of other laws, such as the Truth in Lending 

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Act (“TILA”), the Consumer Leasing Act (“CLA”), or State regulations, and in some 

instances whether compliance with State regulations should act as a safe harbor. The 

Commission notes that another statute—the FTC Act—already prohibits 

misrepresentations in or affecting commerce, and to the extent there is duplication 

between the FTC Act and other existing statutes pertaining to deception, there is no 

evidence that duplicative misrepresentation prohibitions have harmed consumers or 

competition.169 The Commission further notes that the Final Rule provides additional 

remedies that will benefit consumers who encounter conduct that is otherwise already 

illegal under Federal law, and will aid law-abiding dealers that lose business to 

competitors that act unlawfully.170 State laws may provide more or less specific 

requirements as long as those requirements are not inconsistent with part 463, as set forth 

in § 463.9, and in the event of an inconsistency, the Rule only affects such State law to 

the extent of the inconsistency. Because dealers are already prohibited from engaging in 

“deceptive acts or practices” under the FTC Act, dealers should be able to comply with 

these provisions without the need for a safe harbor. 

169 One commenter expressed concern that the prohibited misrepresentations would cause dealerships to 

provide less information, because discussing pricing and quotes would result in providing further 

documentation for every conversation. However, as the FTC Act already prohibits misrepresentations, and 

given that pricing and financing information are among the most salient aspects of a consumer’s shopping 

for a vehicle, the Commission considers it unlikely that § 463.3 would result in less information or the 

creation of additional documentation. 

170 Under Section 19(a)(1) of the FTC Act, the Commission may sue in Federal district court “any person, 

partnership, or corporation” that “violates any rule under [the FTC Act] respecting unfair or deceptive acts 

or practices.” 15 U.S.C. 57b(a)(1). Where such liability is found, under Section 19(b) a court may “grant 

such relief as [it] finds necessary to redress injury . . . resulting from the rule violation,” including the 

“rescission or reformation of contracts, the refund of money or return of property, [or] the payment of 

damages.” Id. 57b(b). 

A few commenters requested that the Rule go further in providing remedies, including by allowing for a 

private right of action to enforce Rule violations. The Commission notes that, depending on State law, 

consumers may be able to use State statutes that prohibit unfair or deceptive practices to challenge conduct 

that violates this Rule. 

There is nothing in the FTC Act or this Rule that would preclude consumers from exercising any such legal 

rights under State law. The Commission will continue to monitor the market to determine whether 

additional steps are needed. 

74 
 

Industry association commenters also claimed that the prohibited 

misrepresentation proposal ignored the materiality prong of the Commission’s deception 

standard, and further observed that some of the prohibited misrepresentations in the 

proposed rule explicitly included a materiality requirement,171 while others did not. As 

the NPRM made clear, the Commission’s proposed misrepresentation section, at § 463.3, 

addressed misrepresentations that are all material.172 The Commission need not explicitly 

specify materiality in its description of these misrepresentations; indeed, the Commission 

has long considered certain categories of information, express claims, and intended 

implied claims to be presumptively material.173 Nevertheless, rather than using the term 

“Material” in certain individual enumerated paragraphs, the Commission has determined 

to modify the introductory text of § 463.3 from the Commission’s original proposal in 

order to specifically prohibit misrepresentations regarding material information about the 

enumerated paragraphs. As such, the Commission is also removing what would otherwise 

be redundant references to the term “Material” within paragraphs (b) and (g) of § 463.3. 

A national dealership association incorrectly asserted that this section is 

problematic because there is no requirement that the representation or omission be 

material or be viewed from the perspective of a consumer acting reasonably under the 

circumstances. As adopted in the final rule, this section adds the term “Material,” stating 

that it is an unfair or deceptive practice for any motor vehicle dealer to make any 

misrepresentation, expressly or by implication, regarding material information about the 

171 See NPRM at 42045 (proposed § 463.3(b), (g)). 172 NPRM at 42019. 173 FTC Policy Statement on Deception, supra note 42, at 5 & nn.47-55. 

75 
 

 

 

 

specific categories enumerated in § 463.3.174 The Commission is not aware of situations 

where dealers have made misrepresentations expressly or by implication regarding 

material information about these specific categories that are not deceptive or unfair, nor 

did commenters describe any such situations. 

The Commission further notes that, by the terms of this section, a court must find 

that the dealer made an express or implied misrepresentation regarding material 

information for § 463.3 to be violated. For an express or implied misrepresentation 

regarding material information to be made in violation of the FTC Act and this Rule, 

there must be a representation that misleads consumers acting reasonably under the 

circumstances regarding material information. Whether such a representation has 

occurred depends on the facts. In the case of implied representations, whether a 

representation has occurred is often evident from an examination of the representation 

itself, including, for example, an evaluation of the document in which a representation is 

made, the juxtaposition of language in that document, the nature of the representation, 

and the nature of the transaction.175 In other situations, extrinsic evidence that it is 

reasonable for consumers to reach the implied representation may be helpful, such as 

consumer testimony, surveys, or other reliable evidence of consumer interpretation.176 

174 The Final Rule prohibits misrepresentations in specific categories. In contrast, some FTC rules go 

further by prohibiting misrepresentations of “any material aspect” of the transaction. See, e.g., Mortgage 

Assistance Relief Services Rule, 16 CFR 322.3(b); Telemarketing Sales Rule, 16 CFR 310.3(a)(2)(x). 175 FTC Policy Statement on Deception, supra note 42, at 2 (citing Am. Home Prods., 98 F.T.C. 136, 374 

(1981), aff’d, 695 F.2d 681, 687 (3d Cir. 1982) (evaluation of the entire document); Warner Lambert, 86 

F.T.C. 1398, 1489-90 (1975), aff’d 562 F.2d 749 (D.C. Cir. 1977), cert. denied, 435 U.S. 950 (1978) 

(juxtaposition of phrases); Firestone Tire & Rubber Co., 81 F.T.C. 398, 456 (1972), aff’d, 481 F.2d 246 

(6th Cir.), cert. denied, 414 U.S. 1112 (1973) (nature of the claim); see also Kraft, Inc. v. Fed. Trade 

Comm’n, 970 F.2d 311, 319 (7th Cir. 1992) (“Commission may rely on its own reasoned analysis to 

determine what claims, including implied ones, are conveyed in a challenged advertisement, so long as 

those claims are reasonably clear from the face of the advertisement.”). 176 FTC Policy Statement on Deception, supra note 42, at 2 n.8. 

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For example, if a dealer offers discounted coffee for customers who visit its 

dealership before 10 a.m. and honors that offer, but makes no representations, expressly 

or by implication, about discounted cars, the dealer will not have violated § 463.3(d), 

which prohibits express or implied misrepresentations regarding rebates and discounts, 

even if a consumer holds an unreasonable belief that the offer was for discounted cars. 

On the other hand, if a dealership’s advertisement depicts a car with a consumer standing 

next to it holding a cup of coffee, and states, “10% discount available before 10 a.m.,” 

such an advertisement can convey several representations that may mislead reasonable 

consumers,177 including that the car is available at a 10% discount. 

Commenters including industry associations opined on the term “implied,” 

contending for example that the idea that a misrepresentation can be implied is overly 

broad, and a dealership association commenter expressed concern that the inclusion of 

“implied” creates too much uncertainty. As has been recognized under the law for 

decades, however, representations can mislead consumers, even without making express 

claims. 178 Take, for example, an advertisement that shows a picture of a new sedan for 

sale. Even if the advertisement does not expressly state that consumers could use the 

177 The interpretation or reaction does not have to be the only one; when a seller’s representation conveys 

more than one meaning to reasonable consumers, one of which is false, the seller is liable for the 

misleading interpretation. See FTC Policy Statement on Deception, supra note 42, at 3. Further, an 

interpretation will be presumed reasonable if it is the one the respondent intended to convey. Id. 178 The FTC’s Policy Statement on Deception and scores of FTC cases make clear that both express and 

implied claims can be deceptive. See, e.g., ECM Biofilms, Inc. v. Fed. Trade Comm’n, 851 F.3d 599 (6th 

Cir. 2017) (affirming Commission’s finding that an additive manufacturer’s unqualified biodegradability 

claim conveyed an implied claim that its plastic would completely biodegrade within five years); POM 

Wonderful LLC, No. C-9344 (F.T.C. Jan. 10, 2013) (Opinion of the Commission), aff’d as modified, POM 

Wonderful, LLC v. Fed. Trade Comm’n, 777 F.3d 478 (D.C. Cir. 2015) (finding that company’s 

advertisements would reasonably be interpreted by consumers to contain an implied claim that POM 

products treat, prevent, or reduce the risk of certain health conditions and for some ads that these effects 

were clinically proven); Kraft, Inc. v. Fed. Trade Comm’n, 970 F.2d 311 (7th Cir. 1992) (affirming finding 

of deception where Kraft ads juxtaposed references to the milk contained in Kraft singles and the calcium 

content of the milk, the combination of which implied that each Kraft single contained the same amount of 

calcium as five ounces of milk). 

77 
 

 

vehicle to drive at speeds higher than 25 miles per hour, there is an implied representation 

that a product is fit for the purposes for which it is sold.179 Thus, limiting the Rule to 

prohibit only express misrepresentations would significantly hamper its usefulness to 

consumers. 

One industry association commenter further argued that the proposed rule created 

a new deception standard that ignored intent and reliance. This argument, however, 

misstates the law, which does not require intent180 or reliance181 to establish deception. 

Thus, the Commission is finalizing the introductory paragraph of § 463.3 largely 

as proposed, with a modification stating that it applies to misrepresentations regarding 

material information. For consistency with other parts of the Rule, the Commission is 

also removing the shorthand “FTC Act” that appeared in parentheses after “the Federal 

Trade Commission Act” in the introductory paragraph of the proposed rule. For clarity 

and consistency with the revised definition of “Covered Motor Vehicle Dealer” (at 

§ 463.2(f) and discussed in SBP III.B.2(f)), the Commission is adding the word 

“Covered” to “Motor Vehicle Dealer” in the introductory paragraph. Finally, without 

changing any substantive requirements for covered entities, the Commission is adding the 

following sentence to the end of § 463.3: “The requirements in this section also are 

179 FTC Policy Statement on Deception, supra note 42, at 2; Int’l Harvester Co., 104 F.T.C. 949, 1057-58 

(1984). 

180 See Fed. Trade Comm’n v. Freecom Commc’ns, 401 F.3d 1192, 1202 (10th Cir. 2005) (“Because the 

primary purpose of § 5 is to protect the consumer public rather than punish the wrongdoer, the intent to 

deceive the consumer is not an element of a § 5 violation.”). 181 See Fed. Trade Comm’n v. Figgie Int’l, Inc., 994 F.2d 595, 605-06 (9th Cir. 1993) (holding that Section 

19 of the FTC Act does not require proof of individual consumer reliance; rather, there is a “presumption of 

actual reliance” that arises once the Commission has proved that a defendant made material 

misrepresentations, that they were widely disseminated, and that consumers purchased the defendant’s 

product). 

78 
 

prescribed for the purpose of preventing the unfair or deceptive acts or practices defined 

in this part, including those in §§ 463.4 and 463.5.” 

The Commission examines each paragraph of § 463.3, including by examining 

related comments and Commission responses to those comments. The Commission then 

discusses the corresponding provisions of the Final Rule. 

2. Paragraph-by-Paragraph Analysis of § 463.3 

a) The Costs or Terms of Purchasing, Financing, or Leasing a 

Vehicle 

Proposed § 463.3(a) prohibited misrepresentations regarding the cost or terms of 

purchasing, financing, or leasing a vehicle. The Commission is finalizing this provision 

largely as proposed, with the minor modification of capitalizing the defined term 

“Vehicle” to conform with the revised definition at § 463.2(e) (explained in SBP 

III.B.2(e)). As previously discussed, the addition of “material” to the introductory 

paragraph of § 463.3 will apply to this paragraph and to all paragraphs of § 463.3 that 

follow. 

A number of commenters expressed support for this proposed provision, 

contending, inter alia, that it would level the playing field for car buyers and address 

unfair and deceptive practices related to financing terms and conditions. 

The Commission received a number of industry association comments requesting 

that the Commission clarify the operation of proposed § 463.3(a), including for example, 

by clarifying whether it would require dealers to discuss all purchase, finance, or lease 

terms, or whether it would require dealers to read aloud all the terms of the buyer’s order 

and finance or lease agreement. Dealership association commenters expressed a related 

concern that this proposed provision lacked specific guidance on dealer compliance. 

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To begin, misrepresentations regarding “costs or terms of purchasing, financing, 

or leasing a vehicle” refer to the ordinary plain meaning of the words used in the 

provision.182 Second, as the language in the introductory paragraph of § 463.3 makes 

clear, its paragraphs—including paragraph (a) of § 463.3—prohibit misrepresentations 

regarding material information. By its terms, this paragraph requires no particular 

affirmative disclosures, whether written or oral; rather, this paragraph obligates dealers to 

refrain from misrepresentations regarding material information about the costs or terms 

of purchasing, financing, or leasing a vehicle.183 

The Commission received comments from industry associations requesting that 

the Final Rule provide a safe harbor from liability stemming from dealers’ violations of 

the Rule to vehicle credit contract assignees, who take or receive these contracts subject 

to all claims and defenses consumers could assert against the dealer under the 

Commission’s Trade Regulation Rule Concerning Preservation of Consumers’ Claims 

and Defenses, also known as the “Holder Rule.”184 The Rule, however, does not create 

182 Examples of “costs or terms of purchasing, financing, or leasing a vehicle” include, among other things, 

express or implied representations regarding a vehicle’s total cost, down payments, interest rates, 

repayment schedules, the price for added features, other charges, certainty or finality of terms, and the 

availability of discounts. The Commission has brought numerous enforcement actions where, for example, 

dealers have misrepresented the total price a consumer could pay for vehicles, or concealed a required 

down payment or other restrictions on the offer. See, e.g., Complaint ¶¶ 10-11, Fed. Trade Comm’n v. 

Liberty Chevrolet, Inc., No. 1:20-cv-03945 (S.D.N.Y. May 21, 2020) (alleging false ads stating a certain 

price but charging consumers higher prices); Complaint ¶¶ 38-46, Fed. Trade Comm’n v. Tate’s Auto Ctr. 

of Winslow, Inc., No. 3:18-cv-08176-DJH (D. Ariz. July 31, 2018) (alleging false ads touting attractive 

terms but concealing (i) ads were for lease offers only and required substantial initial payment, (ii) 

discounts were subject to material limitations, or (iii) other legally required disclosures); Complaint ¶¶ 7-

16, Cowboy AG, LLC, No. C-4639 (F.T.C. Jan. 4, 2018) (alleging false ads touting attractive terms, but 

concealing substantial down payments, offers were for leases and not purchases, material eligibility 

restrictions, and other legally required disclosures).

183 Some commenters repeat this and similar questions, regarding what types of disclosures are required, 

through provision (o); the same response applies—provisions (a) through (o) do not affirmatively require 

particular disclosures. As with all misrepresentations prohibited by the Rule, and under Section 5 of the 

FTC Act, misrepresentations are barred whether they are made expressly or by implication. 184 See Trade Regulation Rule Concerning Preservation of Consumers’ Claims and Defenses, 16 CFR 433.2 

[hereinafter Holder Rule]. 

80 
liability for these entities under the Holder Rule where it did not previously exist; the 

Rule addresses conduct that is unfair or deceptive under the FTC Act. When enacting the 

Holder Rule, the Commission did not include a safe harbor or exceptions involving any 

specific deceptive or unfair conduct, and the Commission declines to do so through this 

Rule. 

A comment from a motor vehicle industry association argued that this provision 

would likely be inapplicable, or less impactful, with regard to RV sales because the RV 

industry rarely offers leases, if at all, and because RV sales are usually not financed 

through RV manufacturer-controlled financing companies. To the extent that specific 

provisions do not apply to specific entities, such provisions do not impose any obligations 

upon those entities. Nevertheless, as explained in the analysis of the “Covered Motor 

Vehicle” definition, § 463.2(e), the Commission is excluding recreational vehicle dealers 

from the definition of “Covered Motor Vehicle.” 

After carefully considering the comments, the Commission is finalizing paragraph 

(a) of § 463.3 with the minor modification of capitalizing “Vehicle.” This provision 

prohibits misrepresentations regarding “[t]he costs or terms of purchasing, financing, or 

leasing a Vehicle.” Misrepresentations of the price, discounts, or other terms are likely to 

cause consumers to waste time pursuing unavailable or inapplicable offers and to spend 

more money on a vehicle rather than undergoing the hours-long process to begin the 

vehicle search and shopping process anew at another dealership. Prohibiting these 

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misrepresentations will save consumers time and money and ensure that dealers compete 

on a level playing field.185 

b) Any Costs, Limitation, Benefit, or Any Other Aspect of an Addon Product or Service 

Proposed § 463.3(b) prohibited misrepresentations concerning any costs, 

limitation, benefit, or any other material aspect of an add-on product or service. Section 

463.3(b) of the Final Rule adopts this provision without substantive modification. As 

described in detail in SBP III.C.1, the Commission is modifying § 463.3 from the 

Commission’s original proposal to include the term “Material” in the introductory 

paragraph rather than in paragraphs (b) or (g) of § 463.3. Section 463.3(b) of the Final 

Rule therefore deletes reference to the term “Material.” 

The Commission received a number of comments expressing support for 

prohibiting misrepresentations about add-ons, including comments that requested specific 

additional add-on-related misrepresentation prohibitions. For example, an auto dealer 

commenter expressed support for prohibiting misrepresentations about whether or not a 

car has add-ons already installed. Consumer advocacy organization commenters 

185 The National Automobile Dealers Association commissioned a survey, released in May of 2023, that 

asserted the Commission’s proposed rule would lead to an increase in consumer transaction time. Edgar 

Faler et al., Ctr. for Auto. Rsch., “Assessment of Costs Associated with the Implementation of the Federal 

Trade Commission Notice of Proposed Rulemaking (RIN 2022 – 14214), CFR Part 463” (2023), 

https://www.cargroup.org/wp-content/uploads/2023/05/CAR-Report_CFR-Part-463_Final_May-2023.pdf. 

This survey was released more than seven months after the closure of the comment period for the notice of 

proposed rulemaking on September 12, 2022, and is not part of this rulemaking record. These facts 

notwithstanding, the Commission observes that each respondent to this survey was presented with a leading 

statement at the beginning of the survey asserting, inter alia, that the proposed rule would impose “new 

duties [that] are expected to create additional monitoring, training, forms, and compliance review 

responsibilities as well as a modification of record keeping systems and coordination with outside IT and 

other vendors” and “increase the time of a motor vehicle transaction, inhibit online sales, limit price 

disclosures, and increase customer confusion and frustration.” Id. at 34, 36 (introductory instructions on the 

survey instrument sent to respondents). In addition, this survey did not explain its selection process or 

criteria for the 60 dealers it surveyed, nor why only 40 such dealerships provided fully completed survey 

responses. Moreover, the survey report attributed much of this estimated increase to proposed rule 

provisions that the Commission is not finalizing. 

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recommended that the Commission include a new paragraph in § 463.3 prohibiting 

misrepresentations regarding the consumer’s right to cancel add-on products or services. 

This provision, however, already covers such conduct: It prohibits misrepresentations 

regarding material information about any costs, limitation, benefit, or any other aspect of 

an add-on product or service. “Material” means likely to affect a consumer’s conduct or 

choices.186 A consumer’s right to cancel is likely to affect the consumer’s conduct 

regarding an add-on product or service. Thus, § 463.3(b) includes representations about a 

consumer’s right to cancel an add-on product or service. 

A number of dealership association commenters argued that the language used in 

this provision is vague or confusing. The terms “Material” and “Add-on Product or 

Service,” however, are specifically defined in § 463.2. The remaining terms in this 

provision are commonly used and can be understood according to their plain meaning.187 

The NPRM examined misrepresentations regarding the coverage and costs of add-ons, 

and enforcement actions by the Commission and other agencies have documented many 

instances of such misrepresentations.188 Examples of the type of conduct prohibited 

186 See FTC Policy Statement on Deception, supra note 42, at 2, 5; see also Fed. Trade Comm’n v. Crescent 

Publ’g Grp., Inc., 129 F. Supp. 2d 311, 321 (S.D.N.Y. 2001). 187 E.g., Cost, Cambridge Dictionary, https://dictionary.cambridge.org/us/dictionary/english/cost (“Cost” is 

defined as “the amount of money needed to buy, do, or make something”); Limitation, Cambridge 

Dictionary, https://dictionary.cambridge.org/us/dictionary/english/limitation (“Limitation” is defined as 

“something that controls or reduces something”); Benefit, Cambridge Dictionary, 

https://dictionary.cambridge.org/us/dictionary/english/benefit (“Benefit” is defined as “a helpful or good 

effect, or something intended to help”). 

188 See, e.g., Complaint ¶¶ 26-27, 70-71, Fed. Trade Comm’n v. N. Am. Auto. Servs., Inc., No. 1:22-cv01690 (N.D. Ill. Mar. 31, 2022) (alleging deceptive and unauthorized add-on charges; unfair discrimination 

against minority consumers); Complaint ¶¶ 12-19, Fed. Trade Comm’n v. Liberty Chevrolet, Inc., No. 1:20-

cv-03945 (S.D.N.Y. May 21, 2020) (alleging deceptive and unauthorized add-on charges in consumers’ 

transactions); Complaint ¶¶ 59-64, Fed. Trade Comm’n v. Universal City Nissan, Inc., No. 2:16-cv-07329 

(C.D. Cal. Sept. 29, 2016) (deceptive and unauthorized add-on charges in consumers’ transactions); 

Complaint ¶¶ 4-14, Nat’l Payment Network, Inc., No. C-4521 (F.T.C. May 4, 2015) (alleging failure to 

disclose fees associated with financing program; misleading savings claims in advertisements); Complaint 

¶¶ 4-13, Matt Blatt Inc., No. C-4532 (F.T.C. July 2, 2015) (alleging failure to disclose fees associated with 

83 
 

 

 

include misrepresenting whether add-ons are required in order to purchase or lease a 

vehicle, including by representing that such charges are required when in fact they are 

not, or misrepresenting that advertised prices do not include fees beyond routine taxes 

and fees only to subsequently require the purchase of add-ons; misrepresenting what is, 

or is not, covered by, among others, an extended warranty, service or maintenance plan, 

or GAP agreement;189 and misrepresenting that consumers have provided express, 

informed consent to be charged for add-ons. 

Commenters including a number of motor vehicle dealership associations 

requested that the Commission clarify how extensive disclosures would need to be to 

satisfy this provision. One such commenter requested that the Commission explain what 

conduct would be required under this paragraph, and expressed concern that, if the 

paragraph required disclosures, such a requirement would affect the length of the 

transaction. Another industry association commenter suggested that, in the event dealers 

provide consumers with a verbal or written disclosure stating that such products have 

costs, limitations, or benefits, and stating information about other material aspects, the 

Commission modify its proposal to shift to consumers the burden of proving any relevant 

dealer misrepresentation. An individual commenter expressed support for applying 

§ 463.3(a) and (b) to dealer advertisements of free lifetime benefits programs and 

requiring dealers to make disclosures about any costs, limitations, benefits, or any other 

financing program; misleading savings claims). Cf. Consent Order ¶¶ 10-16, Santander Consumer USA, 

Inc., CFPB No. 2018-BCFP-0008 (Nov. 20, 2018) (finding defendant sold GAP product allegedly 

providing “full coverage” to consumers with loan-to-value ratios (“LTVs”) above 125%, when in fact 

coverage is limited to 125% of LTV).

189 See, e.g., Consumer Fin. Prot. Bureau, “Supervisory Highlights: Issue 12, Summer 2016” 5 (June 2016), 

https://files.consumerfinance.gov/f/documents/Supervisory_Highlights_Issue_12.pdf (finding that one or 

more auto lenders deceptively advertised the benefits of their GAP agreement products, leaving the 

impression that these products would fully cover the remaining balance of a consumer’s loan in the event of 

vehicle loss when, in fact, the product only covered amounts below a certain loan to value ratio). 

84 
 

aspect of an add-on product or service. The Commission notes that paragraphs (a) and (b) 

of § 463.3 already apply to free lifetime benefits programs. Regarding disclosures, the 

Commission is concerned about including additional disclosure requirements beyond the 

few areas included in the Rule, or shifting the burden to consumers to hunt for and 

decipher disclosures, given that the auto finance and lease process is already lengthy, 

complex, document-heavy, and dense. Accordingly, as discussed in regard to § 463.3(a), 

these provisions do not mandate set disclosures or allow for disclosures to be used as a 

shield when there are misrepresentations to consumers; rather, they prohibit express or 

implied misrepresentations.190 

Several dealership association commenters pointed to State laws that, they 

contended, may already prohibit misrepresentations about add-ons or may otherwise 

protect consumers. As discussed previously, to the extent there may be duplication 

between the provisions the Commission is finalizing and other laws, there is no evidence 

that duplicative misrepresentation prohibitions have harmed consumers or competition. 

Moreover, the Final Rule provides additional remedies that will benefit consumers who 

encounter conduct that is already illegal under State or Federal law and will assist lawabiding dealers that presently lose business to competitors that act unlawfully. Under 

§ 463.9, States may provide more or less specific requirements relating to motor vehicle 

dealers so long as those requirements are not inconsistent with part 463, and in the event 

of an inconsistency, the Rule only affects such State law to the extent of the 

inconsistency. 

190 It is well-settled that, if one makes a claim that, absent additional information, would mislead a 

consumer acting reasonably under the circumstances about a material fact, such conduct would violate the 

law. See FTC Policy Statement on Deception, supra note 42, at 2; Int’l Harvester Co., 104 F.T.C. 949, 

1057-58 (1984). 

85 
Based on a review of the comments and the responses discussed, the Commission 

adopts paragraph (b) of § 463.3 without substantive modification. As discussed in SBP 

III.C.1, the Commission has determined to modify the introductory paragraph of § 463.3 

from the Commission’s original proposal so that each paragraph of § 463.3 prohibits 

misrepresentations regarding material information. As such, the Commission is finalizing 

a version of § 463.3(b) that removes what would otherwise be redundant explicit 

reference to the term “Material.” This provision prohibits misrepresentations regarding 

“[a]ny costs, limitation, benefit, or any other aspect of an Add-on Product or Service.” 

Misrepresentations regarding add-ons are likely to affect a consumer’s conduct, including 

the consumer’s decision to purchase the product or service. 

c) Whether Terms Are, or Transaction Is, for Financing or a 

Lease 

Proposed § 463.3(c) prohibited misrepresentations regarding whether the terms 

are, or the transaction is, for financing or a lease. Upon review and consideration of 

public comments, the Commission is finalizing paragraph (c) of § 463.3 without 

modification from the Commission’s original proposal. 

A few industry association and individual commenters posited that this proposed 

provision was unnecessary, either because other statutes or regulations, including TILA 

and some State regulations, address this issue, or because vehicle manufacturers already 

monitor such misrepresentations. As noted in SBP III.C.1, even given the possibility of 

overlap between this provision and existing Federal or State law, there is no evidence that 

duplicative misrepresentation prohibitions have harmed consumers or competition. 

Further, given that the conduct covered by this provision is already unlawful under the 

86 
 

 

 

 

FTC Act and may duplicate other laws, or be prohibited by manufacturer rules, it should 

not be difficult to follow this provision.191 

Accordingly, after careful consideration, the Commission adopts paragraph (c) of 

§ 463.3 as proposed. Misrepresentations regarding whether terms are, or a transaction is, 

for financing or a lease are likely to affect a consumer’s conduct, including by causing 

consumers to enter into a monetary transaction for a product they do not want, or, if the 

true circumstances are revealed prior to consummation of the transaction, to waste time 

traveling to, and potentially spending hours at, the dealership. 

d) The Availability of Any Rebates or Discounts that are Factored 

into the Advertised Price but Not Available to All Consumers 

Proposed § 463.3(d) prohibited misrepresentations concerning the availability of 

any rebates or discounts that are factored into the advertised price but not available to all 

consumers. Upon review and consideration of public comments, the Commission is 

finalizing paragraph (d) of § 463.3 without modification from the Commission’s original 

proposal. 

Comments in support of this proposed provision, including those from a group of 

State attorneys general and from two United States Senators, generally contended that the 

proposed provision would increase the transparency of the purchase transaction by 

requiring dealers to be honest when they advertise the availability of discounts. 

191 The FTC has alleged that misrepresentations that particular terms are available for financing or for a 

lease violate the FTC Act. See Complaint ¶¶ 38-39, Fed. Trade Comm’n v. Tate’s Auto Ctr., No. 3:18-cv08176-DJH (D. Ariz. July 31, 2018) (alleging false ads touting attractive terms but concealing ads were for 

lease offers only); Complaint ¶¶ 10, 13, TC Dealership, L.P., No. C-4536 (F.T.C. Aug. 13, 2015) (same); 

Complaint ¶¶ 9-12, Cowboy AG, LLC, No. C-4639 (F.T.C. Jan. 4, 2018) (same); Complaint ¶¶ 36-38, 

United States v. New World Auto Imports, Inc., No. 3:16-cv-02401-K (N.D. Tex. Aug. 18, 2016) (alleging 

misrepresentation that terms were for financing instead of leasing); Complaint ¶¶ 28-37, 44, Fed. Trade 

Comm’n v. Universal City Nissan, Inc., No. 2:16-cv-07329 (C.D. Cal. Sept. 29, 2016) (alleging 

advertisements with key terms that were not generally available). 

87 
An individual commenter suggested that the Commission modify proposed 

§ 463.3(d) to require dealers to disclose all representations regarding rebates or discounts 

in writing, in a clear and conspicuous manner. The Commission notes this paragraph 

prohibits misrepresentations regardless of the medium. Further, this paragraph focuses on 

misrepresentations; disclosures regarding price, add-ons, and total of payments are 

addressed in the discussion of § 463.4, as is a discussion of why the Commission has 

determined not to include additional disclosure requirements in this Final Rule. The same 

commenter also requested that the Final Rule text include examples of situations where 

discounts or rebates may not be available. The Commission describes examples here 

rather than adding them to the Final Rule text, as it would be difficult to anticipate all 

such examples and the text would become unwieldy. Examples include where an 

advertised rebate or discount applies only to the most expensive version of a particular 

vehicle make and model or is only available to consumers with high credit scores. 

The Commission received comments from a dealership association and an 

individual commenter asking for additional detail about proposed § 463.3(d), pointing to 

a State regulation that includes disclosures and asking which types of rebates the 

provision covers. Here, the Commission notes that, as the language in § 463.3(d) states, 

this provision applies to “any rebates and discounts” advertised by dealers, and is not 

limited to any particular type of rebate or discount.192 The terms in this provision may be 

interpreted according to their plain meaning, as they are commonly used and 

understood.193 Additionally, the language of this provision, the NPRM, and Commission 

192 Section 463.3(d) (emphasis added). 193 See, e.g., Rebate, Cambridge Dictionary, https://dictionary.cambridge.org/us/dictionary/english/rebate 

(last visited Dec. 5, 2023) (defining “rebate” as “an amount of money that is returned to you, especially by 

88 
 

 

 

 

 

 

 

 

 

 

enforcement actions provide further context. In proposing § 463.3(d) to specifically 

address the availability of discounts and rebates, the Commission included additional 

language (“that are factored into the advertised price but not available to all consumers”) 

to describe the manner in which such misrepresentations often occur: a dealer represents 

an advertised price which includes a discount or rebate that is not generally available to 

consumers.194 The NPRM’s discussion of proposed § 463.3(d) described both a scenario 

in which a dealer advertised a rebate or discount separately, and one in which rebates or 

discounts are factored into the advertised price but the rebates and discounts are not 

available to a typical consumer. The conduct in either such scenario would violate this 

provision and, depending on the circumstances, may violate other provisions the 

Commission is finalizing, such as paragraph (a) of § 463.3. Enforcement actions cited in 

the NPRM provide further illustration of deceptive practices involving rebates and 

discounts.195 The Commission declines to add additional requirements, such as disclosure 

the government, for example when you have paid too much tax” or “an amount of money that is paid back 

to you after you have paid too much”); Discount, Cambridge Dictionary, 

https://dictionary.cambridge.org/us/dictionary/english/discount (last visited Dec. 5, 2023) (“[A] reduction 

in the usual price”). 

194 See NPRM Section IV.C, 87 FR at 42020 (proposed § 463.3(d) prohibited misrepresentations 

concerning “[t]he availability of any rebates or discounts that are factored into the advertised price but not 

available to all consumers,” and the NPRM explained “[w]hen dealers advertise rebates and discounts, or 

offer prices that factor in such rebates and discounts, but in fact those rebates and discounts are not 

available to the typical consumer, but only a select set of customers, such conduct induces the consumer to 

select and transact with the dealer under false pretenses”). 195 See, e.g., Complaint ¶¶ 6-13, Jim Burke Auto., Inc., No. C-4523 (F.T.C. May 4, 2015) (alleging 

promises of prices and discounts not generally available to consumers); Complaint ¶¶ 6, 9, TT of 

Longwood, Inc., No. C-4531 (F.T.C. July 2, 2015) (alleging promises of prices and discounts not generally 

available to consumers); Complaint ¶¶ 8-9, JS Autoworld, Inc., No. C-4535 (F.T.C. Aug. 13, 2015) 

(alleging false ads touting prices but concealing discounts with material eligibility limitations); Complaint 

¶¶ 7-9, TC Dealership, L.P., No. C-4536 (F.T.C. Aug. 13, 2015) (alleging false ads touting attractive prices 

but concealing discounts were subject to material eligibility limitations and trade-in requirement); 

Complaint ¶¶ 4-5, Timonium Chrysler, Inc., No. C-4429 (F.T.C. Jan. 28, 2014) (alleging dealership 

advertised internet prices and dealer discounts but failed to disclose consumer would have to qualify for 

multiple rebates not generally available to them); Complaint ¶¶ 4-5, Ganley Ford West, Inc., No. C-4428 

(F.T.C. Jan. 28, 2014) (alleging dealership advertised discounts on vehicle prices, but failed to disclose 

discounts were only available on the most expensive models). 

89 
requirements, to its Final Rule, given the already lengthy, complex, and document-heavy 

nature of auto transactions. 

A number of dealership association commenters contended that the proposed 

paragraph would prohibit dealers from displaying beneficial information to consumers or 

would prohibit dealers from advertising rebates and incentives of limited availability. In 

addition, commenters including one such dealership association requested that the 

Commission adopt an approach the commenter contended is used in some States: 

allowing dealers to display, below the advertised sales price, a rebate or incentive that is 

not available to all purchasers. Moreover, a number of industry association and dealership 

association commenters argued that the proposed paragraph was more stringent than, and 

inconsistent with, the Commission’s prior articulation of the deception standard, further 

noting the existence of Commission orders that prohibit defendants from representing 

that a price, discount, rebate, or other incentive is available, unless it is in fact available to 

all or unless a defendant provides a clear and conspicuous disclosure of any qualifications 

or restrictions. Section 463.3(d) prohibits misrepresentations; it does not prohibit a dealer 

from advertising, in a truthful manner, rebates or discounts with limitations. Thus, this 

paragraph allows for the representation of limited offers, as long as such representation is 

truthful, and any limitations are clear and conspicuous to consumers. The paragraph is 

also consistent with the Commission’s prior enforcement order practice in this area, 

which both prohibits misrepresentations regarding rebates and prohibits representations 

regarding rebates without disclosing any material qualifications or restrictions.196 The 

paragraph simply contains one of these prohibitions but not the second. 

196 See, e.g., Decision and Order, Timonium Chrysler, Inc., No. C-4429 (F.T.C. Jan. 28, 2014). 

90 
 

 

 

 

 

 

A dealership association commenter expressed concern that this proposed 

provision would penalize dealers if consumers were to confuse a rebate or discount 

offered for one vehicle with a vehicle that does not contain such an offer. As under 

current law, dealers are prohibited under § 463.3(d) from both express and implied 

misrepresentations. If, for example, a dealer states or implies that a discount is available 

on several types of vehicles when, in truth, the discount is only available on one such 

type of vehicle, such conduct would violate this paragraph. If, alternatively, the dealer 

does not state or imply that a discount is available for several types of vehicles, and offers 

a discount for one type of vehicle, this conduct would not violate this paragraph, as long 

as the dealer makes no other express or implied misrepresentations. 

After careful review of the comments, the Commission is adopting paragraph (d) 

of § 463.3 as proposed. When dealers advertise rebates or discounts in a misleading 

manner, including when such rebates or discounts are not available to the typical 

consumer, or apply only to the most expensive versions of the make and model,197 such 

conduct induces consumers to select and transact with the dealer under false pretenses.198 

197 See Complaint ¶¶ 4-5, Ganley Ford West, Inc., No. C-4428 (F.T.C. Jan. 28, 2014) (alleging false ads 

touting price discount but concealing offer was limited to certain high-end models).

198 See Complaint ¶¶ 8-9, JS Autoworld, Inc., No. C-4535 (F.T.C. Aug. 13, 2015) (alleging false ads touting 

prices but concealing discounts with material eligibility limitations); Complaint ¶¶ 7-9, TC Dealership, 

L.P., No. C-4536 (F.T.C. Aug. 13, 2015) (alleging false ads touting attractive prices but concealing 

discounts were subject to material eligibility limitations and trade-in requirement); Complaint ¶ 14, TXVT 

Ltd. P’ship, No. C-4508 (F.T.C. Feb. 12, 2015) (alleging false ads failed to disclose that it would match 

consumers’ income tax refunds only up to $1,000); Complaint ¶¶ 4-5, Timonium Chrysler, Inc., No. C-4429 

(F.T.C. Jan. 28, 2014) (alleging false ads touting pricing and discounts but concealing material 

qualifications and restrictions); Complaint ¶¶ 6, 9, TT of Longwood, Inc., No. C-4531 (F.T.C. July 2, 2015) 

(alleging promises of prices and discounts not generally available to consumers); Complaint ¶¶ 6-13, Jim 

Burke Auto., Inc., No. C-4523 (F.T.C. May 4, 2015) (alleging promises of prices and discounts not 

generally available to consumers); see also Auto Buyer Study, supra note 25, at 8 (“A number of [study] 

participants were attracted by promotional offers in ads that they did not qualify for, but did not realize that 

they did not qualify until they got to the dealer. Some did not learn that they did not qualify until they got to 

the financing stage of the transaction.”). 

91 
e) The Availability of Vehicles at an Advertised Price 

Proposed § 463.3(e) prohibited misrepresentations regarding the availability of 

vehicles at an advertised price. Upon reviewing the comments pertaining to this 

provision, the Commission is finalizing paragraph (e) of § 463.3 largely as proposed, 

with the minor modification of capitalizing the defined term “Vehicles.” 

One individual commenter recommended that proposed § 463.3(e) be expanded to 

prohibit certain specific misrepresentations about advertised vehicle availability, 

including whether any specific vehicle is already reserved for another consumer; whether 

the availability is subject to a requirement that the consumer pay a deposit; and regarding 

the amount of time until the vehicle becomes available. Another individual commenter 

recommended that the Rule require disclosure of how long each vehicle has been in the 

dealer’s inventory, to prevent dealers from misrepresenting that a vehicle recently 

became available. Here, the Commission notes that, to the extent any such 

misrepresentations regarding the availability of vehicles were made with express or 

implied reference to the price of the vehicle, each would be prohibited by § 463.3(e).199 

Furthermore, to the extent such misrepresentations included reference to the subject of 

another paragraph of § 463.3, they would be prohibited by the Final Rule. For example, if 

an advertisement were to make a claim about the monthly payment for a specific vehicle, 

but the vehicle is not actually available, it would be covered under the bar against 

misrepresentations regarding costs or terms in paragraph (a) of § 463.3. In addition, under 

199 The commenter also expressed concern about misrepresentations regarding the refundability of deposits 

and recommended that the Commission include language in § 463.3(e) addressing this issue. Because 

representations and practices regarding the refundability of deposits are related to the costs or terms of 

purchasing, financing, or leasing a vehicle, this issue is covered by § 463.3(a). Thus, the Commission 

declines to adopt the commenter’s recommendation. 

92 
the Final Rule, dealers are also subject to disclosure requirements under § 463.4, 

including the requirement at § 463.4(a) to disclose the vehicle’s offering price in any 

advertisement that references a specific vehicle, or any monetary amount or financing 

term for any vehicle. And if a dealer discloses the offering price for a vehicle, but the 

vehicle is not available to consumers, § 463.3(e) applies. Beyond this, the Commission 

will continue to monitor whether other misrepresentations regarding availability are being 

made without reference to price, or to the subject of another paragraph of § 463.3, to 

determine whether additional action is warranted. 

The Commission received comments from a number of dealership associations 

and individuals requesting that the Final Rule limit dealers’ responsibility for 

unanticipated delays, or otherwise expressing concern about how dealers would be able 

to comply with this proposed provision. One industry association commenter stated that 

unanticipated delays could result from factors beyond the reasonable control of the 

dealer, such as shipping or production issues. Other dealership association commenters 

contended that, because of supply chain disruptions, adjustments to inventory and other 

information may not always be displayed on a retailer’s website instantaneously. 

As is the case under current law, under this provision, dealers may not make 

claims about the availability of vehicles at an advertised price without a reasonable basis 

at the time the claims are made.200 Objective claims about products or services represent, 

200 FTC Policy Statement on Deception, supra note 42, at 1 n.5 (“Advertising that lacks a reasonable basis 

is also deceptive.”) (citing Firestone Tire & Rubber Co., 81 F.T.C. 398, 451-52 (1972) (additional citations 

omitted)); see Fed. Trade Comm’n v. US Sales Corp., 785 F. Supp. 737, 748 (N.D. Ill. 1992) (“Apart from 

challenging the truthfulness of an advertiser’s representations, the FTC may challenge the representation as 

unsubstantiated if the advertiser lacked a reasonable basis for its claims.”); see also Fed. Trade Comm’n v. 

Am. Screening, LLC, 4:20-CV-01021-RLW (E.D. Mo. July 14, 2022) (granting summary judgment for the 

FTC upon finding that American Screening’s claim that its COVID-19 protective equipment was available 

and would ship quickly was false and lacked a reasonable basis); Fed. Trade Comm’n v. John Beck 

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explicitly or by implication, that an advertiser has a reasonable basis to support those 

claims.201 Consumers would be less likely to be affected by claims for products and 

services if they knew the advertiser did not have a reasonable basis for believing them to 

be true.202 If a dealer has a reasonable basis to make a claim about the availability of 

vehicles at the time the claim is made, the dealer would not be in violation of the 

provision if a vehicle later becomes unavailable because of circumstances that a dealer 

could not reasonably anticipate or control. 

A few dealership association commenters claimed that promulgation of § 463.3(e) 

would cause regulatory confusion because State guidelines or rules already address issues 

about the availability of vehicles, including, for example, by requiring dealers to note the 

location of the vehicle.203 As described in SBP III.C.1, States may provide more or less 

specific requirements relating to motor vehicle dealers so long as those requirements are 

not inconsistent with part 463, and in the event of an inconsistency, the Rule only affects 

Amazing Profits, LLC, 865 F. Supp. 2d 1052 (C.D. Cal. 2012) (finding that the defendants’ representations 

were unsubstantiated in violation of Section 5, because Defendants conceded that during the time period in 

which their infomercial was aired they did not have evidence supporting their representations that 

consumers who purchased their product would be able to earn money easily and because survey results 

revealed that less than one percent of consumers actually generated any revenue or profits); Fed. Trade 

Comm’n v. Elegant Sols., Inc., 8:19-cv-01333-JVS-KES (C.D. Cal., July 6, 2020) (finding that defendants 

made false or unsubstantiated representations, including representing that consumers would be enrolled in a 

repayment plan that may be forgiven after a specific number of years even though there were no Federal 

loan forgiveness programs with those repayment terms).’ 

201 Fed. Trade Comm’n, “FTC Policy Statement Regarding Advertising Substantiation,” (appended to In re 

Thompson Med. Co., Inc., 104 F.T.C. 648, 839 (1984)); Fed. Trade Comm’n v. John Beck Amazing Profits, 

LLC, 865 F. Supp. 2d 1052, 1067 (C.D. Cal. 2012). 202 Fed. Trade Comm’n, “FTC Policy Statement Regarding Advertising Substantiation,” (appended to In re 

Thompson Med. Co., Inc., 104 F.T.C. 648, 839 (1984)); see Fed. Trade Comm’n v. Am. Screening, LLC, 

4:20-CV-01021-RLW (E.D. Mo., July 14, 2022) (granting FTC’s motion for summary judgment and 

finding that Defendants’ representations that it had protective equipment in stock and would ship it to 

consumers within seven to ten business days were material to consumers seeking such equipment during a 

global pandemic).

203 This provision would not prohibit dealers from advertising a vehicle with limitations on availability in a 

truthful manner, such that any limitations are clear and conspicuous to the consumer. For example, dealers 

should not affirmatively represent that a vehicle is available on its lot without a reasonable basis that the 

vehicle is on the lot or without clearly and conspicuously noting that the vehicle will be made available 

after transfer from an affiliate’s lot. 

94 
such State law to the extent of the inconsistency. To the extent there are actual 

inconsistencies, § 463.9 is clear that this Rule’s prohibition against misrepresentations 

controls. 

After careful consideration of the comments, the Commission is adopting 

paragraph (e) of § 463.3 largely as proposed, with the minor modification of capitalizing 

the defined term “Vehicles.” This paragraph prohibits dealers from promoting low prices 

for specific vehicles, but then later misrepresenting, among other things, that the 

advertised vehicle is no longer available or no longer available at the advertised price. 

Such misrepresentations are likely to induce consumers to waste their time traveling to a 

particular dealership to pursue a specific offer on a specific vehicle when the offer or 

vehicle itself may not actually be available. 

f) Whether Any Consumer Has Been or Will Be Preapproved or 

Guaranteed for Any Product, Service, or Term 

Proposed § 463.3(f) prohibited misrepresentations regarding whether a consumer 

has been or will be preapproved or guaranteed for any product, service, or term. Upon 

reviewing public comments, the Commission is finalizing paragraph (f) of § 463.3 

without modification from the Commission’s original proposal. 

One dealership association commenter recommended that compliance with a State 

law that prohibits certain misleading statements, such as “we finance anyone” and “no 

credit rejected” and similar statements, should function as a safe harbor against liability 

under this proposed paragraph.204 Yet, while compliance with the State law cited may 

require dealers to refrain from using certain frequently misleading statements, as 

204 Comment of Tex. Auto. Dealers Ass’n, Doc. No. FTC-2022-0046-8102 at 21; see 43 Tex. Admin. Code 

215.247(2) (2023). 

95 
described by the commenter, that law does not generally prohibit all misrepresentations 

regarding material information about consumer preapprovals or guarantees; even if it did, 

there is no evidence that duplicative laws prohibiting misrepresentations harm consumers 

or competition, and no evidence of benefits to consumers or competition in allowing one 

such law to act as a safe harbor against another such law. Further, given that current law 

already prohibits deceptive conduct generally, dealers should be able to comply with the 

Commission’s Rule, which provides further protections for consumers and law-abiding 

dealers. Thus, the Commission declines to adopt the recommended safe harbor. 

Therefore, after careful consideration, the Commission is finalizing paragraph (f) 

of § 463.3. Misrepresentations regarding preapproval or guarantees for a product, service, 

or term—as with misrepresentations about availability and price, described previously— 

are likely to impact consumers’ conduct with regard to motor vehicle sales, financing, or 

leasing transactions, including by inducing consumers to waste time pursuing illusory 

offers. 

g) Any Information on or About a Consumer’s Application for 

Financing 

Proposed § 463.3(g) prohibited dealers from misrepresenting any material 

information on or about a consumer’s application for financing. After carefully reviewing 

public comments, the Commission is adopting paragraph (g) of § 463.3 without 

substantive modification. As with § 463.3(b), the only adopted modification is the 

deletion of the term “Material,” which nonetheless applies to the operation of each of the 

96 
misrepresentation paragraphs in § 463.3, including paragraph (g), through the addition of 

the term in the introductory paragraph of § 463.3. 

The Commission received a number of comments regarding this provision, 

including comments that expressed support for prohibiting misrepresentations about a 

consumer’s application for financing. 

A credit union commenter requested that, in addition to this proposal, the 

Commission consider implementing a requirement to clearly and conspicuously disclose 

any potential financing limitations prior to vehicle purchase negotiations, contending that 

such a measure would better enable consumers to choose a motor vehicle dealer and 

financing option that best serves their needs. To the extent a dealer misrepresents a 

consumer’s financing options or limitations, including prior to or during the process of 

selling, leasing, or arranging financing for a vehicle, such conduct is prohibited by this 

provision, and depending on the circumstances, may also violate other provisions of the 

Rule. For example, as discussed in this paragraph-by-paragraph analysis, § 463.3(a) of 

the Final Rule prohibits misrepresentations regarding the cost or terms of financing a 

vehicle; this prohibition includes misrepresentations about available vehicle financing. 

Furthermore, this provision pertains to misrepresentations; comments pertaining to 

proposed disclosures regarding price, add-ons, and total of payments are examined in the 

Commission’s discussion of § 463.4, wherein the Commission explains its determination 

not to finalize any additional disclosure requirements not included in its NPRM. 

An individual commenter, while expressing support for regulation of such 

misrepresentations, also noted concern for the “grave consequences of falsifying 

information on a customer’s application for financing,” and urged the Commission to 

97 
consult with other law enforcement agencies to further address such problems.205 The 

Commission appreciates the concern and the seriousness of falsifying information on a 

consumer’s application for financing, and coordinates regularly with other law 

enforcement agencies regarding areas of shared jurisdiction and responsibility, including 

motor vehicle sales and financing. The Commission will continue to monitor financing 

application falsification issues to determine whether any additional action, beyond 

§ 463.3(g), is needed. 

A number of dealership association commenters contended that the proposed 

language was vague and did not adequately explain the type of behavior this paragraph 

would prohibit. Relatedly, some dealership association commenters contended that this 

provision lacked specific guidance about what a motor vehicle dealer must or must not 

disclose. This provision, however, utilizes terms which are commonly used and 

understood, and which may be interpreted according to their plain meaning. Read 

together with the introductory paragraph of § 463.3, § 463.3(g) prohibits 

misrepresentation . . . regarding material information about “[a]ny information on . . . a 

consumer’s application for financing.” By its terms, this prohibition includes any 

misrepresentations of material information on a financing application. For example, 

dealers would make misrepresentations in violation of this provision by including, on a 

consumer’s application that is submitted to a third-party financing institution, consumer 

income information that is different from what the consumers have stated to the dealer 

that the consumers actually earn, or by representing a different down payment amount 

than the amount the consumer has actually provided, or by misrepresenting that the 

205 Individual commenter, Doc. No. FTC-2022-0046-7445 at 12. 

98 
vehicle is being sold or leased with certain add-on products.206 Moreover, as described in 

detail with regard to other paragraphs of § 463.3, this provision does not require any 

particular affirmative disclosures, instead obligating dealers to refrain from certain 

misrepresentations. 

One dealership association commenter questioned whether a dealer would be held 

responsible for a customer’s false statement about his or her income. If a consumer 

falsely states they have a higher income, that consumer would not be misled into thinking 

he has a higher income. If, however, a consumer’s application falsely states a higher 

income because a dealer has altered the information, that consumer would be misled into 

thinking that the application they are signing accurately reflects the information the 

consumer provided, and § 463.3(g) would be violated. Additionally, if a dealer advises a 

consumer to include other sources of payment as income or advises the consumer to list a 

higher income in other ways, such conduct may mislead the consumer into thinking that 

it is proper to calculate income for auto retail installment contracts in a particular way, 

and there may be a violation of § 463.3(g). 

After careful review and consideration of the comments, the Commission adopts 

paragraph (g) of § 463.3 without substantive modification, prohibiting misrepresentations 

regarding material information about any information on or about a consumer’s 

application for financing. It is likely to affect a consumer’s choices if the consumer 

knows a dealer is misrepresenting the consumer’s income, or other aspects of financing 

206 See Complaint ¶¶ 18-36, Fed. Trade Comm’n v. Tate’s Auto Ctr. of Winslow, Inc., No. 3:18-cv-08176-

DJH (D. Ariz. July 31, 2018); Consumer Fin. Prot. Bureau, “Supervisory Highlights: Issue 30, Summer 

2023” 5 (July 2023), https://files.consumerfinance.gov/f/documents/cfpb_supervisory-highlights_issue30_2023-07.pdf (finding that dealers “fraudulently included” in financing documents add-ons, such as 

undercoating, that were not actually present on the vehicle, creating “improperly inflated loan amounts” 

that caused consumers to pay improper additional interest). 

99 
applications. If, for example, a consumer knew the truth—that the dealer is inflating the 

consumer’s income such that the consumer would not otherwise obtain financing for a 

particular vehicle—the consumer might opt to finance a less expensive car, rather than 

risking repossession. Material misrepresentations on consumers’ financing paperwork are 

also likely to cause consumers substantial injury, including by causing them to take on 

debt beyond that which the financing company would have approved, and increasing the 

risk of repossession and harmful consequences to consumers’ credit. Consumers cannot 

avoid the injury from dealers misrepresenting the information consumers provide them, 

and this practice provides no countervailing benefits to consumers or competition. 

h) When the Transaction Is Final or Binding on All Parties, & 

i) Keeping Cash Down Payments or Trade-in Vehicles, Charging 

Fees, or Initiating Legal Process or Any Action If a 

Transaction Is Not Finalized or If the Consumer Does Not 

Wish To Engage in a Transaction 

Proposed § 463.3(h) prohibited dealers from misrepresenting when the transaction 

is final or binding on all parties. Proposed § 463.3(i) prohibited dealers from making 

misrepresentations about keeping cash down payments or trade-in vehicles, charging 

fees, or initiating legal process or any action if a transaction is not finalized or if the 

consumer does not wish to engage in a transaction. After careful review and 

consideration of the comments, the Commission is finalizing paragraphs (h) and (i) of 

§ 463.3 with the minor modification of capitalizing the defined term “Vehicles” in 

§ 463.3(i) to conform with the revised definition at § 463.2(e). 

Some commenters, including a group of State attorneys general and consumer 

advocacy organizations, generally supported prohibiting misrepresentations about when 

the transaction is final or binding on all parties but urged the Commission to include 

100 
additional requirements or prohibitions. For instance, several commenters, including 

consumer advocacy organizations and individual commenters, requested that the 

Commission add to its Final Rule a provision requiring dealers to include, in every 

consumer credit contract, a finality clause stating that the transaction is final as soon as 

the consumer credit contract is signed, or alternatively, a provision requiring dealers to 

include in retail installment contracts a clause prohibiting financing-contingent sales. 

Commenters including a group of State attorneys general recommended that the 

Commission require any dealer that does not ultimately secure financing under 

previously presented terms to unwind the transaction, return any down payment in full, 

and return any traded-in vehicle. Such commenters also recommended that the 

Commission implement restrictions, such as requiring dealers to be reasonably certain 

that a consumer will qualify for quoted financing terms; requiring a written disclosure 

that the consumer must sign advising the consumer that financing is not final; or setting a 

short deadline by which the dealer must either arrange financing or cancel the transaction. 

Other commenters, including a State consumer protection agency, also supported 

requiring the contractual contingency to be disclosed conspicuously and limiting the 

contingency to a short period of time. A number of these commenters, including 

consumer advocacy organizations, provided examples of how spot delivery transactions 

can harm consumers. 

The provision’s prohibitions and requirements address many of these 

commenters’ concerns regarding spot delivery and yo-yo financing. Spot delivery and yoyo financing refer to situations where a dealer delivers a vehicle to a consumer on the 

spot before the financing or leasing has been finalized, leads a consumer to believe that 

101 
 

 

 

 

 

 

the transaction is final, and then later directs the consumer to return the vehicle and 

engages in certain tactics, such as failing to return the consumer’s trade-in vehicle while 

refusing to honor the finance or lease transaction, or pressuring the consumer to enter into 

a new transaction.207 Paragraphs (h) and (i) of § 463.3 prohibit misrepresentations 

regarding the finality of the transaction and return of down payments and trade-in 

vehicles. Under these provisions, if a consumer is under the impression that the 

transaction is final, and the dealer subsequently causes the consumer to return the vehicle 

to the lot because the transaction was not final, or the dealer takes or threatens to take 

possession of the vehicle but refuses to return the down payment or trade-in vehicle, the 

dealer has violated either § 463.3(h), by misrepresenting the finality of the transaction, or 

§ 463.3(i), by falsely representing, expressly or by implication, that the dealer has a legal 

207 Complaint ¶¶ 67-72, Fed. Trade Comm’n v. Universal City Nissan, Inc., No. 2:16-cv-07329 (C.D. Cal. 

Sept. 29, 2016); State ex rel. Dewine v. Dads Car Lot Inc., No. 13-cv-4036, 2014 BL 468717, at *1 (Ohio 

Com. Pl. June 6, 2014) (finding defendant violated State consumer sales practices act by including “spot 

delivery” document that allowed defendant to keep “all funds on deposit”); Att’ys Gen. of 31 States & 

D.C., Comment Letter on Public Roundtables: Protecting Consumers in the Sale and Leasing of Motor 

Vehicles, Project No. P104811, Submission No. 558507-00112 at 4 (Apr. 13, 2012), 

https://www.ftc.gov/sites/default/files/documents/public_comments/public-roundtables-protectingconsumers-sale-and-leasing-motor-vehicles-project-no.p104811-00112/00112-82927.pdf (recommending, 

among other rules aimed at deterring yo-yo sales, FTC adopt rules that would require dealers to disclose the 

consumer’s “right to walk away” if financing is rejected and, in the context of spot delivery, to disclose 

financing has not been finalized as well as the responsibilities and potential consequences for consumers); 

Legal Aid Just. Ctr., Comment Letter on Public Roundtables: Protecting Consumers in the Sale and 

Leasing of Motor Vehicles, Project No. P104811, Submission No. 558507-00066 at 26, 29 (Jan. 30, 2012), 

https://downloads.regulations.gov/FTC-2022-0036-0062/attachment_2.pdf (explaining that in a yo-yo sale 

the dealer misrepresents to the consumer that credit has been finalized, when in fact the dealer treats the 

sale as contingent, retaining the ability to call off or seize the vehicle later; a “yo‐yo case can result in 

substantial distress to the person who has been tricked”; and “[t]he harm to the marketplace occurs when 

the consumer believes a credit sale has been completed and stops shopping for a car on credit”); Nat’l 

Consumer L. Ctr., “In Harm’s Way—At Home: Consumer Scams and the Direct Targeting of America’s 

Military and Veterans” 41 (May 2003), https://filearchive.nclc.org/special_projects/military/report-scamsfacing-military.pdf (listing “Spot Delivery” or “yo-yo sales” among scams commonly aimed at military 

members). 

102 
 

 

basis to keep the down payment or trade-in vehicle in the event the transaction is not 

finalized, or both.208 

Regarding the recommendation to include a requirement that dealers be 

reasonably certain that consumers will qualify for quoted financing terms, the Rule the 

Commission is finalizing already contains several provisions in addition to § 463.3(h) 

and (i) that address this conduct. For example, the Rule prohibits misrepresentations 

regarding material information about the costs or terms of financing (§ 463.3(a)), or 

about whether any consumer has been or will be preapproved or guaranteed for any 

product, service, or term (§ 463.3(f)). As explained in the paragraph-by-paragraph 

analysis of § 463.3(e) in SBP III.C.2(e), existing law requires dealers to have a 

reasonable basis for their claims. Objective claims about products or services represent, 

explicitly or by implication, that an advertiser has a reasonable basis to support those 

claims.209 Thus, to avoid misrepresentation, dealers must reasonably believe that 

consumers will qualify for quoted financing terms, or that the transaction will be finalized 

on the terms presented, in order to represent such terms to consumers. 

Regarding additional provisions that would require certain contractual measures, 

such as finality clauses or prohibitions against financing-contingent sales, the 

Commission is concerned that requiring specific contract provisions would obligate 

208 See Orkin Exterminating Co., Inc., 108 F.T.C. 263 (1986), aff’d sub nom. Orkin Exterminating Co. v. 

F.T.C., 849 F.2d 1354 (11th Cir. 1988) (finding that defendant’s practice of unilaterally raising consumers’ 

annual renewal fees where the consumers’ contracts contained a “lifetime guarantee” as to the amount of 

the fee was unfair under Section 5 of the FTC Act); see also First Amended Complaint ¶¶ 59-61, Fed. 

Trade Comm’n v. BF Labs, Inc., No. 4:14-cv-00815 (W.D. Mo. May 14, 2015) (alleging as unfair 

defendants’ practice of unilaterally failing to provide paid-for services while refusing to refund consumers’ 

upfront payments).

209 Fed. Trade Comm’n, “FTC Policy Statement Regarding Advertising Substantiation,” (appended to In re 

Thompson Med. Co., Inc., 104 F.T.C. 648, 839 (1984)); Fed. Trade Comm’n v. John Beck Amazing Profits, 

LLC, 865 F. Supp. 2d 1052, 1067 (C.D. Cal. 2012). 

103 
 

dealers that are not engaged in spot delivery to change their contracts even though their 

customers do not experience harm stemming from spot delivery practices. Before 

requiring any such changes, the Commission has determined to continue to monitor the 

market to evaluate whether additional steps are warranted.210 

Some commenters, including dealership associations, requested that the 

Commission clarify how dealers could document compliance with these proposed 

provisions, such as how dealers could establish that appropriate disclosures had been 

made. One such commenter, for instance, asked whether written agreements required by 

State law were sufficient to satisfy the requirements of these provisions. As noted 

elsewhere in this paragraph-by-paragraph analysis of § 463.3 in SBP III.C.2, these 

provisions do not require any particular affirmative disclosures, instead obligating dealers 

to refrain from certain misrepresentations. Section 463.6 discusses records dealers need 

to keep to demonstrate compliance with the requirements of the Final Rule, and 

enumerates five such categories of records, including copies of finance and lease 

documents signed by the consumer, whether or not final approval is received for a 

financing or lease transaction. The Commission declines to include in this Final Rule 

additional requirements regarding any specific documents dealers must keep in order to 

demonstrate compliance with § 463.3(h) or (i). 

One individual commenter requested that the Commission include in the CFR the 

examples of harmful conduct related to yo-yo financing that it published in the NPRM.211 

The Commission has determined that each such example describes conduct that violates 

210 On May 31, 2023, the Commission received a petition for rulemaking under 16 CFR 1.31 regarding yoyo financing. Petition for Rulemaking Concerning the Finality of a Car Purchase (Yo-Yo Financing), Doc. 

No. FTC-2023-0035-0002. The Commission will address this petition separately. 211 See NPRM at 42020-21. Individual commenter, Doc. No. FTC-2022-0046-9469 at 5-6. 

104 
 

 

 

 

this rulemaking. Rather than adding them to the text of the Final Rule, the Commission 

repeats those examples in this paragraph-by-paragraph analysis of § 463.3(h) and (i), in 

order to avoid voluminous modifications to the Rule text itself. 

Commenters including a dealership association asserted that the issue of when a 

contract is final or binding is one of State law, and thus it is within the purview of each 

State to determine when a contract is final or binding, arguing that § 463.3(h) therefore 

should be removed from the Final Rule. Another such commenter contended that even 

courts experienced in contract interpretation have difficulty determining when an 

agreement is final, and that dealers therefore are likely to transgress this prohibition in 

proposed § 463.5(h) accidentally. This provision, however, requires that a dealer’s 

express or implied representations regarding material information be truthful, which is 

consistent with current law and with the Commission’s authority to prohibit unfair or 

deceptive acts or practices. Moreover, under § 463.9, this Rule does not affect State law 

pertaining to contracts so long as State law is not inconsistent with part 463, and in the 

event of an inconsistency, the Rule only affects such State law to the extent of the 

inconsistency.212 In the case of § 463.3(h), for example, an inconsistency would include 

State law allowing material misrepresentations regarding whether transactions are final; 

the Commission is unaware of any such law. Further, to the extent dealers are concerned 

they may transgress this prohibition because courts have had difficulty interpreting their 

contracts, then, as they should be doing under current law prohibiting misrepresentations, 

212 One commenter questioned whether this section would prohibit a dealer from retaining a down payment 

on a special order vehicle where the customer refuses to take delivery of the vehicle. Comment of Minn. 

Auto. Dealers Ass’n, Doc. No. FTC-2022-0046-8670 at 10. Sections 463.3(h) and (i) prevent 

misrepresentations, including misrepresenting that a dealer can keep a down payment when a dealer does 

not have a legal basis to do so. If the dealer does not make a misrepresentation, this provision would not be 

violated. 

105 
dealers should carefully consider the net impression they are conveying with the language 

they use, both in their contracts and in the context in which these contracts are presented, 

as such language may confuse consumers as well. 

Several dealership association commenters claimed that State law already 

prohibits misrepresentations about spot delivery transactions or otherwise protects 

consumers in such transactions. One such commenter asserted that Massachusetts law 

prohibits spot deliveries, and cautioned the FTC not to create uncertainty with its Rule 

such that one might think spot deliveries are allowed in Massachusetts. Another such 

commenter asked whether this provision applies in addition to State law or instead of it. 

Other commenters, including consumer advocacy organizations, asserted that less than 

half of the States have statutes, regulations, or administrative pronouncements about yoyo transactions; that there are significant variations in such law from State to State; and 

that State regulation often does not provide sufficient protections for consumers. As 

described throughout the paragraph-by-paragraph analysis of § 463.3 in SBP III.C.2, 

State law may provide more or less specific requirements than those under the Final Rule 

as long as those requirements are not inconsistent with part 463, and in the event of an 

inconsistency, the Rule only affects such State law to the extent of the inconsistency. As 

for any States that prohibit spot delivery, such prohibitions are consistent with the 

provisions of this Rule. Finally, as to whether additional provisions are warranted to 

protect consumers, the Commission will continue to monitor the market to make this 

determination. 

Commenters including an industry association contended that the Commission 

should not take action to disrupt spot delivery transactions to consumers, stating that 

106 
there may be reasons to keep down payments even when consumers are not permitted to 

keep the vehicle, or claiming that although abusive spot deliveries have occurred, they 

are not a systemic problem in the marketplace. The Commission, however, need not show 

that abusive spot deliveries are systemic in order to finalize these provisions barring 

misrepresentations.213 Further, these misrepresentation prohibitions do not alter 

requirements under current law prohibiting dealers from making express or implied 

misrepresentations. 

After careful consideration of the recommendations and record, the Commission 

has determined to finalize paragraphs (h) and (i) of § 463.3 largely as proposed, with the 

minor modification of capitalizing the defined term “Vehicles” in § 463.3(i). The 

Commission notes, however, that it has significant concerns about consumer harm due to 

yo-yo financing and will continue to examine these issues even as it finalizes these 

prohibitions against certain misrepresentations. Misrepresentations about when the 

transaction is final or binding on all parties, as well as about keeping down payments or 

trade-in vehicles, charging fees, or initiating legal process or any action, are likely to 

affect consumer conduct, including regarding whether to enter into a new transaction 

with less beneficial terms for the consumer, and are likely to mislead consumers. 

i) Keeping Cash Down Payments or Trade-in Vehicles, Charging 

Fees, or Initiating Legal Process or Any Action If a 

Transaction Is Not Finalized or If the Consumer Does Not 

Wish To Engage in a Transaction 

Proposed § 463.3(i) is discussed with § 463.3(h). 

213 See SBP I.A, n.3. 

107 
 

 

j) Whether or When a Dealer Will Pay Off Some or All of the 

Financing or Lease on a Consumer’s Trade-in Vehicle 

Proposed § 463.3(j) prohibited misrepresentations regarding whether or when a 

motor vehicle dealer will pay off some or all of the financing or lease on a consumer’s 

trade-in vehicle. The Commission is finalizing paragraph (j) of § 463.3 largely as 

proposed, with minor modifications—substituting “Dealer” for “Motor Vehicle Dealer” 

and capitalizing “Vehicle”—to conform with the revised definitions of “‘Covered Motor 

Vehicle’ or ‘Vehicle’” and “‘Covered Motor Vehicle Dealer’ or ‘Dealer’” at § 463.2(e) 

and (f). 

The Commission received several comments in response to this paragraph, 

including from individual commenters who expressed support for prohibiting dealers 

from misrepresenting whether they would pay off outstanding balances remaining on a 

trade-in vehicle.214 Other commenters, including an industry association and dealership 

associations, requested that the Commission limit dealer responsibility under this 

provision for unanticipated delays stemming from circumstances beyond a dealer’s 

reasonable control, arguing that proposed § 463.3(j) made no exception for unanticipated 

delays such as a previous financing source declining to accept a payoff or refusing to 

release the vehicle title after receiving a payoff.215 The Commission notes that, as is the 

case under current law, under this provision, dealers are not permitted to make claims 

214 See, e.g., Individual commenter, Doc. No. FTC-2022-0046-3770 (“I agree that these changes need to 

take place. No one should have to pay what was owed on a trade in after the dealership said they would pay 

off the trade in . . . .”). 

215 For example, commenters stated that occasionally the previous finance or lease source will not provide a 

timely payoff for a traded vehicle or will refuse to accept a payoff claiming more money is due; or a 

previous finance or lease source may accept a payoff, but will refuse to credit its former customer’s account 

and release the title promptly. In addition, an industry association commenter requested that the 

Commission narrow this prohibition to specifically address the fact patterns giving rise to it that the 

Commission sets forth in the NPRM, and, in so doing recognize that it is in a dealer’s business interest to 

pay off the existing loan quickly so that the vehicle can be more easily and quickly retailed. 

108 
 

 

about whether or when they will pay off some or all of the financing or lease on a 

consumer’s trade-in vehicle if the truth of those claims depends on circumstances outside 

their control and the dealer does not possess a reasonable basis for such claims.216 

An individual commenter contended that requiring additional disclosures about 

this provision would confuse the consumer.217 This provision, however, does not 

necessitate any affirmative disclosures from dealers. Instead, it prohibits dealers from 

misleading consumers about whether or when they will pay off some or all of the 

financing or lease on a consumer’s trade-in vehicle. 

One State consumer protection agency commenter requested that the Commission 

require, in situations where a buyer’s credit information or trade-in vehicle are evidently 

insufficient to support a deal, that the dealer require additional down payment or other 

security, or affirmatively disclose that the dealer is not responsible for paying off liens.218 

Without further information on the costs and benefits of such a proposal, the Commission 

declines to add such requirements to this Final Rule. The Commission notes, however, 

that the Rule prohibits dealers from misleading consumers regarding when trade-in 

vehicles have negative equity and from otherwise failing to obtain the consumer’s 

express, informed consent prior to charging the consumer for any item, including any 

amounts associated with trading in a vehicle. The Commission will continue to monitor 

this area to determine whether any such additional measures are warranted to protect 

consumers or competition. 

216 See paragraph-by-paragraph analysis of § 463.3(e) in SBP III.C.2(e) (discussing deception and 

reasonable basis). 

217 See Individual commenter, Doc. No. FTC-2022-0046-7905 at 1. 218 See Comment of State of S.C. Dep’t of Consumer Affs., Doc. No. FTC-2022-0046-7891 at 6. 

109 
The Commission also received a number of comments from dealership 

associations arguing that existing State and Federal laws address dealers’ obligations in 

connection with informing consumers how much each consumer is responsible for 

financing. The Commission notes that commenters presented no actual conflicts between 

this provision and other laws, and to the extent duplicative laws prohibit 

misrepresentations in this area, the Commission has not observed harmful consequences 

to consumers or competition. Further, as noted elsewhere in the section-by-section 

analysis, State laws may provide more or less specific requirements as long as those 

requirements are not inconsistent with part 463, under § 463.9, and in the event of an 

inconsistency, the Rule only affects such State law to the extent of the inconsistency. 

After carefully considering the comments, the Commission is finalizing this 

provision with the two minor modifications to conform with the defined terms “‘Covered 

Motor Vehicle’ or ‘Vehicle’” and “‘Covered Motor Vehicle Dealer’ or ‘Dealer.’” This 

provision prohibits dealers from making misrepresentations about paying off the 

financing or lease on a trade-in vehicle. Such conduct includes misrepresenting to 

consumers who trade in a vehicle that the dealer will pay off any outstanding balance 

owed on the trade-in vehicle when the consumer purchases a vehicle from the dealer. For 

example, when such a dealer takes a trade-in, if the dealer remits payment to the entity to 

whom the trade-in payment is owed, as consumers would expect, but also adds this 

payment to the amount the consumer owes on the vehicle the consumer is purchasing 

from the dealer, the consumer is the party that has ultimately paid off the trade-in 

amount, contrary to the impression made by the dealer. This provision also prohibits 

dealers that are going out of business from representing expressly or by implication that 

110 
 

 

 

 

 

they will pay off liens if they do not, in fact, pay off the liens, or do not pay them off in a 

timely manner. Such misrepresentations are likely to affect a consumer’s choice to visit a 

particular dealership or select a particular vehicle. 

k) Whether Consumer Reviews or Ratings Are Unbiased, 

Independent, or Ordinary Consumer Reviews or Ratings of the 

Dealer or the Dealer’s Products or Services 

Proposed § 463.3(k) prohibited misrepresentations about whether “consumer 

reviews or ratings are unbiased, independent, or ordinary consumer reviews or ratings of 

the Dealer or its products or services.” Upon careful review and consideration of the 

comments, the Commission is finalizing paragraph (k) of § 463.3 with one technical 

clarification to replace “its” with “the Dealer’s.” The Rule’s requirements apply to all 

individuals and entities that meet the definition of “Dealer.” 

An individual commenter recommended that the Commission modify this 

provision to include language explicitly prohibiting dealers from creating, editorializing, 

modifying, or removing consumer reviews.219 Here, the Commission notes that if such 

acts or practices would result in reviews that are not independent or do not otherwise 

reflect ordinary consumer experience, they already would violate this provision. For 

example, if a dealer created a positive review, edited or modified negative reviews to 

make them sound positive, or removed negative reviews while keeping positive reviews, 

such practices would violate this provision. 

219 Individual commenter, Doc. No. FTC-2022-0046-2364 (“Many favorable ([i.e.] 5 star) Dealer reviews I 

have read appear suspect with generic, similar wording (or no wording at all) seemingly provided to offset 

lower Dealer ([i.e.] 1 star) ratings. I recommend that for [§ 463.3(k)] the following (or similar) be 

appended: Additionally, consumer reviews may not be created, editorialized, modified or removed by any 

Dealer or third party acting at the direction of any Dealer. Consumer reviews should be modifiable or 

removable by the originating author.”). 

111 
 

A few individual commenters recommended that the Rule include additional 

provisions related to consumer reviews, including a requirement for the creation of an 

online database for consumer reviews and complaints about dealerships, and a 

requirement for dealers to post consumer reviews online and in the dealership location. 

The Commission notes that while some reviews are available online, additional 

information could assist consumers, and the Commission will consider whether such 

measures are needed as it continues to monitor the marketplace, including after the Rule 

goes into effect. 

Several dealership associations asked what type or format of reviews or ratings 

would be covered by this proposed provision. As proposed, § 463.3(k) applied to all 

reviews or ratings, in any format or wherever displayed, that are likely to mislead 

consumers as to whether such reviews or ratings are unbiased, independent, or ordinary 

consumer reviews or ratings. Relatedly, industry and dealership associations contended 

that the language used in the proposed provision was vague and confusing, and requested 

that the Commission further define the phrase, “unbiased, independent, or ordinary 

consumer reviews or ratings.” To begin, the operative terms in this phrase are commonly 

used and understood and may be interpreted according to their plain meaning without 

further definition. Moreover, the Commission has, for decades, provided information and 

guidance on avoiding deception through the use of endorsements, testimonials, and 

online reviews.220 Enforcement actions by the Commission have documented examples 

220 See, e.g., Fed. Trade Comm’n, Notice of Proposed Rulemaking, Trade Regulation Rule on the Use of 

Consumer Reviews and Testimonials, 88 FR 49364 (July 31, 2023) (to be codified at 16 CFR 465), 

https://www.govinfo.gov/content/pkg/FR-2023-07-31/pdf/2023-15581.pdf; Fed. Trade Comm’n, Guides 

Concerning Use of Endorsements and Testimonials in Advertising, 16 CFR 255; Fed. Trade Comm’n, 

“FTC’s Endorsement Guides: What People are Asking,” https://www.ftc.gov/business112 
 

 

 

 

 

of the types of misrepresentations that would be covered by this provision.221 For 

example, dealerships and their employees have posted positive, five-star online reviews 

that falsely purport to be objective or independent.222 As these sources make clear, a 

person who is unbiased, independent, and an ordinary consumer would be someone who 

was not paid or given something of value to write a review and who has no employment 

or familial relationship or other unexpected material connection to the dealership.223 

An industry association commenter expressed concern that this proposed 

provision did not appear to be limited to misrepresentations that may occur when a 

dealership, and not an unrelated third party, affirmatively publishes consumer reviews. 

To the extent an independent third party that does not have a material connection with the 

dealership makes any such claims, those claims would not be covered by this provision. 

This provision concerns situations where there is such a relationship between the third 

party and the dealer. For example, if a dealer were to pay a third party or consumer to 

guidance/resources/ftcs-endorsement-guides-what-people-are-asking; Fed. Trade Comm’n, “Soliciting and 

Paying for Online Reviews: A Guide for Marketers,” https://www.ftc.gov/businessguidance/resources/soliciting-paying-online-reviews-guide-marketers; Fed. Trade Comm’n, “Disclosures 

101 for Social Media Influencers,” https://www.ftc.gov/business-guidance/resources/disclosures-101-

social-media-influencers. 

221 See Complaint ¶¶ 73-78, Fed. Trade Comm’n v. Universal City Nissan, Inc., No. 2:16-cv-07329 (C.D. 

Cal. Sept. 29, 2016); see also Fed. Trade Comm’n, Notice of Proposed Rulemaking, Trade Regulation Rule 

on the Use of Consumer Reviews and Testimonials, 88 FR 49364, 49371-75 (July 31, 2023) (to be codified 

at 16 CFR 465), https://www.govinfo.gov/content/pkg/FR-2023-07-31/pdf/2023-15581.pdf (discussing 

such enforcement actions).

222 See Complaint ¶¶ 73-78, Fed. Trade Comm’n v. Universal City Nissan, Inc., No. 2:16-cv-07329 (C.D. 

Cal. Sept. 29, 2016). 

223 One commenter conducted a study of Google reviews of U.S. car dealerships from April 2008 to 

September 2022. The commenter found by examining a 2% sample of these reviews that consumers gave 

on average 4.47 stars out of 5 stars and made several other conclusions about consumer satisfaction with 

the auto transaction experience based on that methodology. Comment of Inst. for Regul. Analysis & 

Engagement, Doc. No. FTC-2022-0046-10164 at 2-5. The Commission notes that, consistent with its 

enforcement experience, there is no guarantee that those reviews are a genuine reflection of consumer 

experience. Moreover, the Commission notes that oftentimes consumers do not realize that they have been 

charged without their authorization. See SBP II.B. Thus, such a study that relies on Google star ratings is 

not conclusive of consumer experience. 

113 
 

post positive reviews that misrepresent their status as unbiased, independent, or ordinary 

consumer reviews, the dealer would be violating this provision.224 

One industry association commenter contended that the Consumer Review 

Fairness Act225 already prohibits the conduct covered by this provision. The Consumer 

Review Fairness Act makes it illegal for businesses to have form contracts that disallow 

or restrict consumers from posting negative reviews. Section 463.3(k) prohibits 

misrepresentations regarding the authenticity of consumer reviews generally. These 

provisions are not in conflict, and as discussed in SBP III.C.1, to the extent the provision 

creates any duplication, the Commission has seen no harm to consumers or competition 

from duplicative prohibitions of deceptive conduct. 

Whether reviews or ratings about a seller or the seller’s products or services are 

from unbiased, independent, or ordinary consumers is material to consumers’ decisionmaking because a consumer is more likely to interact with a particular dealership if the 

dealership has positive reviews or ratings from unbiased, independent, or ordinary 

consumers. Thus, after careful review of all the comments, the Commission is finalizing 

paragraph (k) of § 463.3 without substantive modification from the Commission’s 

original proposal. 

224 See § 463.1 (“It is an unfair or deceptive act or practice within the meaning of Section 5(a)(1) of the 

Federal Trade Commission Act (15 U.S.C. 45(a)(1)) to violate any applicable provision of this part, directly 

or indirectly . . . .”).

225 See 15 U.S.C. 45b. 

114 
l) Whether the Dealer or Any of the Dealer’s Personnel or 

Products or Services Is or Was Affiliated with, Endorsed or 

Approved by, or Otherwise Associated with the United States 

Government or Any Federal, State, or Local Government 

Agency, Unit, or Department, Including the United States 

Department of Defense or its Military Departments 

Proposed § 463.3(l) prohibited misrepresentations that “the Dealer or any of its 

personnel or products or services is or was affiliated with, endorsed or approved by, or 

otherwise associated with the United States government or any Federal, State, or local 

government agency, unit, or department, including the United States Department of 

Defense or its Military Departments.” Upon careful review and consideration of the 

comments, the Commission is finalizing paragraph (l) of § 463.3 with one technical 

clarification to replace “its” with “the Dealer’s.” The Rule’s requirements apply to all 

individuals and entities that meet the definition of “Dealer.” 

One individual commenter recommended that the Commission additionally 

prohibit dealers from “causing any person to impersonate a police officer for any 

purpose.”226 The commenter contended that such a prohibition would address a common 

yo-yo financing tactic, wherein dealers exert pressure on consumers to return vehicles by 

calling the consumers on the phone, falsely claiming to be police officers, and falsely 

representing that there is a warrant for the consumers’ arrest or that the dealer has 

reported the consumers’ vehicles as stolen. The Commission is likewise concerned about 

such conduct, and notes that it would be covered by the language in this paragraph, which 

applies broadly to misrepresentations of affiliation with, endorsement or approval by, or 

association with “any Federal, State, or local government agency, unit, or department,” 

226 Individual commenter, Doc. No. FTC-2022-0046-7445 at 17. 

115 
 

including State or local police officials.227 By misrepresenting police involvement in 

potential vehicle repossession, such conduct would also violate paragraph (o) of § 463.3 

of the Final Rule. 

A number of dealership association commenters contended that some States 

address this type of deception.228 As noted in response to similar commenter contentions 

regarding other proposed provisions, the Commission has seen no harm to consumers or 

competition from duplicative misrepresentation prohibitions, and overlap between the 

Commission’s Rule provisions and existing law is indicative of dealers’ ability to comply 

with these provisions. Moreover, including such a provision in the Final Rule additionally 

benefits consumers who encounter such conduct, and aids law-abiding dealers that 

otherwise lose business to competitors that act unlawfully. Further, § 463.9 discusses part 

463’s relation to State laws. 

A dealership association commenter claimed that many dealerships in the 

commenter’s State work with military personnel to promote charitable causes, and 

questioned whether a banner listing a dealership at a charitable military event would be 

considered a misrepresentation that the dealership is “associated” with the military.229 

Here, the Commission notes that a banner that conveys true participation in a charitable 

military event, and does not deceptively represent an affiliation with, endorsement or 

227 The Commission discussed government impersonation scams in its Notice of Proposed Rulemaking for 

a Trade Regulation Rule on Impersonation of Government and Business. See 87 FR 62741 (Oct. 17, 2022). 

The Commission observed, inter alia, “ongoing widespread fraud schemes in which scammers impersonate 

law enforcement or government officials in attempts to extort money or steal personally identifiable 

information.” See id. at 62742 (citing announcements on March 7, 2022, and May 20, 2022, by the Federal 

Bureau of Investigation and the Social Security Administration’s Office of the Inspector General, in 

coordination with other Federal law enforcement agencies, respectively). 228 One commenter further opined that “the Department of Defense has itself dealt with this situation in the 

case of military lending and sales.” Comment of Kan. Auto. Dealers Ass’n, Doc. No. FTC-2022-0046-4510 

at 7. 

229 Comment of N.C. Auto. Dealers Ass’n, Doc. No. FTC-2022-0046-11223 at 9. 

116 
 

 

 

 

 

approval by, or association with the military, would not violate this provision. The 

Commission’s law enforcement practice provides further guidance on this point: the 

Commission’s many enforcement actions alleging misrepresentation of government 

affiliation provide examples of the types of conduct that would violate this provision.230 

Representations about whether a seller or any of its personnel, products, or 

services is or was affiliated with, endorsed or approved by, or otherwise associated with 

the government are likely to affect consumers’ conduct. Consumers are more likely to 

visit a dealership and select a vehicle or product if they believe that a specific dealer or a 

dealer’s personnel, products, or services have been approved by a government entity. The 

Commission thus adopts paragraph (l) of § 463.3 without substantive modification from 

the Commission’s original proposal. 

m) Whether Consumers Have Won a Prize or Sweepstakes 

Proposed § 463.3(m) prohibited misrepresentations about whether consumers 

have won a prize or sweepstakes. Upon careful review and consideration of the 

comments, the Commission is finalizing paragraph (m) of § 463.3 without modification 

from its original proposal. 

Comments from dealership associations contended that some States or 

municipalities address this type of deception. As discussed in SBP III.C.1, the 

230 See, e.g., Complaint ¶¶ 5-6, 9-11, 14, Traffic Jam Events, LLC, No. 9395 (F.T.C. Aug. 7, 2020) (alleging 

auto marketer misrepresented that it provided COVID-19 stimulus relief to consumers); Complaint ¶¶ 14-

26, Fed. Trade Comm’n v. Ponte Invs., LLC, No. 1:20-cv-00177 (D.R.I. Apr. 17, 2020) (alleging 

misrepresentation of government affiliation by company that impersonated the U.S. Small Business 

Administration with business names “SBA Loan Program” and “SBA Loan Program.com” and claimed to 

help businesses obtain access to coronavirus relief programs administered by the agency); Complaint ¶¶ 24-

36, Fed. Trade Comm’n v. DOTAuthority.com, Inc., No. 0:16-cv-62186 (S.D. Fla. Sept. 13, 2016) (alleging 

defendants misrepresented affiliation with U.S. Department of Transportation by claiming to be the 

“Compliance Unit” of “DOTAuthority” and providing a telephone number with a Washington, D.C. area 

code). 

117 
Commission has not seen harm to consumers or competition from multiple prohibitions 

against misrepresentations. Furthermore, any significant overlap between the 

Commission’s Rule provisions and existing law is indicative of dealers’ ability to comply 

with these provisions. Finally, § 463.9 discusses part 463’s relation to State laws. 

Misrepresentations about whether consumers have won a prize or sweepstakes 

harm consumers by inducing consumers to choose and transact with a particular 

dealership under false pretenses. Thus, the Commission adopts paragraph (m) of § 463.3 

without modification from the Commission’s original proposal. 

n) Whether, or Under What Circumstances, a Vehicle May Be 

Moved, Including Across State Lines or Out of the Country 

Proposed § 463.3(n) prohibited misrepresentations regarding whether, or under 

what circumstances, a vehicle may be moved, including across State lines or out of the 

country. Upon careful review and consideration of the comments, the Commission is 

finalizing paragraph (n) of § 463.3 largely as proposed, with the minor modification of 

capitalizing the word “State,” as well as the defined term “Vehicle” to conform with the 

revised definition at § 463.2(e). 

The Commission received comments including from dealership associations 

arguing that proposed § 463.3(n) would pose issues for dealers who must comply with 

limitations imposed by manufacturers or distributors on the export of new motor vehicles. 

These commenters requested clarification about liability under this provision in the event 

dealers communicate any such export limitations to consumers or take other steps to 

prevent the export of new vehicles. Section 463.3(n), however, does not prohibit dealers 

from accurately and non-deceptively communicating whether, or under what 

118 
 

 

 

circumstances, a vehicle may be moved—it instead prohibits representations that mislead 

consumers about this information. 

Commenters including a dealership association objected to this proposed 

provision by asserting that a State or insurance company may prescribe, and the parties to 

a contract may agree upon, whether a leased or purchased vehicle may be driven to a 

particular area. This provision, however, does not prevent parties from discussing and 

agreeing to whether a vehicle may be moved. Instead, § 463.3(n) prohibits 

misrepresentations about whether, or under what circumstances, a vehicle may be moved, 

including regarding any liens or other restrictions that would prevent or hinder 

consumers’ ability to move the vehicle beyond certain boundaries. Furthermore, 

interaction with State laws is explained in the section-by-section analysis of § 463.9. 

Representations about whether, and under what circumstances, a consumer may 

move a vehicle are material as they are likely to affect a reasonable consumer’s decision 

to purchase a vehicle, including decisions of military consumers who may frequently 

need to move.231 

Based on a review of the comments and for the reasons previously discussed, the 

Commission is finalizing paragraph (n) of § 463.3 largely as proposed, with the minor 

modification of capitalizing “State” and the defined term “Vehicle.” 

231 See, e.g., Fed. Trade Comm’n, “The Road Ahead: Selling, Financing, & Leasing Motor Vehicles,” 

Public Roundtable, Panel 1: Military Consumers and the Auto Sales and Financing Process, Remarks by 

Hollister K. “Holly” Petraeus, Dir., Off. of Servicemember Affs., CFPB, Tr. at 11 (Aug. 2, 2011), 

https://www.ftc.gov/system/files/documents/public_events/52654/080211_ftc_sess1.pdf 

(“[S]ervicemembers don’t always realize if they buy and finance a car here in the U.S., they can’t take it 

out of the country unless they have a letter of permission from the lienholder to do so. And some of the 

lienholders won’t give that permission. . . . [W]e [heard from] a JAG in Germany saying, ‘I see a number of 

people who end up having to do what you would call “voluntary repossession” on their car because they 

bought this car, they’re excited about it, and . . . the person who made them the loan didn’t say “Oh, by the 

way, if you go overseas, we’re not gonna let you take it with you.”’ And . . . sometimes, they’ll find that 

their warranty is no good overseas, either.”). 

119 
 

o) Whether, or Under What Circumstances, a Vehicle May Be 

Repossessed 

Proposed § 463.3(o) prohibited misrepresentations regarding whether, or under 

what circumstances, a vehicle may be repossessed. After careful review and 

consideration of the comments, the Commission is finalizing paragraph (o) of § 463.3 

with the minor modification of capitalizing the defined term “Vehicle” to conform with 

the revised definition at § 463.2(e). 

A number of commenters, including consumer advocacy organizations and a 

group of State attorneys general, expressed concern about electronic disablement of 

vehicles, including through the use of starter interrupt devices, which are sometimes 

utilized for vehicle repossession. Many of these commenters expressed concern about the 

potential for harm to consumers if such devices are activated without regard to the 

location or operational state of the vehicle, and recommended that the Commission 

restrict their use. Alternatively, one such commenter recommended that the Commission 

add a provision to part 463 that would require dealers to disclose any such technology, 

obtain the consumer’s express, informed consent to its use, and limit its use to one time, 

not to exceed 30 days, once a consumer is in default. Finally, the comment from a group 

of State attorneys general recommended that the Commission require additional 

disclosures any time a starter interrupt device is installed, provide advance notice to 

consumers prior to activating such devices, and enable consumers to restart their vehicles 

in emergency or unsafe situations.232 

232 Comment of 18 State Att’ys Gen., Doc. No. FTC-2022-0046-8062 at 13. 

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The Commission recognizes the potential for abuse with regard to vehicle 

disablement technology.233 It is already illegal under Section 5 of the FTC Act to engage 

in deception, including regarding vehicle disablement technology, and to unfairly cause 

substantial injury to consumers, such as by disabling a vehicle while it is being operated 

on the highway.234 This provision will further provide protection for consumers from 

unfair or deceptive conduct surrounding the repossession of vehicles. Moving forward, 

the Commission will continue to monitor the motor vehicle marketplace for 

developments in this area to determine whether additional restrictions are warranted. 

A number of dealership association commenters contended that this provision 

would inhibit dealers from making representations about their lawful rights to repossess 

vehicles, positing that, upon making any such representations, this provision might 

require dealers to carry out repossessions without exception or risk violating this 

provision. This provision, however, does not prevent dealers from providing accurate 

information to consumers about when a vehicle can, or will, be repossessed. Even where 

dealers have a lawful right to repossess a vehicle, current law, as well as this provision, 

prohibit dealers from misrepresenting whether or when they may take such action. 

Current law, including at the Federal level, imposes some such restrictions in this regard: 

233 See, e.g., Complaint ¶¶ 10-21, CFPB v. USASF Servicing, LLC, No. 1:23-cv-03433-VCM (N.D. Ga. 

Aug. 2, 2023); Consumer Fin. Prot. Bureau, “Supervisory Highlights: Issue 28, Fall 2022” 6-7 (Nov. 2022), 

https://files.consumerfinance.gov/f/documents/cfpb_supervisory-highlights_issue-28_2022-11.pdf (finding 

that, in certain instances, auto servicers engaged in unfair acts or practices by activating vehicle disabling 

devices in consumers’ vehicles when consumers were not past due on payment, contrary to relevant 

contracts and disclosures, including by causing the devices to sound late payment warning beeps and by 

preventing consumers from starting their vehicles).

234 See 15 U.S.C. 45; see also, e.g., Int’l Harvester Co., 104 F.T.C. 949, 1064-67 (1984) (finding that 

manufacturer’s failure to adequately disclose that its tractors had a serious safety hazard constituted unfair 

conduct, where the hazard caused serious injury to a small number of consumers, consumers could not have 

reasonably avoided the harm because the respondent did not adequately disclose the serious risk, and the 

cost of the respondent disclosing the risk was very small in relation to the substantial injury). 

121 
for example, the Servicemembers Civil Relief Act prohibits repossession of vehicles 

during a servicemember’s period of military service without a court order, as long as the 

servicemember either placed a deposit for the vehicle or made at least one installment 

payment on the contract before entering military service.235 This provision prevents 

dealers from representing that they may repossess military consumers’ vehicles under 

such circumstances. However, dealers may still accurately and non-deceptively inform a 

consumer about the circumstances under which a vehicle can be repossessed or when the 

dealer may take action. In providing consumers with such information, however, dealers 

must refrain from representing, including by implication, that repossession is likely when 

in truth it is not. 

After considering the comments, the Commission is finalizing paragraph (o) of 

§ 463.3 largely as proposed, with the minor modification of capitalizing the defined term 

“Vehicle.” This provision prohibits dealers from making misrepresentations regarding 

material information about repossession of a vehicle. Information about whether, or 

under what circumstances, a vehicle may be repossessed is likely to affect consumers’ 

conduct, including by impacting military consumers’ conduct regarding which payments 

to prioritize while serving our country. 

p) Any of the Required Disclosures Identified in this Part 

Proposed § 463.3(p) prohibited misrepresentations of any of the required 

disclosures identified in this part. As the Commission noted in its NPRM, this was 

including but not limited to representations that limit or contradict the required 

235 See 50 U.S.C. 3952(a). 

122 
disclosures.236 Upon careful review and consideration of the comments, the Commission 

is finalizing paragraph (p) of § 463.3 as proposed. 

The Commission received a dealership association comment that contended 

generally that the proposed prohibited misrepresentations in this provision were already 

addressed in State statutes and regulations, and asserted that such State measures should 

suffice given that, according to the commenter, State regulators are more readily 

available to the public. As discussed in SBP III.C.1, the Commission has seen no harm to 

consumers or competition from duplicative prohibitions of deceptive conduct, and 

commenters did not cite State laws that permit misrepresentations or otherwise present a 

possible conflict with the Rule. Moreover, the Final Rule provides additional remedies 

that will benefit consumers who encounter conduct that is already illegal under State or 

Federal law, including by adding a mechanism for the Commission to redress consumers 

injured by a dealer’s violation of the rule, and will assist law-abiding dealers that 

presently lose business to competitors that act unlawfully. Furthermore, State laws may 

provide more or less specific requirements, as long as those requirements are not 

inconsistent with part 463, and in the event of an inconsistency, the Rule only affects 

such State law to the extent of the inconsistency. Accordingly, the Commission adopts 

this provision without modification from its original proposal. 

The Commission hereby determines it is an unfair or deceptive act in violation of 

the FTC Act for any dealer to make any misrepresentations, expressly or by implication, 

regarding material information about the subjects set forth in the paragraphs of 

§ 463.3. Such misrepresentations are likely to cause consumers to waste significant time 

236 NPRM at 42022. 

123 
 

or money beyond what dealers led them to believe would be necessary to purchase or 

lease a vehicle. Thus, these misrepresentations are material and are likely to cause 

substantial injury to consumers. This injury is not reasonably avoidable by consumers 

themselves because information about the truth or falsity of the dealer’s 

misrepresentations is within the control of the dealer, and there are no countervailing 

benefits to consumers or to competition from the illegal practice of making 

misrepresentations. Further, these provisions also serve to help prevent dealers from 

failing to make disclosures required by § 463.4, and from charging for add-ons that 

provide no benefit and from failing to obtain express, informed consent for charges, as 

required by § 463.5, including by prohibiting misrepresentations regarding costs and 

terms.237 To reflect this, and without changing any substantive requirements for covered 

entities, the Commission is adding the following sentence to the end of § 463.3: “The 

requirements in this section also are prescribed for the purpose of preventing the unfair or 

deceptive acts or practices defined in this part, including those in §§ 463.4 and 463.5.” 

Thus, this Rule requires dealers to refrain from making material misrepresentations about 

the topics enumerated in § 463.3. The prohibitions contained in § 463.3 help protect 

consumers from deceptive representations and promote the ability of honest dealers to 

compete on honest terms. 

D. § 463.4: Disclosure Requirements 

1. Overview 

The proposed rule included five disclosure requirements for motor vehicle dealers 

regarding certain pricing and financing information (in proposed § 463.4(a) through (e)). 

237 See 15 U.S.C. 57a(a)(1)(B) (the Commission “may include requirements prescribed for the purpose of 

preventing” such unfair or deceptive acts or practices). 

124 
These provisions proposed to require dealers to disclose a vehicle’s offering price; an 

add-on list with each optional add-on for which the dealer charges consumers and the 

price of each such add-on; that such add-ons are not required and that the consumer can 

purchase or lease a vehicle without the add-ons; and information about a vehicle’s total of 

payments when making certain representations about monthly payments. 

In its NPRM, the Commission specifically requested comments regarding key 

aspects of the proposed disclosures. In response, various stakeholder groups and 

individuals provided comments regarding the proposed provisions. In this section, the 

Commission discusses the comments, responses to the comments, and any changes made 

to this section based on the comments. 

The Commission received many comments in favor of its proposal, including 

from consumer groups, financial services groups, dealerships and dealership employees, 

individual consumers, and others. These comments supported the proposed disclosures as 

addressing bad actors and unlawful practices in the automotive marketplace while 

promoting transparency, reducing consumer confusion, and refraining from inhibiting 

consumer choice or materially increasing the time or paperwork required. 

A number of such comments, however, urged the Commission to adopt additional 

disclosures, both in the areas covered by its proposal and elsewhere. Regarding 

disclosures covered in the proposal, for example, commenters suggested more detailed 

requirements, including regarding specific disclosure language and specific placement of 

disclosures. The Commission agrees with commenters that key information affecting 

pricing, add-ons, and costs must be disclosed clearly and conspicuously to consumers in 

order to address consumer deception and unauthorized charges during the motor vehicle 

125 
 

 

buying and leasing process. To provide flexibility for dealers and room for disclosures to 

be made in a manner that is clear and conspicuous to consumers in particular 

circumstances, however, the Commission declines to include additional prescriptive 

language about the form of such disclosures. Further, the Commission emphasizes that, in 

accordance with the provision being finalized at § 463.3(p), any material 

misrepresentations regarding the disclosures in the Final Rule violate Section 5 of the 

FTC Act238 and part 463. 

The additional disclosures recommended by commenters included, inter alia: a 

disclosure regarding the installation and use of any electronic disabling devices; a 

disclosure explaining the fees certain lenders may charge to accept a consumer’s loan 

application; a disclosure of the invoice price, or the price a dealer paid the manufacturer 

for the vehicle; a disclosure of any potential value gap between a vehicle’s price and its 

appraised value; a disclosure, prior to purchase negotiations, of any potential financing 

limitations imposed by the dealer; a disclosure of credit characteristics relied upon by the 

dealer and certain terms; a disclosure that, as with a mortgage loan settlement statement, 

itemizes all the elements of the sale for car purchases;239 and disclosure signage in 

dealership showrooms or on sales desks explaining that add-ons are not required. As for 

238 15 U.S.C. 45. 239 Comment of Or. Consumer Just., Doc. No. FTC-2022-0046-8492 at 4; cf. Individual commenter, Doc. 

No. FTC-2022-0046-0144 (recommending the disclosed offering price separately list MSRP, markup, all 

fees, and add-on costs); Comment of Legal Aid Just. Ctr., Doc. No. FTC-2022-0046-7833 at 2 (“[D]ealers 

should be required to verbally disclose and explain in a language the customer understands the material 

terms of the contact [sic] (including APR, total number of monthly payments required, etc.) before 

customers sign[] the contract and receive the customers’ consent that they understand these terms. After 

this verbal disclosure, a consent form should be required. This form should be provided in the language 

preferred by the customer, and should ensure that the customer was provided with accurate and agreedupon terms prior to signing.”); Individual commenter, Doc. No. FTC-2022-0046-1641 (“Mortgage lenders 

are required to give a borrower a disclosure document prior to closing to show all costs and expenses; car 

dealers should have to do the same thing.”). 

126 
 

 

 

disclosures in additional areas, the Commission recognizes that vehicle purchase and 

lease transactions are lengthy and document-heavy, and while consumers may benefit 

from additional information, each additional disclosure requirement could increase the 

cost to comply with part 463 and would risk crowding out the information in the 

Commission’s proposed disclosures. Accordingly, the Commission has determined not to 

expand § 463.4 of this Final Rule to include additional disclosures.240 The Commission 

will continue to monitor the marketplace to evaluate the efficacy and sufficiency of the 

present disclosures. 

In addition, the Commission received a number of comments requesting that it 

publish forms for the disclosures proposed in this section. These comments requested 

either that the use of such forms be required or that the Commission provide a “safe 

harbor” from liability under part 463 for dealerships that utilize them.241 The Commission 

did not receive, in the course of public comment, evidence sufficient to conclude that 

uniform formatting for the delivery of such disclosures would be necessary to make them 

effective. Nor has the Commission received evidence to establish that mandating use of a 

particular form disclosure would obviate deceptive and unfair conduct in all 

circumstances. For example, forms that were required or that provided a “safe harbor” 

from liability could be presented (1) with other elements that are distracting or confusing, 

(2) with information that modifies or contradicts the form disclosures, (3) with 

240 In addition to the disclosures noted, a few commenters requested additional provisions to address 

concerns regarding transparency in pricing, including related to interest rates, and that the Rule require 

dealers to maintain a fiduciary relationship to customers. The Commission recognizes the concerns 

regarding pricing transparency and deceptive conduct related to pricing, and will continue to monitor such 

issues, including after this provision (§ 463.4(a), offering price disclosure) and the misrepresentation 

provisions (§ 463.3) are in effect. 

241 Comment of Nat’l Auto. Dealers Ass’n, Doc. No. FTC-2022-0046-8368 at 104, 122; Comment of Ohio 

Auto. Dealers Ass’n, Doc. No. FTC-2022-0046-6657 at 6, 9; see Comment of Compliance Sys., Doc. No. 

FTC-2022-0046-7836 at 1. 

127 
instructions, discouragement, or time pressure that causes consumers not to review the 

forms or that makes such review impracticable or impossible, or (4) through the use of 

forms that are pre-completed in whole or in part, to the extent this makes the information 

therein easy for consumers to miss. The end result of such an approach would be to 

enable deception while also making such deception more difficult to detect. Accordingly, 

the Commission declines to mandate particular disclosure forms as a requirement across 

all transactions or to shield against liability even where dealers otherwise engage in 

deceptive or unfair conduct. The Commission also notes that, because it is not mandating 

particular disclosure forms, dealers that are already complying with the law will avoid 

additional compliance costs associated with using a new form, and all dealers will have 

the flexibility to convey the disclosures in a manner that is clear and conspicuous under 

the particular circumstances of their transactions. 

The Commission also received comments that expressed opposition to this 

section. Some individual commenters argued that the required disclosures were unduly 

extensive, prescriptive or untested, or that the substance of these disclosures is already 

conveyed to consumers before the consummation of the transaction. In response, the 

Commission stresses that this section is limited in both its scope and its requirements. 

Each of the disclosures in § 463.4 is focused on one key category of information: vehicle 

price, add-on optionality, or total of payments. This section requires the clear and 

conspicuous disclosure of this information but does not include prescriptive 

requirements. So, for example, a written disclosure would have to be in a size that stands 

out, but a specific font or font size is not mandated, nor are the specific terms or format 

used, nor are any particular uses of capitalization, punctuation, ink color, or paper color 

128 
 

or size. The proposal refrained from additional formal mandates in order to provide 

dealers with flexibility, within the bounds of the law, to provide this essential 

information, including so that dealers already conveying this information in a nondeceptive manner may continue to do so. Accordingly, the Commission also finds that 

testing of these requirements is unnecessary. Furthermore, each of the disclosure 

requirements being finalized addresses the unfair or deceptive act or practice of 

withholding essential information from consumers or presenting such information to 

them in a deceptive manner. After reviewing comments, including those that contended 

the proposal was not prescriptive enough, the Commission concludes that this is the 

correct approach, and as such, has determined not to adopt any additional specifications 

dictating the form or manner in which the disclosures must be presented to consumers. 

Here, as elsewhere, the Commission will continue its long track record of working to 

assist with legal compliance.242 Further, for dealers already conveying this information 

clearly and conspicuously, complying with this provision should not be burdensome. 

Other commenters, including an industry association, contended that these 

disclosures would have the effect of limiting the products and services consumers are 

offered or otherwise restrict lawful sales practices. In response, the Commission reiterates 

that this section focuses on one of the most foundational pieces of information regarding 

242 Each year since FY2002, the Small Business Administration’s Office of the National Ombudsman has 

rated the Federal Trade Commission an “A” on its small business compliance assistance work. See U.S. 

Small Bus. Admin., “National Ombudsman’s Annual Reports to Congress,” 

https://www.sba.gov/document/report--national-ombudsmans-annual-reports-congress (providing reports 

from FY2013-FY2020); Letter from Edith Ramirez, Chairwoman, Fed. Trade Comm’n, to Senator David 

Vitter, Chairman, Comm. on Small Bus. and Entrepreneurship at 1 (Nov. 16, 2015), 

https://www.ftc.gov/system/files/documents/reports/federal-trade-commission-rule-compliance-guidessmall-businesses-other-small-entities-commission/eighth_section_212_report_to_congress_july_2014-

june_2015.pdf (citing Commission’s “A” rating for “Compliance Assistance” by the Nat’l Ombudsman 

from FY2002-FY-2014). 

129 
the sale of vehicles, add-ons, and financing: their cost. Dealers already providing this 

information in a non-deceptive manner will need to make minimal, if any, changes to 

their disclosure practices. The Commission has seen no evidence that disclosing cost 

information has caused dealers to cease offering products. 

Some commenters, including dealership associations, contended that the presence 

of some State standards in this area makes Federal regulation unnecessary or 

contradictory. In response, the Commission notes that it drew from several State statutory 

and regulatory provisions in formulating its proposal, and it observes that the existence 

and functioning of such standards demonstrates the practicability of such disclosure 

measures. Dealers can comply with any State laws requiring the same conduct as well as 

this section. Similarly, to the extent a State requires additional disclosures regarding 

vehicle price, add-ons, or total of payments, nothing prevents dealers from providing 

those disclosures as well as those required under § 463.4 so long as the State disclosures 

are not inconsistent with part 463. To the extent there is truly a conflict between this 

section and State law, § 463.9 provides that part 463 will govern, but only to the extent of 

the inconsistency, and only if the State statute, regulation, order, or interpretation affords 

consumers less protection than does the corresponding provision of part 463. Moreover, a 

number of States do not have existing standards in the areas covered by this part; in such 

States, the Commission’s disclosures will operate as a key safeguard. 

Other commenters, including an industry association, argued that requiring 

disclosures would increase the time and paperwork for consumers to buy or lease a 

vehicle. In response, the Commission notes that the section includes requirements for the 

disclosure of salient, material information early in the process, thus eliminating the time 

130 
 

consumers would otherwise spend pursuing misleading offers—time which can then be 

spent pursuing truthful offers in the absence of deception. These measures will further 

allow consumers to compare dealerships in advance based on truthful terms; thus, 

dealerships will earn business based on the actual terms offered, and not lose business to 

dealers who compete by omitting or hiding actual terms. Moreover, the disclosures 

required by this section are limited to key information affecting pricing, add-ons, and 

total of payments, needed to address consumer deception and unauthorized charges 

during the vehicle-buying and leasing process, and are required to be in writing only 

where the dealer is responding to written consumer communications or already providing 

consumers with representations in writing.243 As explained in detail in the paragraph-byparagraph analysis of § 463.4(e) in SBP III.D.2(e), in order to avoid any additional 

written disclosure requirements, the Commission is declining to mandate that its required 

disclosures be made in writing in every instance. 

An industry association commenter argued that the proposed disclosure 

requirements in § 463.4 of the NPRM violate the First Amendment. This commenter 

contended that the proposed disclosures constituted compelled speech; that they would be 

subject to intermediate judicial scrutiny were they to be challenged in court; and that, in 

the event of such a challenge, the Commission’s actions would fail to satisfy that 

standard of scrutiny, or a less stringent one. 

The Commission first addresses the applicable First Amendment standard of 

review for this rulemaking effort in the event of a judicial challenge. If so challenged, the 

243 See § 463.4(a) (stating that Offering Price must be disclosed in writing if the communication with the 

consumer, or the dealer’s response, is in writing); § 463.4(c), (d), (e) (requiring that disclosures be in 

writing if the dealer’s associated representation is in writing). 

131 
 

 

 

disclosures in § 463.4 would not be subject to intermediate judicial scrutiny, but instead 

to the less rigorous review standard set forth in Zauderer v. Office of Disciplinary 

Counsel, 471 U.S. 626, 651 (1985). When, as is the case here, a regulation “impose[s] a 

disclosure requirement rather than an affirmative limitation on speech,” and is “directed 

at misleading commercial speech,” Zauderer governs.244 

Under that standard, a commercial speaker’s rights “are adequately protected as 

long as disclosure requirements are reasonably related to the State’s interest in preventing 

deception of consumers.”245 In Zauderer, the Court upheld a rule requiring attorneys who 

advertised on a contingency-fee basis to disclose that clients who did not prevail in 

litigation might nevertheless be liable for significant costs.246 The Court found that “the 

possibility of deception is [] self-evident” when an advertisement discloses only one type 

of charge (fees) without mentioning another (costs).247 In upholding the challenged rule 

as reasonable, the Court emphasized that the rule merely mandated disclosure of “purely 

factual and uncontroversial information about the terms under which . . . services will be 

available,” and that the “constitutionally protected interest in not providing [such] 

information . . . is minimal.”248 

As in Zauderer, § 463.4 requires only “purely factual and uncontroversial 

information about the terms under which [commercial goods or services] will be 

available.”249 These material facts include the offering price of the motor vehicle; that 

add-on products or services are not required and the consumer can purchase or lease the 

244 Milavetz, Gallop & Milavetz, P.A. v. United States, 559 U.S. 229, 249 (2010) (emphasis original). 245 Zauderer v. Off. of Disciplinary Couns., 471 U.S. 626, 651 (1985). 246 Id. at 652. 247 Id. at 652-53. 248 Id. at 651. 249 See id. at 651. 

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vehicle without the add-on, if true; the total amount the consumer will pay to purchase or 

lease the vehicle and, if that amount assumes the consumer will provide consideration, 

the amount of such consideration; and when a lower monthly payment will increase the 

total amount the consumer will pay to purchase or lease the vehicle. As in Zauderer, any 

“constitutionally protected interest” a motor vehicle dealer might have “in not providing 

[this] factual information . . . is minimal.”250 

Courts applying Zauderer have repeatedly affirmed the constitutionality of 

regulations requiring disclosures of complete information about the cost of a purchase, 

which are similar to the required disclosures in § 463.4. For example, courts upheld a 

regulation requiring schools to “disclose the ‘total cost’ of . . . tuition, fees, books, and 

supplies for its programs,” finding that this information was “purely factual and 

uncontroversial.”251 In another instance, a court upheld under Zauderer a rule requiring 

airlines to prominently disclose the “total, final price” of airfare, finding it was 

“reasonably related to the government’s interest in preventing deception of 

consumers.”252 In yet another case, a court upheld a rule requiring hospitals to disclose 

their rates to consumers, finding they were “‘factual and uncontroversial’ and directly 

relevant to ‘the terms under which [hospitals’] services will be available’ to 

consumers.”253 The disclosure provisions the Commission is finalizing in § 463.4, like 

the provisions upheld in these cases, merely require factual and uncontroversial 

250 Zauderer v. Off. of Disciplinary Couns., 471 U.S. 626, 651 (1985) (emphasis original). 251 Ass’n of Priv. Sector Colls. & Univs. v. Duncan, 110 F. Supp. 3d 176, 199 (D.D.C. 2015), aff’d, 640 F. 

App’x 5 (D.C. Cir. 2016).

252 Spirit Airlines, Inc. v. U.S. Dep’t of Transp., 687 F.3d 403, 412-15 (D.C. Cir. 2012) (internal brackets 

omitted). 

253 Am. Hosp. Ass’n v. Azar, 983 F.3d 528, 540 (D.C. Cir. 2020) (quoting Zauderer v. Off. of Disciplinary 

Couns., 471 U.S. 626, 650-651 (1985)). 

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disclosures to provide consumers with accurate and timely pricing and financing 

information as they consider motor vehicle purchases and leases.254 

As discussed, Zauderer applies here because § 463.4 would “impose a disclosure 

requirement rather than an affirmative limitation on speech.”255 The Commission notes, 

however, that disclosure requirements in § 463.4 likewise would pass muster even if, as 

the commenter suggested, they were evaluated under the intermediate scrutiny standard 

formulated in Central Hudson Gas & Electric Corp. v. Public Service Commission of 

New York, 447 U.S. 557 (1980), and subsequent cases applying that standard.256 As an 

initial matter, Central Hudson applies not to disclosure requirements, such as those the 

commenter challenges, but to affirmative limitations on speech.257 The Central Hudson 

test requires restrictions on lawful, non-misleading speech to satisfy three remaining 

criteria. First, there must be a substantial governmental interest in the restriction; second, 

the restriction must directly advance that interest; and third, the restriction may not be 

more extensive than necessary to advance the interest.258 Under the Central Hudson test, 

it is not necessary that “the manner of restriction is absolutely the least severe that will 

achieve the desired end.”259 Rather, there merely must be a “‘fit’ between the 

[restriction’s] ends and the means chosen to accomplish those ends—a fit that is not 

254 Further, as explained in the paragraph-by-paragraph analysis of § 463.4 in SBP III.D.2, the failure to 

disclose this information is itself a deceptive or unfair practice. 255 Milavetz, Gallop & Milavetz, P.A. v. United States, 559 U.S. 229, 249 (2010). 256 The commenter attributes the intermediate scrutiny test to Pagan v. Fruchey, 492 F.3d 766, 771 (6th Cir. 

2007), though it was in fact formulated by the Supreme Court in Central Hudson. 257 Milavetz, Gallop & Milavetz, P.A. v. United States, 559 U.S. 229, 249 (2010). 258 See Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n of N.Y., 447 U.S. 557, 566 (1980). Although 

the Supreme Court in Central Hudson treated the question whether regulated speech is truthful and nonmisleading as one of four criteria, it has alternately treated this question as a threshold inquiry, after which 

the three remaining criteria are evaluated. See Fla. Bar v. Went For It, Inc., 515 U.S. 618, 623-24 (1995). 

Because the government is “free to prevent the dissemination of commercial speech that is false, deceptive, 

or misleading,” Zauderer v. Off. of Disciplinary Couns., 471 U.S. 626, 638 (1985), if a challenged 

restriction fails this threshold inquiry, Central Hudson does not apply. 259 Bd. of Trs. of State Univ. of N.Y. v. Fox, 492 U.S. 469, 480 (1989). 

134 
 

 

 

necessarily perfect, but reasonable.”260 In other words, the restriction should be “one 

whose scope is ‘in proportion to the interest served.’”261 

The disclosure provisions the Commission is finalizing in § 463.4 satisfy these 

criteria. First, the disclosure provisions serve a substantial governmental interest by 

requiring motor vehicle dealers to provide accurate terms, and in particular, accurate 

pricing information, in advertising and sales discussions.262 As the Supreme Court has 

made clear, the government’s “interest in ensuring the accuracy of commercial 

information in the marketplace is substantial.”263 And as explained in the paragraph-byparagraph analysis of § 463.4 in SBP III.D.2, the disclosure requirements set forth there 

are aimed at ensuring that consumers receive accurate pricing information and other 

material transaction terms, and that dealers refrain from the unfair or deceptive act or 

practice of failing to provide this information.264 The required disclosures directly 

advance, “fit” reasonably with, and are proportionate to, their intended ends of 

prohibiting and preventing unfair or deceptive conduct in motor vehicle transactions. 

They prevent dealers from luring consumers to dealerships with unfair or deceptive 

advertising tactics, from padding prices with unwanted add-on products or services, and 

from misdirecting consumers about the true cost of a vehicle through discussions of 

monthly payment amounts. The disclosure requirements effectively “impose[] no burden 

on speech other than requiring [motor vehicle dealers] to disclose the 

260 Id. (citation omitted). 261 Id. (quoting In re R.M.J., 455 U.S. 191, 203 (1982)). 262 NPRM at 42012. 263 Edenfield v. Fane, 507 U.S. 761, 769 (1993). 264 Nothing could be more directly relevant to accurate pricing than disclosure of the actual price itself. See 

Spirit Airlines, Inc. v. U.S. Dep’t of Transp., 687 F.3d 403, 415 (D.C. Cir. 2012) (substantial governmental 

interest “is clearly and directly advanced by a regulation requiring that the total, final price be” prominently 

disclosed). 

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total price consumers will have to pay. This the First Amendment plainly permits.”265 

After careful consideration of the comments, the Commission has determined to 

finalize the introductory paragraph of § 463.4 and certain of the disclosure requirements 

included in its NPRM, with some minor textual changes. The introductory paragraph of 

the NPRM proposed that it would be “a violation of this part and an unfair or deceptive 

act or practice in violation of section 5 of FTC Act for any Motor Vehicle Dealer to fail 

to make any disclosure required by this section, Clearly and Conspicuously.” The 

Commission is finalizing this paragraph with the minor textual changes of capitalizing 

“Section 5” and substituting “Federal Trade Commission Act” for “FTC Act” for clarity 

and conformity with other parts of the Rule. The Commission is also adding the word 

“Covered” to the defined term “Covered Motor Vehicle Dealer” to conform with the 

revised definition at § 463.2(f), discussed in SBP III.B.2(f). 

The Commission is finalizing the specific disclosure requirements proposed at 

§ 463.4(a), (c), (d), & (e), with modifications noted in the paragraph-by-paragraph 

analysis in SBP III.D.2(a), III.D.2(c), III.D.2(d), & III.D.2(e).

 In the paragraphs that follow, the Commission discusses the disclosure 

265 Id. Further, the Commission has taken into account prior enforcement work and other initiatives. See 

NPRM at 42022-25 (explaining rationale behind disclosure requirements and extensively citing prior 

enforcement experience and record evidence); see also Lorillard Tobacco Co. v. Reilly, 533 U.S. 525, 555 

(2001) (“We do not . . . require that empirical data come accompanied by a surfeit of background 

information. We have permitted litigants to justify speech restrictions by reference to studies and anecdotes 

. . . or even . . . based solely on history, consensus, and simple common sense.” (internal quotation marks 

and alterations omitted)); Fla. Bar v. Went For It, Inc., 515 U.S. 618, 628, (1995) (same); Burson v. 

Freeman, 504 U.S. 191, 211 (1992) (finding speech restrictions justified even under strict scrutiny based on 

a “long history, a substantial consensus, and simple common sense”); Milavetz, Gallop & Milavetz, P.A. v. 

United States, 559 U.S. 229, 251 (2010) (“When the possibility of deception is as self-evident as it is in this 

case, we need not require the State to conduct a survey of the public before it may determine that the 

advertisement had a tendency to mislead.” (internal quotation marks and alterations omitted)); Am. Hosp. 

Ass’n v. Azar, 983 F.3d 528, 540 (D.C. Cir. 2020) (finding reasonable relationship between rule and 

governmental interests where “the Secretary, relying on complaints from consumers, studies of state 

initiatives, and analysis of industry practices, reasonably concluded that the rule’s disclosure scheme will 

help the vast majority of consumers”). 

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requirements proposed in the NPRM, the comments relating to the specific disclosures, 

responses to the comments, and the disclosure requirements adopted in § 463.4. 

2. Paragraph-by-Paragraph Analysis of § 463.4 

a) Offering Price 

The offering price disclosure provision in proposed § 463.4(a) required dealers to 

disclose a vehicle’s offering price in advertisements that reference a specific vehicle or 

represent a monetary amount or financing term for any vehicle, as well as upon receipt of 

a consumer communication about a specific vehicle or any monetary amount or financing 

term for any vehicle. The Commission proposed defining “Offering Price,” in § 463.2(k), 

as “the full cash price for which a Dealer will sell or finance the motor vehicle to any 

consumer, excluding only required Government Charges.” The Commission also 

proposed defining the term “Government Charges,” then in § 463.2(h), to mean “all fees 

or charges imposed by a Federal, State or local government agency, unit, or department, 

including taxes, license and registration costs, inspection or certification costs, and any 

other such fees or charges.” For the reasons discussed in the following paragraphs, the 

Commission is finalizing the offering price disclosure provision at § 463.4(a), as well as 

the corresponding “Offering Price” and “Government Charges” definitions in § 463.2 

(finalized at § 463.2(k) and (i), respectively), largely as proposed. The Commission is 

including a modification to the offering price definition to clarify that dealers may, but 

need not, exclude required government charges from a motor vehicle’s offering price, and 

is substituting “Vehicle” for “motor vehicle” to conform with the revised definition at 

§ 463.2(e), discussed in SBP III.B.2(e). Additionally, the Commission is including a 

typographical modification to the “Government Charges” definition to include a serial 

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comma for consistency. The Commission also is capitalizing the defined terms “Vehicle” 

throughout, in its singular, plural, and possessive forms, and is adding language to the 

end of § 463.4(a) clarifying that the requirements in § 463.4(a) “also are prescribed for 

the purpose of preventing the unfair or deceptive acts or practices defined in this part, 

including those in §§ 463.3(a) & (b) and 463.5(c).” 

The Commission received a significant number of comments on its proposed 

offering price disclosures. Many commenters supported the Commission’s proposal to 

require dealers to provide uniform, comprehensive, and accurate pricing information. 

These commenters noted, inter alia, that despite laws generally prohibiting unfair or 

deceptive acts or practices, present market conditions fail to balance the “playing field” 

of information between consumers and motor vehicle dealers, allowing dealers to take 

advantage of consumers by hiding information about pricing, imposing surprise price 

increases, or using pricing advertising tactics that systematically deceive consumers.266 

Many consumers also underscored the need for the proposed disclosure requirements. 

Commenters in support noted, for instance: 

 Buying a car has always been a horrible experience for me. The endless 

driving to dealerships who advertise vehicles for a sale price only to find 

that the vehicle does not exist, or the price advertised for the specific 

vehicle is not what they had posted. The salespersons[’] tactics, always 

attempting to put you in a vehicle based on a car payment, along with 

dancing around the simple question of the actual out the door price of the 

vehicle. . . . It is such a shame that the dealerships just do not give the 

customer the price of the vehicle without them wanting to start a “folder” 

and take all of your information, a copy of your drivers license, ect [sic] . . 

. . Please regulate the automobile dealerships, especially now when it 

seems they are at their worst with these ridiculous add on fees (paint and 

upholstery protector, ect [sic] which was not added at the manufacturer) 

along with adjustments on top of the MSRP.267 

266 See, e.g., Comment of Nat’l Consumer L. Ctr. et al., Doc. No. FTC-2022-0046-7607 at 17-20. 267 Individual commenter, Doc. No. FTC-2022-0046-6649. 

138 
 

 Buying a car in the US is now akin to what I used to do in the Army: 

Before going into the dealership, I have to spend hours conducting 

“intelligence prep of the battlefield” to understand the tactics the 

dealership’s sales and finance & incentives staff will throw at me. . . . It 

has been made increasingly worse by dealerships that advertise a false 

price to entice a buyer but “bait-and-switch” with Additional Dealer MarkUps (ADM), and bogus fees and charges for supposedly dealer-installed 

items tha[t] the consumer doesn’t want in the first place. . . . Unless the 

FTC passes this proposed rule, things will get worse before they get 

better.268 

 Though I am not usually a fan of adding layers of governmental 

regulations to what should be a simple transaction, there definitely needs 

to be a change in what is allowed in the car buying process. . . . As 

consumers we should not have to spend hours reading tiny print in obscure 

sections of a website in order to validate a posted price. The price should 

not be elevated at the last minute in a hidden line item such as a 

mandatory detailing package or service plan you do not want or need to 

the tune of thousands of dollars. . . . We should not have to spend hours at 

a dealer and go through mounds of paperwork with a fine tooth comb in 

order to simply see the ACTUAL price of the vehicle. It is a ridiculous 

ploy to confuse people into purchasing things they do not want or need.269 

 I have been trying to buy a new car for the last two years but with 

unexpected costs I am not able to have a clear written contract on the car 

and its pricing. I have contacted several dealers in my area and many of 

them have issues that prevent me from commited [sic] to buying from 

them. This ranges from them not being able to give me a written sheet of 

the cost of the car, fees, ect [sic] showing me how much I will be paying 

in the end. . . . Most of the dealerships I spoke to would not give me a 

sales sheet of the vehicle I want to purchase to show me how much I will 

be paying in total. I would have to put a down payment and just trust them 

over the phone. If I can’t get it in writing it is hard to commit to a down 

payment I could lose.270 

 Vehicles are typically the second largest purchase made by people. Given 

the choices available according to respective needs/wants, purchasing a 

vehicle should be the same as going to any other mass-market retailer and 

picking that appliance with a set price. So why do we need to haggle or 

268 Individual commenter, Doc. No. FTC-2022-0046-6225. 269 Individual commenter, Doc. No. FTC-2022-0046-6089. 270 Individual commenter, Doc. No. FTC-2022-0046-6656. 

139 
 

expend additional intellectual and emotional bandwidth towards ensuring 

that the transaction is as initially stated? There are instances where I’d 

rather be back conducting combat operations in Iraq than go through the 

dealer process, as it incenses me that this corrupt way of doing business is 

given a free pass. . . . If you are a reputable and honest dealership, then 

there should be no worry; it will be business as usual.271 

 Think of us, the car buying public. We are mad as hell. Please start fixing 

this crooked business model where nobody even knows what they are 

supposed to be paying.272 

 As a consumer, I fully support this new proposed rules update. The 

dealership experience has been an anxiety provoking event everytime [sic] 

I attempt to purchase a car. I have multiple friends and family that all 

report shady practices, bait and switch, and up charging at point of sale 

during their car buying process. Please pass these regulations!273 

 I am writing in FULL support of the FTC rules and regulations. . . . 

Buyers deserve to know Out the door prices and not be hassled by 

nonsensical add-ons for the dealership’s benefit. People should feel 

comfortable and excited to buy their 1st car rather than the dread I feel.274 

 We find the vehicle we came to see and see a sticker beside the 

manufacture[r] one with added prices. These typically include car alarms, 

VIN etching, protection packages, floor mats, market adjustment, etc. We 

go to purchase the vehicle now and they say that none of these can be 

removed from the price of the car (even though they advertised them 

without them at a much lower price). We attempt to negotiate them off and 

find out their [sic] is an additional addon like reconditioning fee. We fail 

at getting the price of the vehicle down to the advertised price and 

leave.275 

 I have financed all of my cars, and the total cost for the vehicle has always 

been hidden, either physically or through the dealer trying to move focus 

onto other numbers such as the monthly payment. Since monthly 

payments will vary due to credit history, down payments, interest rates, 

taxes, and more, it is not an effective tool for measuring a deal. $300 a 

month could be a great deal on one car, and a horrible deal on another. I 

271 Individual commenter, Doc. No. FTC-2022-0046-5238. 272 Individual commenter, Doc. No. FTC-2022-0046-5227. 273 Individual commenter, Doc. No. FTC-2022-0046-5228. 274 Individual commenter, Doc. No. FTC-2022-0046-5219. 275 Individual commenter, Doc. No. FTC-2022-0046-0900. 

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would greatly benefit from the proposal[’]s provision to clearly list and 

advertise the price of the car without additional add[-]ons. It would greatly 

reduce the work of finding the right car at the right dealership. In each of 

the 3 cases, I have gone to multiple dealers, wanting to purchase a specific 

vehicle on their lot, and walked away because of the hidden costs being 

added to the price of the car.276 

 I work as a salesperson at a local Nissan dealership. . . . Currently, 

dealerships across the US, including the one I work for, have made the car 

buying process needlessly confusing, expensive, and frustrating by 

engaging in false advertising and hidden add-on products. While these 

practices are very unscrupulous, they are incredibly effective at what they 

are designed to do: drive revenue for the store. If these regulations are 

passed, they would certainly take a significant toll on my personal 

finances. But the longer I work in my position, the more I realize that no 

one should be allowed to engage in such exploitative conduct in the course 

of running a business. . . . Good, ethical dealers will not have to make any 

changes if these rules are put into place. I also happen to know that several 

of the comments in opposition to the proposed regulations are solicited by 

dealerships and their management. The dealership group I work for, for 

example, sent out a company-wide email encouraging employees to post 

comments on this site in opposition to these rules. But there’s no question: 

The American people want these regulations. They need these regulations. 

The only ones that don’t want them are crooked auto dealerships across 

the US. It’s been far too long that such dealerships have run amuck with 

underhanded sales practices and deception. I would urge the FTC to stand 

strong against . . . dealership groups[]or any lobbyists and get these rules 

passed! I know there will be stiff resistance but it’s of the utmost 

importance to good dealerships, transparent salespeople, and, most 

importantly, the average American consumer!277 

A number of commenters supported the offering price disclosure requirement and 

associated definitions; some expressed support while urging additional protections. A 

number of commenters, including consumer advocacy organizations as well as individual 

commenters, requested that the Commission require a vehicle’s offering price to include 

additional items, such as charges for add-ons attached to the vehicle when it is offered, 

276 Individual commenter, Doc. No. FTC-2022-0046-6490. 277 Individual commenter, Doc. No. FTC-2022-0046-3693. 

141 
 

and charges for add-ons required by the dealer to be sold with the vehicle; to exclude 

rebate information, including rebates contingent upon the use of a certain financing 

company or upon qualifying for any other rebate; and to prohibit the exclusion of certain 

charges, including the advertisement of an offering price that factors out a down payment 

amount.278 

To begin, the Commission notes that by the terms of the proposed “Offering 

Price” definition, the only charges a dealer was permitted to exclude from a vehicle’s 

offering price were required government charges. Thus, under the proposal, if a dealer 

were to charge any consumer for a preinstalled add-on, or require any consumer to pay 

for an add-on to purchase or finance the vehicle, then the charges for such add-ons would 

be required to be included in the vehicle’s offering price.279 In addition, while the 

proposed provision did not prevent dealers from presenting consumers with accurate and 

non-misleading additional information, including terms of limited availability, the 

required offering price disclosure needed to remain clearly and conspicuously presented 

to consumers, and could not be based on discounts or rebates that are not available to 

“any consumer,” including rebates contingent upon the use of a certain financing 

company or upon qualifying for any other rebate. Similarly, under the proposal, if the 

dealer required a down payment amount to sell or finance the vehicle, the offering price 

could not factor out such an amount. 

278 A number of these commenters further requested that the term “Offering Price” include additional dealer 

fees that are known to the dealer at the time they are advertised and imposed by the dealer rather than a 

government entity. These requests are addressed in the discussion of the Commission’s definition of 

“Government Charges” in SBP III.B.2(i). 279 If a dealer does not require any consumer to pay for an add-on, current law, as well as provisions in this 

Rule, require dealers to refrain from deception in this regard. See, e.g., § 463.3(a), (b) (prohibiting material 

misrepresentations regarding the costs or terms of purchasing, financing, or leasing a vehicle, as well as any 

costs, limitation, benefit, or any other material aspect of add-ons); § 463.4(c) (requiring disclosures 

regarding optional add-ons). 

142 
With respect to the proposed definition of “Government Charges,” which is used 

in the definition of “Offering Price,” a number of consumer advocacy organization 

commenters contended the definition should be narrow to accomplish the Commission’s 

goal of ensuring that consumers have access to accurate pricing information before they 

enter a dealership, emphasizing that only charges that are imposed by, and payable to, a 

government entity should be permitted to be excluded from a vehicle’s offering price, and 

that document fees that some States allow dealers to charge should not be excluded from 

the offering price. The Commission notes that, as proposed, the term “Government 

Charges” is limited to those charges “imposed by a Federal, State or local government 

agency, unit, or department.” The Commission specified in this proposed definition that 

such charges need be “imposed by” a government entity rather than, for instance, having 

merely been “authorized by” or “allowed by” such an entity. This language does not 

reach charges that are authorized by a government entity but not required, since such 

charges have not been “imposed”280 by the government. This distinction therefore 

excludes from the definition of “Government Charges” fees, such as dealership document 

preparation fees that State or local law does not require consumers to pay. Furthermore, 

the definition of “Offering Price” at § 463.2(k) permits only “required” government 

charges to be excluded from a vehicle’s offering price. Thus, charges the government 

does not require consumers to pay, but allows the dealer to charge or to pass along to the 

consumer, such as document fees, must be included in the disclosed offering price if the 

dealer requires such charges of any consumer. 

280 See, e.g., Impose, Cambridge Advanced Learner’s Dictionary & Thesaurus, 

https://dictionary.cambridge.org/us/dictionary/english/impose (“to officially force a rule, tax, punishment, 

etc. to be obeyed or received”). 

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Relatedly, an individual commenter suggested that the Commission delete the 

phrase “inspection or certification costs” from the definition of “Government Charges” in 

order to avoid confusion about the status of inspection or certification charges that “are 

NOT imposed by the Government,” as well as explicitly state in the definition that the 

term does “not include dealer document or document processing fees (“doc fees”), or 

electronic titling and registration fees, which are not imposed by the Government.”281 

Regarding the phrase “inspection or certification costs,” such costs that are not 

“imposed” by the government are excluded from the definition of “Government 

Charges,” as the plain language makes clear. Similarly, as noted, dealer document or 

document processing fees and any other fees that are not imposed by the government are 

excluded from the definition, as the plain language states. 

Some commenters, including a group of State attorneys general, likewise 

recommended that a vehicle’s offering price include “anticipated” or “estimated” 

government charges.282 The Commission agrees that consumers would benefit from 

knowing this information early on in their shopping experience, and notes that dealers are 

permitted under this Final Rule to provide additional, truthful information along with a 

vehicle’s offering price. Rather than requiring that anticipated government charges be 

included in the offering price, the Commission is modifying the definition from its 

original proposal to make clear that dealers need not exclude any such charges from the 

offering price. The Commission will evaluate whether the definition, as finalized, as well 

281 Individual commenter, Doc. No. FTC-2022-0046-7445 at 15-16. 282 See, e.g., Comment of 18 State Att’ys Gen., Doc. No. FTC-2022-0046-8062 at 7; Comment of 

Consumer Att’ys & Advocs., Doc. No. FTC-2022-0046-7695 at 2-3 (requesting that the vehicle’s offering 

price include “an estimate of government fees and charges such as sales tax and registration based on the 

dealer’s location”). 

144 
as its associated disclosure, effectively address deceptive and unfair market conduct, and 

will consider future modifications as market practices evolve. 

Thus, the Commission is finalizing a definition of “Offering Price” that clarifies 

that dealers may, but need not, exclude required government charges from a vehicle’s 

offering price that meets the requirements of § 463.2(k). In particular, the Commission is 

finalizing a definition of “Offering Price” that removes the phrase “excluding only” and 

adds the phrase “provided that the Dealer may exclude only” in its place. The definition 

also substitutes “Vehicle” for “motor vehicle” to conform with the revised definition of 

“‘Covered Motor Vehicle’ or ‘Vehicle’” at § 463.2(e), such that the definition reads as 

follows: “Offering Price means the full cash price for which a Dealer will sell or finance 

the Vehicle to any consumer, provided that the Dealer may exclude only required 

Government Charges.” 

Other commenters, including consumer advocacy organizations, proposed 

additional requirements to the disclosure at § 463.4(a): prescribing formatting, posting, 

and presentation requirements for offering price information, such as attaching a written 

offering price to each vehicle, providing written offering price information in response to 

consumer communications regardless of whether the communications are written, and 

requiring offering price to be the most conspicuous piece of information displayed to 

consumers. Regarding the manner in which the offering price must be presented, the 

Commission proposed that all disclosures under § 463.4, including the offering price 

disclosure, be presented clearly and conspicuously. As previously discussed, the 

proposed disclosure provisions were directed at addressing unlawful conduct while 

providing dealers with flexibility to present such disclosures in a manner that is clear and 

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conspicuous to their consumers under the particular circumstances. Thus, the 

Commission has determined not to adopt further formatting, posting, or presentation 

requirements for its offering price disclosure. 

Some commenters, including consumer advocacy organizations and a consumer 

protection agency, proposed that the Commission adopt an additional requirement 

providing that dealers must accept an offer from a buyer of the offering price. In 

response, the Commission notes that, under its proposal, if a dealer were requiring any 

consumer to pay a price that was higher than the disclosed offering price, or adding other 

conditions—such as requiring the use of a particular finance company or the purchase of 

an add-on—to obtain the vehicle at the offering price, such practices would violate part 

463, including the offering price provision, which requires disclosure of the full cash 

price for which the dealer will sell or finance the vehicle to any consumer,283 and the 

related requirement the Commission is finalizing under § 463.3(p), which prohibits 

misrepresentations regarding the required disclosures in part 463.284 

An individual commenter proposed that the Commission adopt additional 

requirements requiring dealers to itemize and disclose each sub-component of the 

offering price, including any applicable document fee. The Commission notes that it has 

not been presented with any evidence that the benefits of such additional disclosure 

283 See § 463.2(k) (defining “Offering Price” as “the full cash price for which a Dealer will sell or finance 

the Vehicle to any consumer, provided that the Dealer may exclude only required Government Charges”). 284 Some commenters described situations in which a dealer may decline to sell or finance a vehicle to a 

particular consumer, including due to legal requirements, irrespective of whether the dealer otherwise 

intends to honor its offering price disclosures. These situations include, for example, a consumer who 

presented identity theft indicia under the Commission’s Red Flags Rule, 16 CFR 681; a consumer on the 

Specially Designated Nationals List maintained by the Office of Foreign Assets Control; a consumer who 

cannot produce the required proof of insurance or license to complete the transaction; or a consumer who is 

abusive or violent at the dealership. The Commission’s offering price provision is a pricing disclosure; it 

will not otherwise alter the status quo on whether a given sale or financing transaction must be 

consummated. 

146 
requirements outweigh the costs to consumers and competition. The Commission may 

consider additional such restrictions or additional guidance in the future, based on 

stakeholder experience with part 463 and whether it effectively remediates unlawful 

conduct. 

Other individual commenters proposed that the Commission impose limitations 

on the price of the vehicle—for example, prohibiting dealers from charging more than 

MSRP for the vehicle—or prohibit or limit particular charges, such as dealer fees, 

document fees, and destination charges. The Commission notes that several Rule 

provisions will prohibit hidden charges and deception related to pricing, including 

§ 463.4(a) (offering price disclosure) and § 463.3(a) (prohibition against misrepresenting 

the costs or terms of purchasing, financing, or leasing a vehicle). Before including 

additional provisions, the Commission will continue studying the market, including after 

the Rule is in effect, to determine whether additional steps are needed. 

Other commenters opposed the offering price disclosure and related definitions. 

Commenters including an industry association contended that, by defining “Offering 

Price” in § 463.2(k) as the price “for which a Dealer will sell or finance the motor vehicle 

to any consumer,” the Commission would prohibit dealers from changing vehicle prices 

as market conditions change, thereby making vehicle pricing less dynamic than under 

current industry practice. 

Section 463.4 and the offering price definition in § 463.2(k), however, do not alter 

the current status quo on pricing accuracy or pricing changes. Consistent with the law, the 

offering price—as with a presently advertised price—must be truthful and nonmisleading. If the offering price is only available for a certain period of time, the 

147 
 

 

 

advertisement must convey that fact clearly and conspicuously, and if it is no longer 

available, the dealer must cease advertising the offering price.285 

Some commenters expressed a related concern that the Commission’s offering 

price disclosure requirement could require dealers to change their practices when an 

advertised vehicle is no longer available. For example, one industry commenter asked 

whether, under such circumstances, a dealer would somehow be obligated to sell some 

other vehicle to that consumer at the offering price. Here, the offering price disclosure 

requirement does not alter the status quo: Under § 463.4(a), as under current law, if an 

offer is limited to a particular period of time, the offer must convey that fact, and once a 

price is no longer available, the dealer must cease advertising that price. Regarding which 

vehicles to sell at an advertised offering price, under the Commission’s proposal, the 

dealer must disclose the offering price for the vehicles advertised. If the dealer charges a 

different price, then the dealer has not disclosed the offering price for which the dealer 

will sell or finance the vehicle, and the dealer has misrepresented the price of the vehicle, 

in violation of several provisions, including §§ 463.3(b) & (p) and 463.4(a). For example, 

if a dealer conveys that all vehicles of a certain nature or in a certain category are 

available at a particular offering price, but charges a higher offering price for any vehicle 

of that nature or in that category, the dealer has violated the Rule. 

Other comments, including from a member of Congress and from dealership 

associations, raised concerns that the Commission’s proposal would limit dealers from 

advertising rebates, discounts, or incentives of limited availability, including when 

285 As is the case under current law, under part 463, any qualifying information necessary to prevent 

deception regarding a material fact must be conveyed clearly and conspicuously. See FTC Policy Statement 

on Deception, supra note 42, at 1 n.4, 4. 

148 
 

 

qualifications for such rebates, discounts, or incentives are identified in the advertising, 

further contending that such a result would contradict prior FTC practice. Relatedly, 

commenters including an industry association questioned whether the Commission’s 

proposal prohibited dealers from advertising additional vehicle prices, contending that 

such a result would conflict with the longstanding obligation under Federal law to 

disclose a vehicle’s Manufacturer’s Suggested Retail Price, or MSRP. The Commission 

notes, however, that the offering price disclosure requirement does not prevent dealers 

from presenting accurate and non-misleading additional information, including terms of 

limited availability, so long as the required offering price disclosure remains clearly and 

conspicuously presented to consumers. 286 If, however, a dealer’s disclosure were to give 

consumers a net pricing impression that is contrary to that which is actually available, 

then the disclosure would violate § 463.4(a), and the related requirement under 

§ 463.3(p).287 

Some commenters, including dealership associations, generally concluded the 

Commission’s proposed offering price definition, or its associated disclosure provision, 

were unnecessary, confusing, burdensome, or likely to hinder comparison shopping. 

286 A number of dealership associations expressed a related concern that the Commission, through its 

offering price proposal, was somehow seeking to restrict competition between dealers to being only about 

the price of vehicles. The associations described other areas, beyond vehicle price, by which dealerships 

currently distinguish themselves (e.g., their range of products and services; their service availability; the 

convenience of their locations; and the nature of their sales staffing and process). In response, the 

Commission notes that it has long recognized the importance of protecting competition across both price 

and quality metrics, including providing consumers with truthful, nondeceptive advertising. See, e.g., Cal. 

Dental Ass’n v. Fed. Trade Comm’n, 526 U.S. 756, 766-68 (1999) (affirming Commission exercise of law 

enforcement authority against industry guidelines that unlawfully restricted both price advertising and 

advertising relating to the quality of dental services). As noted, the offering price disclosure requirement 

does not prevent dealers from presenting accurate and non-misleading additional information, including 

information about any such distinguishing characteristics, so long as the offering price is presented clearly 

and conspicuously. 

287 For reference, § 463.3(p), which the Commission is finalizing, see SBP III.C.2(p), prohibits dealers from 

making material misrepresentations regarding “[a]ny of the required disclosures” under the Final Rule. 

149 
Some commenters, for instance, contended that their respective States already prohibit 

misrepresenting price terms, rendering the Commission’s proposal redundant. The 

Commission notes, however, that a simple disclosure of the offering price, using the same 

definition across States, addresses multiple issues, including: the promotion of prices 

based on dealer discounts, rebates, or other price reductions when such benefits are in 

fact subject to hidden or undisclosed restrictions that render them unavailable to typical 

customers; the concealment or omission of additional dealer charges, such as for 

document preparation fees, amounting to several hundred dollars; the advertisement of a 

price without disclosing material limitations or additional charges required by the dealer 

that are fixed and thus can be readily included in the price at the outset; and the 

inducement to pursue pricing offers that are not actually available or to pay more for a 

vehicle due to inadequate or nonexistent disclosures. Moreover, this disclosure and the 

associated definitions should produce the corollary benefit of increasing price 

competition among dealers, who will be able to compete on truthful, standard terms.288 

The Commission also concludes that the claim that its offering price disclosure 

requirement would limit comparison shopping appears to follow from the mistaken 

notion that the offering price disclosure prohibits dealerships from conveying accurate 

additional information to consumers, including information about rebates, discounts, or 

other limited-availability incentives. 

Relatedly, some dealership association commenters contended there are areas of 

overlap, or potential conflict, with State law. Pursuant to § 463.9 of part 463, where it is 

possible for dealers to comply with both State law and the provisions of this regulation, 

288 See NPRM at 42023. 

150 
or where State law affords greater consumer protection, part 463 will not displace 

existing State pricing or disclosure regimes. This addresses many of the commenters’ 

concerns about State law. Some dealership associations, for instance, contend that their 

respective States require dealers to separately disclose a dealer document fee and not 

represent that the fee is required by the State, or that they allow dealers, with certain 

limitations, to incorporate rebates into an advertised price. Regarding document fees, 

dealers can simultaneously comply with part 463, which requires document fees to be 

included in the offering price unless they are “required” government charges, and with 

State law that permits but does not require document fees to be excluded from a vehicle’s 

advertised price, or that requires disclosure of the amount of the document fee and that 

such a fee is not required by the State, by disclosing the offering price and any additional 

State-required information, such as the amount of the dealer document fee. Similarly, 

regarding rebates, in addition to the offering price, dealers may provide consumers with 

additional pricing information, including regarding rebates or other incentive pricing, so 

long as the offering price remains clear and conspicuous, and any additional information 

is truthful and non-misleading and otherwise complies with part 463 and existing law. 

Another dealership association commenter urged the Commission to consider 

using an existing definition, including a State-law definition of “sales price” or the 

definition of “cash price” under the Truth in Lending Act’s Regulation Z, in lieu of its 

proposed offering price definition.289 The Commission notes that its offering price 

definition overlaps substantially with the commenter’s suggested State-law “sales price” 

definition, which, according to the commenter, requires that a vehicle’s advertised price 

289 Comment of Tex. Auto. Dealers Ass’n, Doc. No. FTC-2022-0046-8102 at 29-30. 

151 
 

be one at which “the dealer must be willing to sell the motor vehicle . . . to any retail 

buyer”; which “must” include certain additional charges that are fixed and thus can be 

readily included in the price at the outset, including “[d]estination and dealer preparation 

charges”; and which permits only certain categories of costs and charges to be 

excluded.290 Based on the commenter’s description, unlike the Commission’s definition, 

this State-law definition permits the exclusion of fees “allowed” by law or those which 

the law has “prescribed.”291 Again, the Rule permits only charges that the government 

requires the consumer to pay to be excluded from a vehicle’s offering price, by defining 

“Offering Price” to allow only “required Government Charges” to be excluded. This 

difference from the State law described by the commenter, however, creates no conflict— 

a dealer governed by that State law will be able to comply with both requirements by 

disclosing an offering price that excludes only required government charges and includes 

allowable government charges. 

Similarly, commenters have not demonstrated any actual conflicts between the 

proposed offering price definition and TILA’s definition of “cash price.”292 Dealers can 

comply with both requirements by disclosing an offering price that excludes only 

required government charges. And the Rule’s definition addresses specific unfair and 

deceptive conduct in the auto marketplace. Were offering prices to exclude additional 

categories, the resulting disclosure provision at § 463.4(a) would permit dealers to lure 

consumers to dealership lots based on a price that is not actually the price the dealer 

would require the consumer to pay, a result that would require consumers to spend time 

290 Id.; see also 43 Tex. Admin. Code 215.250(a), (b) (2023). 291 Comment of Tex. Auto. Dealers Ass’n, Doc. No. FTC-2022-0046-8102 at 29-30; see also 43 Tex. 

Admin. Code 215.250(b)(3) (2023). 

292 See 12 CFR 226.2(a)(9). 

152 
 

traveling to the dealership and time on the lot to attempt to discover the true price, and 

that would place dealerships that choose to advertise the price truthfully at a competitive 

disadvantage. 

Relatedly, commenters including an industry association contended that no 

additional regulation of pricing or credit and lease advertising was necessary beyond that 

provided by existing practice or by the Truth in Lending Act, the Consumer Leasing Act, 

and their implementing Regulations Z and M, and relatedly, that the Commission’s 

offering price disclosure requirement duplicated, modified, or ignored such existing law. 

The disclosure requirement, however, is consistent with these existing legal obligations 

and does not disturb them; dealers can and should make the disclosures required under 

TILA and other laws as well as the offering price disclosure required by the Final Rule. 

The provision requires dealers to disclose simple and highly material pricing information 

under certain circumstances.293 Providing consumers with accurate and timely pricing 

and financing information is critical, especially in the context of motor vehicle sales.294 

Several commenters requested modifications to limit or expand the proposed 

definition of “Government Charges,” or clarification regarding this term’s application to 

certain fees. For example, commenters, including a dealership association, urged the 

Commission to modify this proposed definition to include charges that are “allowed to be 

293 The industry association commenter further contended that this provision would apply to dealers based 

on whether they have a service department, but this is incorrect, as explained in the analysis of the 

definition of “‘Covered Motor Vehicle Dealer’ or ‘Dealer’” in SBP III.B.2(f). 294 See, e.g., Buckle Up, supra note 63, at 5 (noting consumer confusion about how the vehicle price they 

were offered was determined and that consumers did not understand they could negotiate price); id. at 9 

(observing add-on products or services, which typically increase a vehicle’s purchase price, were “the 

single greatest area of confusion” in the study); Att’ys Gen. of 31 States & DC, Comment Letter on Public 

Roundtables: Protecting Consumers in the Sale and Leasing of Motor Vehicles, Project No. P104811, 

Submission No. 558507-00112-1 at 5-6 (Apr. 13, 2012), 

https://www.ftc.gov/sites/default/files/documents/public_comments/public-roundtables-protectingconsumers-sale-and-leasing-motor-vehicles-project-no.p104811-00112/00112-82927.pdf. 

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charged but not required or imposed by a Federal, State, or local government agency, 

unit, or department.”295 One such commenter provided the example of certain registration 

and title charges, which it described as “not necessarily imposed or mandatory fees” and 

for which “the amount may vary, depending on the county” and the dealership, and 

within a governmentally determined range.296 Regarding registration and title charges, to 

the extent such charges are required by a government agency, unit, or department, then 

they fall within the “Government Charges” definition as charges “imposed by” such 

agency, unit, or department. If, however, there are title, registration, or other fees, beyond 

any title and registration fees required by the government, that dealers are allowed, but 

not required, to charge, such fees do not fall within the “Government Charges” definition, 

and to the extent a dealer imposes such allowable charges on any consumer, such fees 

must be included in the offering price. Were the Commission to categorize such allowed, 

but not required, amounts as “Government Charges,” dealers would be allowed to 

exclude them from a vehicle’s offering price but then require consumers to pay them 

anyway, thereby allowing dealers to lure consumers to their lots based on a price that is 

not actually the price the dealer would require the consumer to pay—a fact that 

consumers would not learn until they have spent time traveling to the dealership and time 

on the lot, if they learn this fact at all.297 Further, under such circumstances, dealerships 

that choose to advertise the price truthfully would be at a competitive disadvantage. The 

Commission therefore declines to finalize the definition with such a modification. 

295 Comment of Tex. Auto. Dealers Ass’n, Doc. No. FTC-2022-0046-8102 at 14. 296 Id. 297 Indeed, as the Commission also noted in its NPRM, an entity that induces the first contact through false 

or misleading representation is liable under the FTC Act, regardless if the buyer later becomes fully 

informed. See, e.g., Resort Car Rental Sys., Inc. v. Fed. Trade Comm’n, 518 F.2d 962, 964 (9th Cir. 1975); 

Fed. Trade Comm’n v. Gill, 71 F. Supp. 2d 1030, 1046 (C.D. Cal. 1999), aff’d, 265 F.3d 944 (9th Cir. 

2001). 

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Commenters, including a number of dealership associations, contended there were 

burdens associated with the Commission’s offering price disclosure requirement, 

claiming it would cause dealers to require documenting every contact with a consumer in 

which a specific vehicle was mentioned, thereby lengthening the sales process and 

increasing the recordkeeping burden. Comments regarding recordkeeping requirements, 

including records that must be created and maintained under this Rule, are addressed in 

the section-by-section analysis of § 463.6. Here, the Commission notes that accurate 

pricing communication is already required by law. Section 463.4(a) does not require a 

complex or lengthy disclosure, is based on similar provisions already in operation in 

certain States,298 will operate as a key safeguard in States without such provisions, and, as 

discussed in the following paragraphs, addresses deceptive and unfair conduct. Further, 

this offering price requirement will save consumers time when shopping for a vehicle by 

requiring the provision of salient, material information early in the process and 

eliminating time otherwise spent pursuing misleading offers. For dealers already 

disclosing accurate pricing information upfront, this provision allows them to compete on 

an even playing field. 

Another industry association commenter contended that, by requiring offering 

price to be disclosed when an advertisement references a specific vehicle or represents a 

monetary amount or financing term “by implication,” the Commission’s disclosure 

requirement could apply to advertisements that merely list a dealer’s website, on which 

298 For example, California and Wisconsin have similarly enacted laws that make it unlawful for 

dealerships to advertise a total price without including additional costs to the purchaser outside the 

mandatory fees such as tax, title, and registration fees. Cal. Veh. Code 11713.1(b), (c) (2023); Wis. Admin. 

Code. Trans. 139.03(3) (2023). In Louisiana, the advertised price must be the full cash price for which a 

vehicle will be sold to any and all members of the buying public. La. Admin. Code tit. 46, pt. V, 719 

(2023). 

155 
 

specific vehicles and their prices appear. Under the Commission’s proposal, an 

advertisement that does not expressly reference a specific vehicle or expressly refer to a 

monetary amount or financing term would not do so “by implication” solely by referring 

to a website, document, or other destination where such information may otherwise be 

available, absent evidence that the net impression of a reasonable consumer is that the 

advertisement implicitly references such terms.299 The phrasing in the Commission’s 

requirement—“expressly or by implication”—refers to the nature of the claims conveyed 

by a dealer’s advertisement (i.e., whether such claims are made expressly or by 

implication). For more than three decades, the Commission has explained express and 

implied claims as follows: 

Express claims directly state the representation at issue. Implied claims are any 

claims that are not express. They range on a continuum from claims that would be 

“virtually synonymous with an express claim through language that literally says 

one thing but strongly suggests another to language which relatively few 

consumers would interpret as making a particular representation.”300 

This same industry association commenter contended that its aforementioned 

concerns—that the disclosure requirement would prohibit dynamic pricing, and that the 

requirement would extend to advertisements simply by virtue of their referencing a 

dealer’s website—would together cause dealers to curb their pricing representations in 

advertising, either by limiting such representations to a vehicle’s MSRP or by factoring 

out pricing altogether. As previously discussed, these concerns appear to misunderstand 

either existing legal requirements or the fact that an offering price disclosure would 

operate consistent with those requirements. The Commission’s requirement simply 

299 See FTC Policy Statement on Deception, supra note 42, at 2, 5 (describing the Commission’s “net 

impression” standard for determining the meaning of an advertisement). 300Kraft, Inc., 114 F.T.C. 40, 120 (1991) (quoting Thompson Med. Co., Inc., 104 F.T.C. 648, 788 

(1984), aff’d, 791 F. 2d 189 (D.C. Cir. 1986), cert. denied, 479 U.S. 1086 (1987)). 

156 
requires dealers to disclose an offering price and does not alter the current status quo on 

pricing accuracy. To the extent there is a concern that requiring accurate pricing 

information limits dealers to advertising MSRP or forgoing advertising pricing 

information altogether, such concerns apply equally under current law—including in 

States with pricing disclosure requirements that resemble the Commission’s offering 

price disclosure requirement. The Commission, however, has not been presented with 

evidence suggesting that dealers will not want to distinguish themselves from other 

dealers on price, and will instead default to advertising a price that is offered by all of 

their competitors. 

Another concern raised by this same industry association commenter was that, by 

requiring an offering price “in the Dealer’s first response” to a consumer communication 

that references a specific vehicle or a monetary amount or financing term for any vehicle, 

the requirement would prohibit dealers from explaining the offering price and why it is 

being provided, and that as a result, consumers may understand the offering price to be 

non-negotiable. Under § 463.4, however, dealers continue to be permitted to 

communicate accurate additional information, including the availability of discounts or 

the dealer’s willingness to negotiate, as long as the offering price disclosure remains clear 

and conspicuous. 

The same industry association commenter asserted that mandating the disclosure 

of the offering price in connection with “any communication with a consumer” would 

result in excessive and non-responsive disclosures. The commenter provided the example 

of a consumer who contacts a dealership to ask whether the dealership has “a silver 

[Ford] F-150 in stock,” arguing that the Commission’s proposal would require the dealer 

157 
 

to respond with offering price information for each of the numerous (in the commenter’s 

example, 40) silver F-150 vehicles the dealer has in stock. To begin, if the entire 

communication simply asks, “Do you have a silver Ford F-150 in stock?,” it does not 

concern a “specific vehicle”; it concerns a group of vehicles—silver Ford F-150s—and, 

under § 463.4, the dealer is not required to disclose an offering price, so long as the 

dealer’s reply does not reference either (1) a specific vehicle or (2) a monetary amount or 

financing term for any vehicle, whether a specific vehicle or a group of vehicles.301 If, 

however, the dealer chooses to respond by discussing a specific vehicle—whether by 

describing that vehicle, referring to a stock or VIN number, or using other means—the 

dealer is required to disclose the offering price for that specific vehicle. If the dealer 

chooses to respond by discussing several specific vehicles, the offering price disclosure 

requirement applies for each such vehicle. Finally, the offering price disclosure 

requirement applies if the dealer’s response references a monetary amount or financing 

term, such as a down payment or monthly payment amount, for a specific vehicle or a 

group of vehicles. This requirement applies only to the dealer’s first response regarding 

the specific vehicle. It does not apply to subsequent communications about that specific 

vehicle. 

The failure to disclose a vehicle’s offering price in an advertisement or other 

communication that references a specific vehicle, or a monetary amount or financing 

term for any vehicle, is likely to cause substantial injury to consumers who waste time 

and effort pursuing offers that are not actually available or end up paying more for a 

vehicle than they expected or being subject to hidden charges. 

301 See Any (def. 1), Merriam-Webster.com Dictionary, https://www.merriam-webster.com/dictionary/any 

(defining “any” as “one or some indiscriminately of whatever kind”). 

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Buying or leasing a vehicle is time-consuming and often the most expensive 

purchase a consumer makes without knowing the actual price of the product at the outset. 

Consumers can spend hours driving to a dealership.302 Once at the dealership, it can then 

take several hours to days to finalize a transaction303 before the consumer learns the price 

of the vehicle. And many consumers never learn the true price at all; part of the 

finalization process includes signing dense paperwork, where information regarding the 

price of the vehicle and charges for other items is easily obscured, especially if 

consumers are not provided with baseline price information around which to anchor the 

lengthy, dense discussions and process. When consumers are not provided with such 

price information, they are susceptible to hidden charges such as “junk fees” or 

unnecessary add-ons that can cost consumers thousands of dollars and significantly 

increase their overall expense.304 These hidden charges substantially injure consumers by 

increasing their total cost as well as their debt burden in the many instances where 

vehicle purchases are financed.305 

302 See, e.g., Complaint ¶¶ 23-26, Fed. Trade Comm’n v. N. Am. Auto. Servs., Inc., No. 1:22-cv-01690 

(N.D. Ill. Mar. 31, 2022) (alleging that many consumers drive hours to dealerships). 303 See, e.g., Auto Buyer Study, supra note 25, at 15 (noting that the purchase transactions in the FTC’s 

qualitative study often took 5 hours or more to complete, with some extending over several days); Cf. 2020 

Cox Automotive Car Buyer Journey, supra note 25, at 6 (reporting average consumer time spent shopping 

for a vehicle at 14 hours, 53 minutes, including 1 hour, 49 minutes visiting dealerships/sellers). 

304 See Nat’l Consumer L. Ctr., “Auto Add-Ons Add Up: How Dealer Discretion Drives Excessive, 

Arbitrary and Discriminatory Pricing” (2017), https://www.nclc.org/wpcontent/uploads/2022/09/auto_add_on_charts.pdf; Complaint ¶¶ 25, 27-28, Fed. Trade Comm’n v. N. Am. 

Auto. Servs., Inc., No. 1:22-cv-01690 (N.D. Ill. Mar. 31, 2022) (alleging defendants charged thousands of 

consumers hundreds to thousands of dollars each for unauthorized add-ons, totaling in aggregate over $70 

million since 2017); Complaint ¶¶ 59, 61, Fed. Trade Comm’n v. Universal City Nissan, Inc., No. 2:16-cv07329 (C.D. Cal. Sept. 29, 2016) (alleging unauthorized add-on charges costing thousands of dollars).

305 According to public reports, 81% of new motor vehicle purchases, and nearly 35% of used vehicle 

purchases, are financed. See Melinda Zabritski, Experian Info. Sols., Inc., “Automotive Industry Insights: 

Finance Market Report Q4 2020” at 4, https://www.autofinancenews.net/wpcontent/uploads/2021/03/2020-Q4-Auto-Finance-News-Industry-Pulse.pdf. 

159 
 

Moreover, the consumer injury caused by the lack of price information is not 

reasonably avoidable. The dealer has sole control over pricing information and the timing 

of when it is provided to consumers. Even if the consumer learns of the price of the 

vehicle before finalizing the transaction, the consumer has already spent time and effort 

traveling to the dealer, on the dealership lot, and in the financing office, and for many, the 

immediate need for the vehicle for work, school, childcare, groceries, medical visits, and 

other vital household reasons makes it infeasible to start the process anew at a different 

dealership. Further, during the lengthy vehicle-buying process and in complex, dense 

paperwork, it is especially easy to hide or alter price information or include hidden 

charges when consumers are not provided with baseline price information around which 

to anchor the discussion of vehicles, monetary amounts, or financing terms.306 

The injury to consumers from a lack of price information is not outweighed by 

benefits to consumers or competition from withholding this basic information. Instead, 

upfront information about the offering price protects consumers from lost time and effort, 

supracompetitive prices, and unexpected charges while increasing price competition 

among dealers, who should be able to compete on truthful, standard terms. The costs of 

providing price information—which the dealer determines and can calculate upfront—are 

minimal for dealers that are already advertising a specific vehicle, monetary amount, or 

financing term, especially when compared to the injury to consumers. 

306 See, e.g., Complaint ¶¶ 17-19, 44, Fed. Trade Comm’n v. Liberty Chevrolet, Inc., No. 1:20-cv-03945 

(S.D.N.Y. May 21, 2020) (dealers inflated the car price on paperwork in the middle of the sale without the 

consumer’s knowledge or authorization, a practice they internally referred to as adding “air money”); 

Complaint ¶¶ 24-27, Fed. Trade Comm’n v. N. Am. Auto. Servs., Inc., No. 1:22-cv-01690 (N.D. Ill. Mar. 

31, 2022) (alleging that defendants buried charges for add-ons in voluminous paperwork, making it 

difficult to detect). 

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Thus, the failure to disclose a vehicle’s offering price in an advertisement or other 

communication that references a specific vehicle, or a monetary amount or financing 

term for any vehicle is an unfair practice. 

The Commission notes that § 463.4(a)(1) & (a)(2) affects only dealers that are 

already advertising about specific vehicles or monetary amounts or financing terms; it 

does not affect businesses that do not expend funds on advertising specific vehicles, 

monetary amounts, or financing terms. The Commission will continue to monitor the 

market to assess whether this approach is sufficient to address the harms associated with 

a lack of price and charge information. If not, the Commission will revisit whether 

additional measures are necessary, such as requiring price information in all advertising, 

requiring total charge estimates, or prohibiting charges for additional items along with a 

vehicle sale. 

Regarding deception, price is one of the most material pieces of information for a 

consumer in making an informed purchasing decision.307 Yet, including as illustrated by 

the Commission’s law enforcement efforts, it can be difficult for consumers to uncover 

the actual price for which a dealer will sell an advertised vehicle until visiting the 

dealership and spending hours on the lot. When an advertisement or other communication 

references a monetary amount or financing term, it is reasonable for a consumer to expect 

that those amounts and terms are available at other standard terms. If instead, for 

example, a dealer advertises a low monthly payment based on an unexpectedly long 

307 See, e.g., Fed. Trade Comm’n. v. Windward Mktg., Inc., 1997 WL 33642380, at *10 (N.D. Ga. Sept. 30, 

1997)) (“[A]ny representations concerning the price of a product or service are presumptively material.”); 

Thompson Med. Co., Inc., 104 F.T.C. 648, 817 (1984); see also Fed. Trade Comm’n v. Crescent Pub. Grp., 

Inc., 129 F. Supp. 2d 311, 321 (S.D.N.Y. 2001) (“Information concerning prices or charges for goods or 

services is material, as it is ‘likely to affect a consumer’s choice of or conduct regarding a product.’”). 

161 
 

 

 

 

financing term or an unexpectedly high interest rate that results in a higher price than 

standard terms would have, then the consumer is lured to the dealership based on a 

misimpression of what they reasonably expect the total price to be. 

If a dealer advertises a specific vehicle, it is reasonable for a consumer to expect 

to learn the true offering price of the vehicle upon visiting the dealership. Consumers are 

misled when dealers misrepresent or otherwise obscure price information or charge for 

items beyond the advertised vehicle during the long and complex sales, financing, and 

leasing process.308 

If consumers knew that the true price was beyond what was expected or that the 

prices and charges were for unwanted items, that would likely affect their choice to visit 

one dealership over another dealership. Thus, misleading consumers about price 

information is material. See, e.g., Fed. Trade Comm’n v. Windward Mktg., Inc., No. 

Civ.A. 1:96-CV-615F, 1997 WL 33642380, at *10 (N.D. Ga. Sept. 30, 1997) (“[A]ny 

representations concerning the price of a product or service are presumptively material.” 

(citing Removatron Int’l Corp., 111 F.T.C. 206, 309 (1988)); Thompson Med. Co., Inc., 

104 F.T.C. 648, 817 (1984)); see also Fed. Trade Comm’n v. Crescent Pub. Grp., Inc., 

308 Consumers who expect particular prices, based on the MSRP or Kelley Blue Book, are also misled when 

true pricing information is not disclosed upfront. See, e.g., Individual commenter, Doc. No. FTC-2022-

0046-1878 (“We ended up having to drive 3 hours to get the [vehicle we] wanted. Upon arriving to pickup 

the car we were told there was a 4300 increase over MSRP.”); Individual commenter, Doc. No. FTC-2022-

0046-1690 (“It was only after five hours at the dealership that we discovered the dealer had added on a 

$3000 market adjustment and $3100 in other add-ons (nitrogen-filled tires, LoJack, paint protection) to 

MSRP.”). The average transaction price of a new vehicle exceeded the average manufacturer’s suggested 

retail price (MSRP) for twenty consecutive months between 2021 and 2023. See Cox Auto., “After Nearly 

Two Years, New-Vehicle Transaction Prices Fall Below Sticker Price in March, According to New Data 

from Kelley Blue Book” (Apr. 11, 2023), https://www.coxautoinc.com/market-insights/kbb-atp-march2023/; see also Edmunds, “8 Out of 10 of Car Shoppers Paid Above Sticker Price for New Vehicles in 

January, According to Edmunds” (Feb. 15, 2022), https://www.edmunds.com/industry/press/8-out-of-10-

of-car-shoppers-paid-above-sticker-price-for-new-vehicles-in-january-according-to-edmunds.html; 

iSeeCars, “10 New Cars Priced the Highest Over MSRP, Even as Peak Pricing Eases” (Mar. 19, 2023), 

https://www.yourerie.com/news/10-new-cars-priced-the-highest-over-msrp-even-as-peak-pricing-eases/ 

(finding the average new car price was 8.8% over MSRP). 

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129 F. Supp. 2d 311, 321 (S.D.N.Y. 2001) (“Information concerning prices or charges for 

goods or services is material, as it is ‘likely to affect a consumer’s choice of or conduct 

regarding a product.’”).309 

Thus, it is an unfair or deceptive act or practice for dealers to fail to disclose the 

offering price in an advertisement or other communication that references, expressly or 

by implication, a specific vehicle or any monetary amount or financing term for any 

vehicle. 

Furthermore, this provision also serves to prevent the misrepresentations 

prohibited by § 463.3—including misrepresentations regarding costs or add-ons—by 

requiring consumers to be told the true price of the vehicle in advertisements and other 

communications. It also helps prevent dealers from failing to obtain the express, informed 

consent of consumers for charges, as addressed by § 463.5(c).310 Thus, the Commission is 

requiring dealers to disclose a vehicle’s offering price when advertising or otherwise 

communicating about a specific vehicle or monetary amount or financing term for any 

vehicle. This provision allows consumers to compare offers based on the same price 

terms and to select dealers that truly offer the lowest price rather than dealers that 

advertise deceptively low prices but charge more. When price information in the market 

is distorted or concealed—especially in document- and time-intensive vehicle 

309 Even if some consumers were not misled by the failure to disclose the offering price, to show deception 

under the FTC Act, “the FTC need not prove that every consumer was injured. The existence of some 

satisfied customers does not constitute a defense . . . .” Fed. Trade Comm’n v. Amy Travel Serv., Inc., 875 

F.2d 564, 572 (7th Cir. 1989), vacated in part on other grounds, Fed. Trade Comm’n v. Credit Bureau Ctr., 

LLC, 937 F.3d 764 (7th Cir. 2019); accord Fed. Trade Comm’n v. Stefanchik, 559 F.3d 924, 929 n.12 (9th 

Cir. 2009). 

310 See 15 U.S.C. 57a(a)(1)(B) (the Commission “may include requirements prescribed for the purpose of 

preventing” unfair or deceptive acts or practices). 

163 
 

transactions—consumers are unable to effectively differentiate between sellers, and 

sellers trying to deal honestly with consumers are put at a competitive disadvantage. 

For the foregoing reasons, and having considered the comments that it received 

on this proposed provision, the Commission is finalizing the offering price provision at 

§ 463.4(a) with modifications to capitalize the defined term “Vehicle” in its singular, 

plural, and possessive forms, to correspond to the revised definition at § 463.2(e), and to 

add language clarifying that the provision is also prescribed for the purpose of preventing 

unfair or deceptive acts or practices defined in this Rule. The Commission is finalizing 

the corresponding “Offering Price” and “Government Charges” definitions in § 463.2 

largely as proposed, with modifications to the “Offering Price” definition to conform 

with the defined term “Vehicle” and to clarify that dealers may, but need not, exclude 

required government charges from a vehicle’s offering price, and a typographical 

modification to the “Government Charges” definition to include a serial comma for 

consistency. 

b) Add-on List 

The Commission’s proposed add-on list disclosure provision (proposed 

§ 463.4(b)) required the disclosure, both online and at each dealership, of a list of all 

optional add-ons for which the dealer charges consumers and the price of each such addon.311 As proposed, if the price of the add-on varies based on the specifics of the 

transaction, the add-on list would have to include the range the typical consumer will 

311 To the extent any add-on charges are required by a dealership, and thus are not optional, such charges 

would have to be included in the offering price, pursuant to §§ 463.2(k) and 463.4(a). 

164 
 

 

 

 

pay.312 Due to space constraints, dealer advertisements presented not online but in 

another format—such as in print, radio, or television—would not be required to include 

the add-on list, disclosing instead the website, online service, or mobile application where 

consumers can access the add-on list.313 

Many commenters, including consumer advocacy organizations, supported the 

proposal to require dealers to provide consumers with clear, accurate pricing information 

for add-on products or services altogether in one list. Some commenters raised concerns 

that, without significant modification, the Commission’s proposal to allow for the 

disclosure of price range information where the price of an add-on varies based on the 

specifics of the transaction would allow for significant abuses, including by permitting 

dealers to disclose ranges so broad they would be meaningless. Such commenters urged 

the Commission to modify its definition of “Add-on List” to require, where a price range 

is listed for a given add-on, the add-on list further indicate the low, median, and high 

prices charged to consumers for each such add-on over the preceding two years; or that 

the Commission require dealers to create individualized add-on lists for each vehicle 

sold, containing one fixed, non-negotiable price for each add-on. Relatedly, other 

commenters, including industry organizations, expressed concerns regarding the add-on 

312 See NPRM at 42044 (noting, in the definition of “Add-on List” at proposed § 463.2(b) that “[i]f the 

Add-on price varies, the disclosure must include the price range the typical consumer will pay instead of 

the price”); see also Fed. Trade Comm’n v. Five-Star Auto Club, Inc., 97 F. Supp. 2d 502, 528 (S.D.N.Y. 

2000) (“at the very least it would have been reasonable for consumers to have assumed that the promised 

rewards were achieved by the typical Five Star participant”); Complaint ¶¶ 28-50, Fed. Trade Comm’n v. 

Universal City Nissan, Inc., No. 2:16-cv-07329 (C.D. Cal. Sept. 29, 2016) (alleging unlawful deception 

where a dealer’s ads list prominent terms not generally available to consumers, including where those terms 

are subject to various qualifications or restrictions); Complaint ¶¶ 8-10, Progressive Chevrolet Co., No. C4578 (F.T.C. June 13, 2016) (alleging advertised offer was deceptive because the typical consumer would 

not qualify for the offer). 

313 Working in tandem, proposed § 463.4(b)(1) and (b)(2) would mean that dealers who engage in 

advertising and charge for optional add-ons must have a website, online service, or other mobile application 

by which to disclose an add-on list. 

165 
list proposal, including that the proposal to allow for price range information was vague 

or confusing, and that certain aspects of the proposed definition, including the scope of 

add-ons covered, as well as the requirement to keep such add-on lists updated, would 

impose extensive economic burdens. 

After careful review of the comments, the Commission has determined not to 

finalize its proposed add-on list provision (proposed § 463.4(b)). Here, the Commission 

believes its proposal would benefit from further review and refinement. The Commission 

nevertheless emphasizes that, under existing law, dealers are prohibited from 

misrepresentations regarding material information about any costs, limitation, benefit, or 

any other aspect of an add-on, and from charging for add-ons without obtaining the 

express, informed consent of the consumer—conduct which the Final Rule prohibits as 

well, including in §§ 463.3(b) and 463.5(c). The Commission also emphasizes that, in 

addition to the Rule’s prohibitions, industry guidance and effective self-regulatory efforts 

can serve a role in helping prevent problematic dealer behavior in this area. The 

Commission will continue to monitor the motor vehicle marketplace for issues pertaining 

to add-ons and will consider implementing additional measures in the future if it 

determines such measures are warranted to address deceptive or unfair acts or practices 

related to add-on products or services. 

c) Add-ons Not Required 

For optional add-on products or services, the Commission’s proposed § 463.4(c) 

required dealers to disclose, when making any representation about an optional add-on, 

that the add-on is not required and the consumer can purchase or lease the vehicle 

without the add-on. For the reasons discussed in the paragraphs that follow, the 

166 
Commission is finalizing the required disclosure at § 463.4(c) largely as proposed. The 

Commission is capitalizing the defined term “Vehicle” to conform with the definition at 

§ 463.2(e). The Commission also is adding language to the end of § 463.4(c) clarifying 

that the requirements in § 463.4(c) “also are prescribed for the purpose of preventing the 

unfair or deceptive acts or practices defined in this part, including those in §§ 463.3(a) & 

(b) and 463.5(c).” 

A number of commenters, including a group of State attorneys general, supported 

this proposed requirement, contending that unscrupulous dealers have exploited the 

vehicle sales process to saddle consumers with unwanted add-on products or services, 

and that such a disclosure would importantly help consumers avoid discovering these 

additional charges only after completing the purchase, assenting to them because they 

believed the add-ons to be required in order to purchase the vehicle, or paying for them 

unknowingly because they never uncovered the charges. Many individual commenters 

also stressed the need for add-on disclosure requirements. For example: 

 Salespeople such as myself are responsible for selling the car and all 

aftermarket/add-on products. This has put me in a unique position to see 

how these proposed regulations would impact automotive sales. I cannot 

stress enough my support for these new rules. . . . The payments calculated 

by management include add-ons, but the price of the add-ons and how 

they affect the payments are not shown. The add-ons “packed” in the first 

payment often include an extended warranty, GAP insurance, tire and 

wheel protection, an oil change package, a theft recovery device, and 

sometimes more depending on the situation.314 

 Car buying is one of the most miserable consumer experiences in 

existence. Frankly, I’m disappointed that this issue hasn’t been addressed 

decades ago. It’s well past time that the deceptive practices that car dealers 

use to manipulate and take advantage of customers is made illegal. What 

other business can legally lie about the price of the product that they sell, 

314 Individual commenter, Doc. No. FTC-2022-0046-3693. 

167 
 

 

and slip extra unwanted products into the deal that they don’t reveal and 

won’t remove upon request? These practices are arcane and unfair, 

especially considering the absurd cost of automobiles today. I 

wholeheartedly approve of what the proposed rules are attempting to 

accomplish. Please do not allow a powerful lobbying group to limit or 

change good legislation that benefits tens of millions of Americans who 

currently dread the car buying experience for far more reasons than just 

price.315 

 . . . I am not against business making a profit, in fact most Americans 

understand businesses need to make money too, however most dealers will 

not disclose additional costs to the purchaser until it is time to sign 

paperwork for purchase. Rather than simply being upfront with what their 

desired price is and how much they make from the sale rather they are fed 

lines about “common practices”, [sic] “these are normal fees” or simply 

not being forthright about additional costs on items only installed on 

location at the dealerships to drive the price up. Even more insulting is 

when buyer[s] ask to have options removed from the vehicle dealers stall 

or flat out refuse to do so.316 

 It is about time something like this is brought up. This will have no effect 

on the honest dealers out there. . . . This will really help the consumer . . . . 

We will be able to compare apples to apples. You won’t show up at the 

dealership with the lowest price only to find out that they have all these 

other fees that make them the least desirable of the choices. Also, adding 

stuff like pinstriping for large fees will come to an end. . . . I have no 

problem with a dealer making money. They are a business and have 

overhead. I have a problem when they try [to] gloss over everything they 

are trying to charge you for. This ruling needs to take effect. Anyone 

posting against it is someone working for a dealer. Like I mentioned 

before, if you are doing everything on the up and up, not only do you get 

good reviews and repeat business, but this ruling will not even effect [sic] 

you.317 

 I also agree that Enhanced Informed Consent in F & I office is necessary. 

One of my cohort was almost coerced into non-equivalent decision315 Individual commenter, Doc. No. FTC-2022-0046-5268. 316 Individual commenter, Doc. No. FTC-2022-0046-1365. 317 Individual commenter, Doc. No. FTC-2022-0046-9883; see also Individual commenter, Doc. No. FTC2002-0046-9632 (“I was told that GAP insurance was required to be included. . . . I [later] contacted and 

asked for copies of my contracts. On September 5 [the dealer] sent me an email with a credit contract 

attached. I am including it here. It says my monthly payment is over $370. It also shows the cash price as 

close to $17,000.00. I can also see it says the GAP is optional. I never saw this contract. I never signed this 

contract.”). 

168 
making scenarios in the finance office with their car purchases. The 

finance officer flat out ask[ed] them, “did you want the 2 year, 30[,000] 

mile extended warrant[y], or the 4 year 50[,000] mile extended warranty?” 

The wife sat there and asked, “I’m confused. Do I HAVE to pick one of 

those?” Her husband said, “No, he’s trying to trick you into buying one. 

You don’t need any at all.” They then promptly threatened to walk out and 

the finance manager came out and did their paperwork without further 

conflict.318 

Several commenters offered support while also proposing that the Commission 

adopt additional measures to further ensure that consumers understand that optional addons are not required. One dealership group, for example, commenting in support of 

disclosures that optional add-ons are not required, recommended that dealers be required 

to include signage on their websites and in their showrooms or on their sales desks that 

set out both components of the Commission’s proposal: that add-ons are not required, and 

that consumers may purchase or lease the vehicle without add-ons. Other commenters, 

including a consumer protection agency and a consumer advocacy organization, 

suggested that the Commission modify the language in proposed § 463.4(c) to strike the 

“if true” language, asserting that all add-ons should be optional and not required to 

consummate the sale or lease of a vehicle. At least one individual commenter 

recommended that the Commission prohibit dealers from pre-installing add-ons. 

In response to these comments, the Commission notes that, were it to require 

signage stating, generally, that add-ons are optional, or to strike the “if true” language 

from this disclosure, it would cause consumers to be presented with information that may 

not be accurate in all circumstances. Some add-ons might already be installed on the 

vehicle or otherwise required by the dealer. As explained in SBP III.D.2(a) with regard to 

318 Individual commenter, Doc. No. FTC-2022-0046-6816. 

169 
 

 

§ 463.4(a), charges for such add-ons must be included in the vehicle’s offering price.319 

In such cases, representing that add-ons are categorically optional would mislead the 

consumer. Relatedly, by requiring that charges for mandatory items be included in the 

vehicle’s offering price, the Final Rule allows dealers to customize the vehicles they are 

selling while protecting consumers by requiring dealers to disclose the offering price for 

such customized vehicles. Accordingly, the Commission declines to prohibit the practice 

of pre-installing add-ons in this Final Rule, but will continue to monitor the market to 

determine whether pre-installed add-ons require further regulation. At the same time, the 

Commission emphasizes that the protections contemplated here and elsewhere in this 

Final Rule prohibit dealers from obscuring price information and whether an add-on is 

optional, and further require dealers to obtain the express, informed consent of the 

consumer to charge a consumer for any add-on. 

Additionally, several commenters indicated their support for the Commission’s 

proposal while also recommending that the Commission consider further steps to protect 

consumers from deceptive or unfair practices pertaining to the inclusion of add-ons in 

consumer vehicle sales or leases. Some commenters, including a group of State attorneys 

general and a dealership association, requested that the Commission require dealers to 

disclose any mandatory add-ons and whether those add-ons are required in order to 

obtain financing, including by requiring such disclosure in an addendum sticker affixed 

to the motor vehicle. In response, the Commission notes that other provisions of the Final 

Rule prohibit misconduct in this area, including by requiring, at § 463.4(a), that charges 

319 In such cases, however, § 463.4(a) of the Final Rule requires these non-optional add-ons to be included 

in a vehicle’s offering price; if the dealer requires the consumer to pay for them, they are part of the full 

cash price for which a dealer will sell or finance the vehicle to any consumer. See SBP III.D.2(a). 

170 
for such add-ons must be included in the vehicle’s offering price. While consumers may 

benefit from repeated or additional disclosures, each additional disclosure requirement 

would increase both the cost to comply with the regulation and the risk of crowding out 

other important information. Given these risks, the Commission declines to include 

additional requirements regarding the content or form of its add-on disclosure at 

§ 463.4(c). The Commission will continue to monitor the market to gather additional 

information on this issue and will consider whether to modify or expand this or other 

sections in the future based on stakeholder experience with this provision and whether it 

effectively halts unlawful conduct. 

Other commenters, including consumer advocacy organizations and consumer 

attorneys and advocates, urged the Commission to adopt a thirty-day “cooling-off” period 

for the sale of vehicle-related add-ons, similar to that required by the Commission for 

door-to-door and other off-premises sales,320 which would grant consumers time to 

review the paperwork after the transaction, and to cancel unexpected or otherwise 

unwanted add-ons for a full refund. As explained in greater detail in the discussion of 

§ 463.5(c), in SBP III.E.2(c), the Commission also has determined not to include in this 

Final Rule a “cooling-off” period in which add-on products or services may be canceled. 

In this regard, the Commission would benefit from additional information, including the 

length of time needed for such “cooling off” rights to be effective. The Commission may 

consider revisiting this decision in the future based on actual stakeholder experience with 

the provisions of the Final Rule and whether they effectively halt unlawful conduct. 

320 See Rule Concerning Cooling-Off Period for Sales Made at Homes or at Certain Other Locations, 16 

CFR 429. 

171 
Other commenters presented questions or critiques regarding this proposed 

disclosure. As with the Commission’s proposed disclosures generally, some commenters, 

including an industry association and a dealership association, contended that existing 

requirements in a number of States to disclose that add-ons are optional make Federal 

regulation in this area unnecessary or contradictory. As described in detail in SBP III.D.1, 

the Commission first observes that the functioning of such standards demonstrates the 

practicability of its proposed disclosure that add-ons are not required. To the extent a 

State requires additional disclosures regarding add-ons, nothing prevents dealers from 

providing those disclosures as well as those required under part 463 so long as the State 

disclosures are not inconsistent with those required under part 463. To the extent there is 

truly an inconsistency between this part and State law, § 463.9 provides that part 463 will 

govern, but only to the extent of the inconsistency, and only if the State statute, 

regulation, order, or interpretation affords consumers less protection than does the 

corresponding provision of this part. Finally, a number of States do not have existing 

standards in this area; in such States, the Commission’s disclosures operate as a key 

safeguard. 

Commenters, including dealership associations, argued that dealers would 

develop and use an additional form to demonstrate compliance with this disclosure 

requirement, thereby burdening the vehicle sales and delivery process. The Commission 

begins by noting that any such steps are not required by part 463; on the contrary, the 

Commission structured this disclosure to provide dealers with flexibility, within the 

bounds of the law, to provide this essential information in a manner that is clear and 

conspicuous under the particular circumstances of their transactions. This requirement 

172 
 

does not require a complex or lengthy disclosure, is based on similar provisions already 

in operation in certain States,321 and for dealers already disclosing accurate add-on 

information, this provision requires no significant additional burden. 

When making a representation about an add-on product or service, the failure to 

disclose that the add-on is not required and the consumer can purchase or lease the 

vehicle without the add-on, if true, is likely to cause substantial injury to consumers who 

end up paying more for a vehicle sales or lease transaction than they expected by being 

subject to charges of which they are not aware or which they believe are required because 

they were never told they could decline the charges. 

Absent this information, consumers cannot reasonably avoid the injury of being 

charged for these products because they are not aware that they have an option to begin 

with. When consumers are presented with motor vehicle transaction documents that 

include a variety of charges, it is difficult to detect any charges that are added to the 

contract beyond those that are required or have been agreed upon, especially in a stack of 

lengthy, complex, highly technical, and often pre-populated documents, at the close of a 

long sales, financing or leasing process after an already-lengthy process of selecting the 

vehicle and negotiating over its price or payment terms. Consumers cannot reasonably 

avoid charges of which they are unaware, or regarding which they do not know they have 

a choice. 

321 See, e.g., California Car Buyer’s Bill of Rights, Cal. Civ. Code 2981 (requiring dealers to provide a 

written list of specified items purchased and their effect on monthly payments, including GAP, theft 

deterrent devices, and surface protection products); Minn. Stat. 59D.06(b) (requiring any person offering a 

GAP waiver to disclose that the waiver is not required for a consumer to buy or lease the vehicle); Wash. 

Rev. Code. 48.160.050(9) (mandating that GAP waivers disclose that “neither the extension of credit, the 

terms of the credit, nor the terms of the related motor vehicle sale or lease, may be conditioned upon the 

purchase of the waiver.”); La. Stat. Ann. 32:1261(A)(2)(a) (declaring it unlawful for a dealer to require, as 

a condition of sale and delivery, for a consumer to purchase “special features, appliances, accessories, or 

equipment not desired or requested by the purchaser.”). 

173 
 

The injury to consumers from a lack of information about add-on optionality is 

not outweighed by benefits to consumers or competition from withholding this basic 

information. Instead, information about the optional nature of these products or services 

protects consumers from lost time and effort, supracompetitive transaction costs, and 

unexpected charges while increasing competition among dealers, who are able to 

compete on truthful, standard terms. Moreover, the cost of providing this threshold 

information is minimal, especially when compared to the injury to consumers, and 

providing such information is consistent with existing industry guidance.322 

This provision addresses deceptive conduct as well. Throughout the lengthy 

vehicle sales, financing, or leasing process, dealers often discuss various different charges 

at various different times. Such charges include charges the government requires the 

consumers to pay and financing costs. Dealers then often present consumers a total 

amount to pay that differs from the advertised or sticker price. Given that some additional 

charges are required, if a dealer also discusses charges for items that are not required, 

such as optional add-ons, it is reasonable for consumers to believe that charges for such 

items are required. In the course of a lengthy transaction involving extensive 

negotiations, dealers can obscure such products and their associated charges in dense 

paperwork. Moreover, the omitted information is highly material: if consumers knew that 

322 See Nat’l Auto. Dealers Ass’n et al., “Voluntary Protection Products: A Model Dealership Policy” 4 

(2019), https://www.nada.org/regulatory-compliance/voluntary-protection-products-model-dealershippolicy (stating dealerships should “prominently display to customers a poster stating that [add-on products 

or services] offered by the dealership are optional and are not required to purchase or lease a vehicle or 

obtain warranty coverage, financing, financing on particular terms, or any other product or service offered 

by the dealership. . . .”). 

174 
 

 

a particular optional add-on was not required to purchase the vehicle, it would likely 

affect their choice about whether to purchase the add-on.323 

Thus, it is an unfair or deceptive act or practice for dealers to fail to disclose, 

when making a representation about an add-on product or service, that the add-on is not 

required and the consumer can purchase or lease the vehicle without the add-on, if true. 

Further, this provision also serves to prevent the misrepresentations prohibited by 

§ 463.3—including misrepresentations regarding material information about the costs or 

terms of purchasing, financing, or leasing a vehicle, or about any costs, limitations, 

benefits, or any other aspect of an add-on—by requiring consumers to be told whether 

represented add-ons are optional. It also helps prevent dealers from failing to obtain the 

express, informed consent of the consumer for charges, as addressed by § 463.5(c).324 

Thus, the Commission is requiring dealers to disclose, when making representations 

about add-ons, that the add-ons are not required and the consumer can purchase or lease 

the vehicle without the add-ons, if true. 

For the foregoing reasons, and having considered all of the comments that it 

received on this proposal, the Commission is finalizing the required disclosure at 

§ 463.4(c) largely as proposed, with the minor modifications of capitalizing the defined 

term “Vehicle” and clarifying that the requirements of § 463.4(c) also are “prescribed for 

the purpose of preventing the unfair or deceptive acts or practices defined in this part, 

including those in §§ 463.3(a) & (b) and 463.5(c).” 

323 See, e.g., Fed. Trade Comm’n. v. Windward Mktg., Inc., 1997 WL 33642380, at *10 (N.D. Ga. Sept. 30, 

1997)) (“[A]ny representations concerning the price of a product or service are presumptively material.”); 

Thompson Med. Co., Inc., 104 F.T.C. 648, 817 (1984); see also Fed. Trade Comm’n v. Crescent Pub. Grp., 

Inc., 129 F. Supp. 2d 311, 321 (S.D.N.Y. 2001) (“Information concerning prices or charges for goods or 

services is material, as it is ‘likely to affect a consumer’s choice of or conduct regarding a product.’”). 

324 See 15 U.S.C. 57a(a)(1)(B) (the Commission “may include requirements prescribed for the purpose of 

preventing” unfair or deceptive acts or practices). 

175 
d) Total of Payments and Consideration for a Financed or Lease 

Transaction 

Section 463.4(d) of the Commission’s proposed rule required dealers, when 

making any representation about a monthly payment for any vehicle, to disclose the total 

amount the consumer will pay to purchase or lease the vehicle at that monthly payment 

after making all payments as scheduled. If the total amount disclosed assumes the 

consumer will provide consideration, the proposed rule required dealers to disclose the 

amount of consideration to be provided by the consumer. For the reasons discussed in the 

following paragraphs, the Commission is finalizing the required disclosure at § 463.4(d) 

largely as proposed. The Commission is capitalizing the defined term “Vehicle” to 

conform with the definition at § 463.2(e), and making the minor grammatical correction 

of replacing the semicolon and the word “and” at the end of § 463.4(d)(1) with a period. 

The Commission also is adding language to the end of § 463.4(d) clarifying that the 

requirements in § 463.4(d) “also are prescribed for the purpose of preventing the unfair or 

deceptive acts or practices defined in this part, including those in §§ 463.3(a) and 

463.5(c).” 

A number of commenters, including consumer advocacy organizations, supported 

this proposed requirement, contending it would provide essential information to the 

consumer while not contributing to information overload, and noting the information to 

be disclosed would have been calculated by the dealer in the process of determining the 

proposed monthly payment. Many individual commenters also stressed the need for the 

Commission’s proposal: 

 Small businesses are a cornerstone of our economy. Automotive dealers, 

like other retailers, deserve to make a reasonable profit in order to 

176 
 

maintain their physical plants, to purchase inventory, and to pay their staff. 

That being said, some auto dealers have for years used misleading and 

often out-and-out deceptive sales tactics (i.e. lies) to generate sales. . . . 

Sometimes the unwary consumer may not even realize that the actual price 

differs from the quoted price, because the automobile finance agent speaks 

only in terms of monthly payments rather than the total cost. The 

consumer may not even realize that he or she has been “taken” until a 

friend with an amortization table runs the numbers.325 

 At most dealerships, including the one I work at, when a customer asks to 

see figures on a car after a test drive, management goes out of their way to 

make sure the customer only sees the monthly payment. The typical 

numbers presented to the customer initially show the price of the car, the 

trade-in value, the down payment, and the monthly payment options in 

bold numbers at the bottom. The payments calculated by management 

include add-ons, but the price of the add-ons and how they affect the 

payments are not shown. . . . Compounding this issue of hidden add-ons is 

that salespeople are instructed to figure out the customer’s budget 

beforehand (e.g., $450 per month). If the monthly payment with the car 

and add-ons comes out to be less than $450 per month, management will 

often raise the price of the add-ons to get the payment to $450 or even 

slightly above.326 

 I wholeheartedly support the proposed regulation changes for car 

dealerships and the car buying process. As an average consumer who has 

bought 3 vehicles with financing and 2 without, I can see the obvious 

benefit these proposed regulations would have on the car buying process. 

The vast quantities of paperwork and add [-]ons make it easy for car 

dealers to switch things around to their benefit. I had one dealership . . . 

change the term of my auto loan from 72 to 84 months in the middle of 

reprinting the final sales sheet because of another obvious error in the first 

copy. In the midst of all the distractions and misdirection going on, [I] 

didn’t notice [‘]til[l] after the fact. I felt powerless and cheated . . . .327 

 There is no reason that buying a car has to be a chore and so ambiguous on 

price. The dealer was also so twisted up on getting me to focus on the 

monthly payment and not the total price of the car and that is where they 

were able to sneak the price up. Practices like this are also why people 

have such a disdain for purchasing a new/used car.328 

325 Individual commenter, Doc. No. FTC-2022-0046-1216. 326 Individual commenter, Doc. No. FTC-2022-0046-3693. 327 Individual commenter, Doc. No. FTC-2022-0046-5567. 328 Individual commenter, Doc. No. FTC-2022-0046-2176. 

177 
 I have experienced many of the “typical” tactics that one hears about when 

negotiati[ng] with an automobile dealership, like the salesperson always 

wanting to talk about the monthly payment and never the actual trade-in 

price and sales price. . . .I agree that the whole car buying process could be 

made easier and I see no reasons that any fair and honest car dealership 

would object to these proposed changes / rules as they, in my estimation 

are all things that a fair and honest car dealer should be doing anyway. 

The only car dealers that should be objecting to these new rules should be 

the unscrupulous dealers.329 

 When buying a car dealers try to negotiate the monthly payment, so the 

actual total cost is hidden from the buyer until they get into the “financing 

office” where all kinds of unexpected add-ons are sprung on the 

consumer.330 

 I am trying to buy a new car, from the factory, with no modifications or 

alterations, is it so much to ask for? The process of figuring out the price 

of the car is impossible. The sales people are all about the monthly 

payment, when I asked them what the car price is the answer is always 

what payment are you looking for.331 

 They only want to gain the amount you can be “comfortable” on your 

monthly payment so that they can stretch out the term and hammer you 

with hidden fees and other expenses you won[’]t be able to see right 

away.332 

 Dealerships always want you to come in so they can manipulate you into a 

car you can[’]t afford and pay for things you don’t need by hiding them in 

a monthly payment.333 

 If we had to do our grocery shopping the same way dealers want us to buy 

a car, most Americans would starve before sunset. “What kind of monthly 

payment are you looking for in a banana?” is a conversation I should 

never be forced to have . . . .334 

329 Individual commenter, Doc. No. FTC-2022-0046-4034. 330 Individual commenter, Doc. No. FTC-2022-0046-4911. 331 Individual commenter, Doc. No. FTC-2022-0046-5958. 332 Individual commenter, Doc. No. FTC-2022-0046-8847. 333 Individual commenter, Doc. No. FTC-2022-0046-6405. 334 Individual commenter, Doc. No. FTC-2022-0046-3860. 

178 
 

One individual commenter requested that the Commission make clear that 

handwritten negotiation notes made by a dealer would trigger the requirement that this 

proposed disclosure be made in writing.335 In response, the Commission affirms such 

representations have been made “in writing,”336 and thus, where dealers represent a 

monthly payment in such notes, this provision requires them to provide the disclosures in 

§ 463.4(d) in writing. 

Other commenters, including industry associations and individual commenters, 

questioned whether the proposal would require a disclosure in every place a monthly 

payment appears on a dealer’s website, or otherwise would be difficult or infeasible given 

the frequency with which dealers provide consumers with monthly payment information, 

suggesting that such a requirement could either overwhelm consumers or dissuade 

dealers from providing monthly payment information, or arguing337 that the proposal 

overlapped with other laws such as the Truth in Lending Act or the Consumer Leasing 

Act. Regarding monthly payment amounts appearing more than once or in multiple 

places, the Commission notes that, as proposed, this section would require disclosure of 

the total purchase or lease amount for a vehicle including any assumed consumerprovided consideration, and only when making a representation about the vehicle’s 

monthly payment amount; it would not require a complex or lengthy disclosure. 

Consumers shop for vehicles and interact with online interfaces, and other advertising in 

many different ways; thus, it is important for this simple disclosure to accompany a 

335 Individual commenter, Doc. No. FTC-2022-046-9469 at 6-7. 336 See, e.g., Writing, Black’s Law Dictionary (11th ed. 2019) (defining “writing” as “[a]ny intentional 

recording of words in a visual form, whether in handwriting, printing, typewriting, or any other tangible 

form that may be viewed or heard with or without mechanical aids.”); cf. Fed. R. Evid. 1001(a) (defining 

“writing” as letters, words, numbers, or their equivalent set down in any form”). 337 These association commenters made these contentions regarding the monthly payment disclosures at 

both § 463.4(d) and (e). The Commission responds to these contentions in this section. 

179 
 

monthly payment representation however a consumer might encounter it. Moreover, the 

Commission has taken into account existing disclosure obligations.338 Monthly payment 

amounts for motor vehicle sales or leases constitute so-called “triggering terms” under 

the Truth in Lending Act, the Consumer Leasing Act, and their implementing 

Regulations Z and M. As such, dealers currently providing such information, including 

on their websites or other online interfaces, are bound by existing laws that require 

providing consumers with additional terms in a clear and conspicuous way: in the case of 

vehicle credit transaction offers, this includes the terms of repayment, which reflect the 

repayment obligations over the full term of the loan;339 in the case of vehicle lease offers, 

this includes the number, amounts, and due dates or periods of scheduled payments under 

the lease.340 The Commission’s disclosure requirement takes into account these existing 

obligations, requiring, specifically: the total amount the consumer will pay to purchase or 

lease the vehicle at a represented monthly payment amount including any assumed 

consumer-provided consideration. Similarly, regarding the feasibility of providing this 

disclosure as often as dealers provide consumers with monthly payment information: 

once dealers choose to make a representation about a monthly payment, they are capable 

of disclosing a total of payments for the consumer based on the same inputs needed to 

arrive at that voluntary monthly payment representation. 

The Commission further notes that, in the event a monthly payment is already 

being disclosed, the associated total of payment would be calculated with the same 

338 One industry commenter, in expressing concern that § 463.4(d) and (e) may conflict with Regulations Z 

and M, questioned whether the FTC coordinated with the Federal Reserve Board. Several Senators 

similarly questioned whether the FTC consulted with the Federal Reserve Board, CFPB, or other agencies. 

Although the Commission cannot comment on specific interactions, it coordinates regularly with other 

Federal agencies, including the Federal Reserve Board and the CFPB. 

339 See 12 CFR 1026.24(b), (d)(2)(ii). 340 See 12 CFR 1013.7(b), (d)(2)(iii). 

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financing or leasing estimates used to calculate the monthly payment. Dealers already 

must be prepared to calculate such a total to satisfy their obligations under TILA, the 

CLA, or their implementing regulations.341 

Regarding § 463.4(d)’s similarity to existing laws, as discussed previously, this 

provision is indeed consistent with other laws, and commenters have not indicated how 

providing truthful information about total payment amounts along with information they 

already provide about monthly payment amounts would unduly burden them or harm 

consumers, or how providing such information in writing before providing consumers 

with the contract, if they are already providing monthly payment information in writing 

prior to the contract, would do so. 

Some dealership associations described certain elements of the proposal as vague 

or unclear, requesting that the Commission clarify its use of the term “by implication” 

with regard to a monthly payment, or alternatively, that the Commission omit the terms 

“any” (as it pertains to “any representation”), “by implication,” and “indirectly” from the 

proposed disclosure provision.342 Regarding the use of the term “by implication” with 

regard to a monthly payment, as discussed in the section-by-section analysis of § 463.3 in 

SBP III.C with respect to the prohibition on express or implied misrepresentations, the 

341 As is currently the case under Federal law and the Final Rule, the terms must be the terms available to 

the typical consumer. See, e.g., Fed. Trade Comm’n v. Five Star Auto Club, 97 F. Supp. 2d 502, 528 

(S.D.N.Y. 2000) (“[A]t the very least it would have been reasonable for consumers to have assumed that 

the promised rewards were achieved by the typical Five Star participant.”). This is consistent with prior 

FTC enforcement actions. See, e.g., Complaint ¶¶ 48-53, 82-84, Fed. Trade Comm’n v. Universal City 

Nissan, Inc., No. 2:16-cv-07329 (C.D. Cal. Sept. 29, 2016) (alleging unlawful deception where a dealer’s 

advertisements list prominent terms not generally available to consumers, including where those terms are 

subject to various qualifications or restrictions); Complaint ¶¶ 8-10, Progressive Chevrolet Co., No. C4578 (F.T.C. June 13, 2016) (alleging advertised offer was deceptive because the typical consumer would 

not qualify for the offer). 

342 One commenter requested clarification or deletion of “any,” “by implication” and “indirectly” from 

§ 463.4(c) and (e) for the same reasons it articulated with regard to § 463.4(d): that the terms are too vague. 

The explanation provided in the text pertains to these sections as well. 

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Commission notes that such language is consistent with longstanding law, and given that 

representations can mislead reasonable consumers even without making express claims, 

the provision could be rendered meaningless without it.343 Variations of the phrase 

“expressly or by implication” appear frequently in existing Commission guides and 

regulations,344 and implied claims are treated extensively in the longstanding FTC Policy 

Statement on Deception, which the Commission issued in 1983 to provide guidance to 

343 The FTC Policy Statement on Deception and FTC cases make clear that both express and implied claims 

can be deceptive. See, e.g., ECM Biofilms, Inc. v. Fed. Trade Comm’n, 851 F.3d 599 (6th Cir. 2017) 

(affirming Commission’s finding that an additive manufacturer’s unqualified biodegradability claim 

conveyed an implied claim that its plastic would completely biodegrade within five years); POM 

Wonderful LLC, Doc. No. C-9344 (F.T.C. Jan. 10, 2013) (Opinion of the Commission), generally aff’d by 

POM Wonderful, LLC v. Fed. Trade Comm’n, 777 F.3d 478 (D.C. Cir. 2015) (finding that company’s 

advertisements would reasonably be interpreted by consumers to contain an implied claim that POM 

products treat, prevent, or reduce the risk of certain health conditions and for some ads that these effects 

were clinically proven); Kraft, Inc. v. Fed. Trade Comm’n, 970 F.2d 311 (7th Cir. 1992) (affirming finding 

of deception where Kraft advertisements juxtaposed references to the milk contained in Kraft singles and 

the calcium content of the milk, the combination of which implied that each Kraft single contained the 

same amount of calcium as five ounces of milk). Further, to be considered reasonable, the interpretation or 

reaction does not have to be the only one; when a seller’s representation conveys more than one meaning to 

reasonable consumers, one of which is false, the seller is liable for the misleading interpretation. See FTC 

Policy Statement on Deception, supra note 42, at 3. Further, an interpretation will be presumed reasonable 

if it is the one the respondent intended to convey. Id. 344 See, e.g., Telemarketing Sales Rule, 16 CFR 310.3(a)(2) (prohibiting “[m]isrepresenting, directly or by 

implication, in the sale of goods or services” a list of ten categories of material information); 16 CFR 

310.2(o) (defining “debt relief service” as any program or service “represented, directly or by implication, 

to renegotiate, settle, or in any way alter” certain terms); 16 CFR 310.5(a)(2) (requiring telemarketers to 

keep records of certain prize and prize-recipient information “for prizes that are represented, directly or by 

implication, to have a value of $25.00 or more”); Business Opportunity Rule, 16 CFR 437.1(c) (defining a 

“(b)usiness opportunity” as a commercial arrangement in which, among other criteria, “[t]he seller, 

expressly or by implication, orally or in writing, represents that” it will provide, inter alia, business 

locations, outlets, accounts, or customers); Disclosure Requirements and Prohibitions Concerning 

Franchising, 16 CFR 436.1(e) (defining “(f)inancial performance representation” as any representation to a 

prospective franchisee that states, “expressly or by implication, a specific level or range” of sales, income, 

or profits); Military Credit Monitoring Rule, 16 CFR 609.3(e) (describing as prohibited materials those that 

“expressly or by implication” represent certain “interfering, detracting, inconsistent, and/or undermining” 

information); Rules and Regulations Under Fur Products Labeling Act, 16 CFR 301.14 (requiring an 

“unknown” origin disclosure when “no representations are made directly or by implication” regarding the 

origin of used furs); 16 CFR 301.18 (regulating the “passing off” of domestic furs as imported by 

prohibiting labeling, invoicing, or advertising that “represent[s] directly or by implication” that such furs 

have been imported); 16 CFR 301.43 (regulating the use of deceptive trade or corporate names by 

prohibiting any “representation which misrepresents directly or by implication” certain information); Power 

Output Claims for Amplifiers Utilized in Home Entertainment Products, 16 CFR 432.1(a) (defining the 

regulation’s scope when certain amplifier features or characteristics are “represented, either expressly or by 

implication, in connection with the advertising, sale, or offering for sale”). 

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the public on the meaning of deception.345 Furthermore, this language serves to help 

ensure that dealers may not avoid this disclosure requirement by making only implied 

reference to monthly payments, including by referring to a monthly payment amount that 

is not explicitly identified as such, or by referring to a regular periodic payment made on 

a different installment basis (e.g., a biweekly payment) to indirectly illustrate a 

consumer’s monthly payment obligations. 

These same reasons also counsel against deleting the terms “any” and “indirectly” 

from this proposed disclosure provision. To begin, one dealership association commenter 

suggested deleting these terms from the regulatory text, but did not explain the nature of 

its specific concern regarding its use of the term “any,” instead claiming generally that 

the terms with which the commenter took issue were “broad,” “vague,” and “imprecise.” 

As proposed, the Commission’s total payments disclosure would be required when a 

dealer makes “any representation . . . about a monthly payment for any vehicle.” These 

disclosure circumstances are markedly similar to those under Regulation Z and 

Regulation M: Regulation Z requires the disclosure of additional payment terms when 

“any” of a number of terms is set forth, including “[t]he amount of any payment”;346 

Regulation M similarly requires the disclosure of additional terms when “any” of a 

number of items is stated, including “[t]he amount of any payment.”347 The use of the 

term “any” is consistent with existing law, and thus is not confusing or impracticable. 

Furthermore, as with representations made “by implication,” the Commission has a 

longstanding practice of regulating representations made “indirectly” in the same manner 

345 See FTC Policy Statement on Deception, supra note 42, at 2. 346 12 CFR 1026.24(d) (emphasis added). 347 12 CFR 1013.7(d) (emphasis added). 

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as those made directly,348 and it does so to help ensure that its requirements are effective 

and not easily avoided. The Commission thus declines to modify their usage in 

§ 463.4(d). 

Some commenters, including a dealership association, questioned whether the 

disclosure requirement would require dealers to obtain individuals’ consumer reports 

before providing monthly payment information. In response, the Commission notes that 

§ 463.4(d) does not alter the status quo regarding the information a dealer must have in 

order to represent a monthly payment amount. As previously discussed, this provision 

does not require disclosure of a monthly payment; instead, if a dealer chooses to 

represent a monthly payment amount, § 463.4(d) requires a corresponding disclosure of 

“the total amount the consumer will pay to purchase or lease the vehicle at that monthly 

payment.” As previously explained in detail, dealers are capable of disclosing a total of 

payments for the consumer based on such voluntary monthly payment representations. 

Furthermore, to the extent a dealer may be providing consumers with estimated monthly 

348 See, e.g., Business Opportunity Rule, 16 CFR 437.6 (prohibiting “any seller, directly or indirectly 

through a third party” from engaging in certain prohibited practices); Credit Practices Rule, 16 CFR 444.2 

(prohibiting as unfair “a lender or retail installment seller directly or indirectly” taking or receiving certain 

obligations from a consumer); 16 CFR 444.3 (prohibiting as deceptive “a lender or retail installment seller, 

directly or indirectly” misrepresenting cosigner liability, and prohibiting as unfair “a lender or retail 

installment seller, directly or indirectly” obligating a cosigner under certain circumstances); 16 CFR 444.4 

(prohibiting as unfair the act or practice of “a creditor, directly or indirectly” levying or collecting certain 

late charges); Telemarketing Sales Rule, 16 CFR 310.3(a)(3) (prohibiting as deceptive the act or practice of 

“[c]ausing billing information to be submitted for payment, or collecting or attempting to collect payment 

for goods or services or a charitable contribution, directly or indirectly” without express verifiable 

authorization); 16 CFR 310.4(a)(7) (prohibiting as abusive the act or practice of “[c]ausing billing 

information to be submitted for payment, directly or indirectly, without the express informed consent of the 

customer or donor”); Mail, Internet, or Telephone Order Merchandise Rule, 16 CFR 435.1(f) (defining 

“Telephone” as “any direct or indirect use of the telephone to order merchandise . . . .”); Preservation of 

Consumers’ Claims and Defenses, 16 CFR 433.2 (prohibiting as an unfair or deceptive act or practice “for 

a seller, directly or indirectly” to take or receive a consumer credit contract which does not contain the 

Commission’s “Holder Rule” provision); Prohibition of Energy Market Manipulation Rule, 16 CFR 317.3 

(declaring “[i]t shall be unlawful for any person, directly or indirectly” to engage in certain energy market 

manipulation practices); Trade Regulation Rule Pursuant to the Telephone Disclosure and Dispute 

Resolution Act of 1992, 16 CFR 308.7(i) (declaring that regulated persons may not “report or threaten 

directly or indirectly to report adverse information” on a consumer report under certain circumstances). 

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payment information, the dealer may use the same assumptions used for estimating the 

monthly payment in order to determine the total of payments. Further, as is required 

under other law and this Rule, the dealer must refrain from deception, including by 

avoiding assumptions that the consumer would not reasonably expect or for which the 

consumer would not reasonably qualify.349 

When making a representation, expressly or by implication, directly or indirectly, 

about a monthly payment for any vehicle, the failure to disclose the total amount the 

consumer will pay, inclusive of any consideration, to purchase or lease the vehicle at that 

monthly payment after making all payments as scheduled is likely to cause substantial 

injury to consumers who waste time and effort pursuing offers that are not actually 

available at reasonably expected terms; or who pay more for a vehicle sales or lease 

transaction than they expected by being subject to hidden charges or an unexpected down 

payment or trade-in requirement; or who are subject to the higher financing or leasing 

costs and greater risk of default associated with an unexpectedly lengthy loan or lease 

term. Moreover, when a consumer pays for his or her vehicle over a longer period of 

time, there is an increased likelihood that negative equity will result when the consumer 

needs or wants to purchase or lease another vehicle, because a vehicle’s value tends to 

decline faster than the amount owed.350 Longer motor vehicle financing term lengths also 

have higher rates of default, potentially posing greater risks to both borrowers and 

349 Importantly, as is the case under current law, a dealer may not mislead the consumer about the 

likelihood of qualifying for any particular credit or leasing terms in the course of providing this disclosure. 

Generally speaking, such deception is less likely where the dealer communicates to the consumer any 

assumptions it may have made, along with the basis for any such assumptions, in a manner in which the 

consumer understands this information. 

350 Buckle Up, supra note 63, at 7. 

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financing companies.351 Even if a consumer eventually learns the true total payment, or 

later learns that the terms being discussed are based on a previously undisclosed 

requirement that the consumer provide consideration, such as a down payment, the 

consumer cannot recover the time spent pursuing the offer that the consumer had 

expected. 

The injury caused by the failure to disclose the total amount and consideration is 

not reasonably avoidable. As the Commission has observed previously, withholding total 

payment information enables dealers to focus consumers on the monthly payment amount 

in isolation. Under such circumstances, dealers may add unwanted, undisclosed, or even 

fictitious add-on charges more easily, since consumers may not notice the relatively small 

changes an add-on charge makes when secreted within a monthly vehicle payment, 

despite the fact that such hidden charges can cost a consumer more than a thousand 

dollars over the course of an auto financing or lease term.352 The absence of information 

concerning the total of payments—which is within the sole control of the dealership— 

351 Consumer Fin. Prot. Bureau, “Quarterly Consumer Credit Trends: Growth in Longer-Term Auto Loans” 

7-8 (Nov. 2017), https://files.consumerfinance.gov/f/documents/cfpb_consumer-credit-trends_longer-termauto-loans_2017Q2.pdf; see also Zhengfeng Guo et al., Off. of the Comptroller of the Currency, “A Puzzle 

in the Relation Between Risk and Pricing of Long-Term Auto Loans” 2, 4-5, 20 (June 2020), 

https://www.occ.gov/publications-and-resources/publications/economics/working-papers-banking-perf-reg/ 

pub-econ-working-paper-puzzle-long-term-auto-loans.pdf (finding motor vehicle financing with six-plusyear terms have higher default rates than shorter-term financing during each year of their lifetimes, after 

controlling for borrower and loan-level risk factors). 352 See Auto Buyer Study, supra note 25, at 14 (“[T]he dealer can extend the maturity of the financing to 

reduce the effect of the add-on on the monthly payment, obscuring the total cost of the add-on”); Auto 

Buyer Study: Appendix, supra note 66, at 229, 233 (Study participant 457481) (dealership pitching add-ons 

at the end of the negotiation, and in terms of consumer’s monthly price); Auto Buyer Study: Appendix, 

supra note 66, at 701 (Study participant 437175) (dealership pitching add-ons in terms of monthly price); 

see also Complaint ¶¶ 12-19, Fed. Trade Comm’n v. Liberty Chevrolet, Inc., No. 1:20-cv-03945 (S.D.N.Y. 

May 21, 2020) (alleging dealership included deceptive and unauthorized add-on charges in consumers’ 

transactions); Complaint ¶¶ 21-28, Fed. Trade Comm’n v. Ramey Motors, No. 1:14-cv-29603 (S.D. W. Va. 

Dec. 11, 2014) (alleging dealer emphasized attractive terms such as low monthly payments but concealed 

substantial cash down payments or trade-in requirements); Complaint ¶¶ 38-46, Fed. Trade Comm’n v. 

Billion Auto, Inc., No. 5:14-cv-04118-MWB (N.D. Iowa Dec. 11, 2014) (alleging dealer touted attractive 

terms such as low monthly payments but concealed significant extra costs). 

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also enables dealers to use claims regarding monthly payment amounts to falsely imply 

savings or parity between different offers where reduced monthly payments increase the 

total vehicle cost due to an increased payment term or annual percentage rate. 

The injury to consumers from a lack of total payment information is not 

outweighed by benefits to consumers or competition from withholding this basic 

information. Instead, the burden of disclosing this information—which the dealer 

determines and can calculate upfront—is minimal for dealers who are already making 

representations about a monthly payment for a vehicle, especially when compared to the 

injury to consumers. 

Regarding deception, as detailed in the NPRM and in this SBP, cost is one of the 

most material pieces of information for a consumer in making an informed purchasing 

decision.353 Yet it can be difficult for consumers to uncover the actual costs, and their 

actual associated terms, for which a dealer will sell or lease an advertised vehicle until 

visiting the dealership and spending hours on the lot. When an advertisement or other 

communication references a monetary amount or financing term, it is reasonable for a 

consumer to expect that those amounts and terms are available for a vehicle at other 

standard terms, and, in the absence of information to the contrary, that no down payment 

or other consideration is required. If instead, for example, a dealer advertises a low 

monthly payment based on an unexpectedly long financing term or unexpectedly high 

interest rate that results in a higher total payment than standard terms would have yielded, 

353 See, e.g., Fed. Trade Comm’n v. Windward Mktg., Inc., No. Civ.A. 1:96-CV-615F, 1997 WL 33642380, 

at *10 (N.D. Ga. Sept. 30, 1997) (“[A]ny representations concerning the price of a product or service are 

presumptively material.”); Removatron Int’l Corp., 111 F.T.C. 206, 309 (1988) (“The Commission 

presumes as material express claims and implied claims pertaining to a product’s . . . cost.” (citing 

Thompson Med. Co., Inc., 104 F.T.C. 648, 817 (1984)). 

187 
 

or based on an expected but undisclosed down payment or other consideration to be 

provided by the consumer, the consumer will be induced to visit the dealership based on a 

misimpression of what they reasonably expect the total payment to be. 

If consumers knew that the true terms were beyond what was expected, or their 

transaction included charges for unwanted items, that would likely affect their choice to 

visit a particular dealership over another dealership. Thus, misleading consumers about 

cost information is material. A lack of total payment information therefore is likely to 

affect a consumer’s decision to purchase or lease a particular vehicle and is material, and 

paying an increased total cost causes substantial consumer injury. 

Thus, it is an unfair or deceptive act or practice for dealers to fail to disclose when 

making any representation about a monthly payment for any vehicle, the total amount the 

consumer will pay to purchase or lease the vehicle at that monthly payment after making 

all payments as scheduled, inclusive of assumed consideration. Further, this provision 

also addresses the misrepresentations prohibited by § 463.3—including 

misrepresentations regarding material information about the costs or terms of purchasing, 

financing, or leasing a vehicle—by requiring consumers to be provided with the total 

payment amount associated with any represented monthly payment amount. It also helps 

prevent dealers from failing to obtain the express, informed consent of the consumer for 

charges, as required by § 463.5(c).354 To address these unfair or deceptive acts or 

practices, the Commission is requiring dealers to disclose, when making any 

representation about a monthly payment for any vehicle, the total amount the consumer 

will pay to purchase or lease the vehicle at that monthly payment after making all 

354 See 15 U.S.C. 57a(a)(1)(B) (the Commission “may include requirements prescribed for the purpose of 

preventing” unfair or deceptive acts or practices). 

188 
payments as scheduled, inclusive of assumed consideration. As with a vehicle’s price, 

when cost information in the market is distorted or concealed—especially in documentand time-intensive vehicle transactions—consumers are unable to effectively differentiate 

between sellers, and sellers trying to deal honestly with consumers are put at a 

competitive disadvantage. 

For the foregoing reasons, and having considered all of the comments that it 

received, the Commission is finalizing the required disclosure at § 463.4(d) largely as 

proposed, with the minor modifications of capitalizing the defined term “Vehicle,” 

substituting a period for a semi-colon and the word “and” at the end of § 463.4(d)(1), and 

clarifying that the requirements of § 463.4(d) also are “prescribed for the purpose of 

preventing the unfair or deceptive acts or practices defined in this part, including those in 

§§ 463.3(a) and 463.5(c).” 

e) Monthly Payments Comparison 

Proposed § 463.4(e) required dealers, when making any comparison between 

payment options that includes discussion of a lower monthly payment, to disclose that the 

lower monthly payment will increase the total amount the consumer will pay to purchase 

or lease the vehicle, if true. For the reasons discussed in the following paragraphs, the 

Commission is finalizing the required disclosure at § 463.4(e) largely as proposed. The 

Commission is capitalizing the defined term “Vehicle” to conform with the definition at 

§ 463.2(e). The Commission also is adding language to the end of § 463.4(e) clarifying 

that the requirements in § 463.4(e) “also are prescribed for the purpose of preventing the 

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unfair or deceptive acts or practices defined in this part, including those in §§ 463.3(a) 

and 463.5(c).” 

A number of institutional commenters supported such a provision, emphasizing 

that it would provide an appropriate amount of helpful information and help make the 

true terms of a car deal much clearer to consumers. Many individual commenters also 

stressed the need for the Commission’s proposal: 

 My car buying experience involving dealers has include [sic] many of the 

issues identified, such as: . . . Negotiating a 4 year loan with a known loan 

payment (did math prior to final steps). Presented paperwork with a 

similar but lesser monthly payment. Dealer had changed terms to 5 year 

loan without open disclosure. Happy to hear, “the bank gave you a better 

rate, you got a smaller payment,” almost didn’t catch what they’d done.355 

 I have purchased about 10 new vehicles in my lifetime. . . . They prey on 

monthly payments as a tool, saying they can lower the monthly payment 

but not telling customers they added months or years to the term. 

Anything that forces them to be honest is a great justice for consumers!356 

 Sometimes, when you are in negotiations with a car dealer, they engage in 

deceptive practices by lowering your monthly payment amount without 

telling you how they lowered it. They may have increased your down 

payment or increased your interest rate or increased your term of the loan. 

This can lead [t]o much higher costs for the consumer. I had reached an 

agreement with a dealer to lower my monthly payments, but what they 

didn’t tell me until I got into the F & I manager’s office is that my deal 

[was] for 6 years, not 4, and they increased my interest rate.357 

 . . . I was quoted a payment at 72 months with adding aftermarket 

warranty but come to find out they extended my term to 76 months in 

order to meet what I wanted to pay monthly. I did not find this out until 

after I bought the car. Very dishonest dealership. This last minute bait and 

switch has to stop.358 

355 Individual commenter, Doc. No. FTC-2022-0046-0141. 356 Individual commenter, Doc. No. FTC-2022-0046-0985. 357 Individual commenter, Doc. No. FTC-2022-0046-1652. 358 Individual commenter, Doc. No. FTC-2022-0046-7569. 

190 
 I purchased a truck from a Tennessee truck dealer. After agreeing on a 

monthly payment of $920 for 72 months, I travelled to the dealership to 

complete the purchase, but the finance office changed the terms to 84 

months with the same monthly payment, effectively adding $11,000 to 

their profit!359 

 I just want to walk in to a dealership, find a car that fits my needs and buy 

it. And what is up with these RIDUCULOUSLY [sic] long loan terms? 72 

MONTHS? If someone cannot afford a car dealers shouldn’t extend the 

loan, they should steer them to a more affordable car!360 

The Commission received numerous comments relating to the scope and terms of 

its proposed monthly payments comparison disclosure. A number of institutional and 

individual commenters urged the Commission to require that such disclosures uniformly 

be provided to consumers in writing. The Commission agrees with commenters that 

many monthly payment comparisons happen verbally, in the course of discussions with 

consumers. As proposed, the Commission’s monthly payment comparison disclosure 

made clear that such discussions are covered, and that dealers would be required to 

inform consumers in the course of such discussions—“[w]hen making any comparison 

between payment options”—if a represented lower monthly payment will increase the 

total amount the consumer will pay to purchase or lease the vehicle. The Commission 

believes there are significant consumer benefits when such disclosures are made verbally, 

close in time to when monthly payment options are discussed. Given that car-buying and 

leasing transactions are already lengthy and paperwork-heavy, the Commission believes 

it must be judicious with any additional written disclosure requirements to avoid 

crowding out other disclosures or other important information. Accordingly, the 

Commission has determined not to modify § 463.4(e) from its original proposal in order 

359 Individual commenter, Doc. No. FTC-2022-0046-0115. 360 Individual commenter, Doc. No. FTC-2022-0046-0050. 

191 
to mandate that the required disclosure always be made in writing. The Commission will 

continue to monitor the market for any further developments in this area and will 

consider whether to modify this or other Final Rule provisions in the future. 

Some commenters, including consumer advocacy organizations, urged the 

Commission to adopt specific proposed language rather than a general disclosure 

requirement, or a requirement that this disclosure include the total amount the consumer 

will pay at the lower monthly payment under discussion. Regarding the proposal to 

require particular, uniform disclosure language, the Commission did not receive, in the 

course of public comment, evidence sufficient to conclude that uniform formatting for the 

delivery of such disclosures would be necessary to make them effective. The 

Commission currently lacks information to evaluate whether any particular form 

disclosure would effectively communicate the required information to consumers in a 

manner that in all circumstances obviates deceptive or unfair conduct. Moreover, 

regarding the proposal to require that the monthly payment comparison disclosure 

additionally require dealers to disclose the new total amount that the consumer will pay, 

the Commission emphasizes that part 463 will require such a disclosure without the need 

to modify this provision from the Commission’s original proposal. As noted in the 

paragraph-by-paragraph analysis of § 463.4(d) in SBP III.D.2(d), the Commission is 

finalizing § 463.4(d), which requires dealers making any representation about a monthly 

payment for a vehicle to disclose the total amount the consumer will pay to purchase or 

lease the vehicle at a given monthly payment amount after making all payments as 

scheduled, inclusive of assumed consideration, largely as proposed. The monthly 

payment comparison discussions covered by § 463.4(e) are those that “include[] 

192 
 

discussion of a lower monthly payment.” To the extent a dealer, in the course of such 

discussions, makes a representation “about a monthly payment for any Vehicle,” 

§ 463.4(d) will require the dealer to disclose the total amount the consumer will pay at 

that monthly payment amount. 

Comments, including those from a number of dealership associations361 and an 

individual commenter, characterized the Commission’s proposal as burdensome and 

likely to lead to excessive disclosures while providing little additional assistance to 

consumers. In response, the Commission emphasizes the streamlined nature of proposed 

§ 463.4(e). In its proposal, the Commission refrained from additional formal mandates in 

order to provide dealers with flexibility, within the bounds of the law, to provide this 

essential information—that a given lower monthly payment will increase the total amount 

the consumer will pay—including so that dealers already conveying this information in a 

non-deceptive manner may continue to do so. 

Thus, after careful review of the comments, the Commission has determined to 

finalize § 463.4(e) largely as proposed. When making any comparison between payment 

options, expressly or by implication, directly or indirectly, that includes discussion of a 

lower monthly payment, the failure to disclose that the lower monthly payment will 

increase the total amount the consumer will pay to purchase or lease the vehicle, if true, is 

likely to mislead consumers regarding the total terms associated with the lower monthly 

payment amount. When a dealer elects to compare between different monthly payment 

options, if the lower monthly payment would result in a higher total transaction cost, 

361 As previously indicated, some such association commenters contended generally that the proposed total 

of payments disclosures at § 463.4(d) and (e) overlapped with the Truth in Lending Act or other laws. The 

Commission responds to this point in the context of the discussion of § 463.4(d), in SBP III.D.2(d). 

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discussion of this fact is necessary to prevent the comparison from being misleading. 

Absent this information, it is reasonable for a consumer who is presented with a monthly 

payment comparison to expect that the lower monthly payment amount would correspond 

to lower total transaction cost. This is because the opposite can only be true if the dealer 

has created a so-called “apples to oranges” comparison, in which an undisclosed element 

of the transaction—such as the length of the payment term, or the existence of a balloon 

payment—has not been kept constant across the two monthly payment scenarios being 

compared. Under such circumstances, without providing the consumer with further 

information, the dealer’s claims regarding monthly payment amounts falsely imply 

saving or parity between different offers where reduced monthly payments increase the 

total vehicle cost. Thus, where a lower monthly payment amount represents a more 

expensive transaction, the dealer must, at a minimum, disclose this simple but 

counterintuitive fact to not deceive consumers.362 

Furthermore, as explained in the NPRM and in the paragraph-by-paragraph 

discussion of § 463.4(d) in SBP III.D.2(d), cost is one of the most material pieces of 

information for a consumer in making an informed purchasing decision.363 

Regarding unfairness, when making any comparison between payment options, 

expressly or by implication, directly or indirectly, that includes discussion of a lower 

362 Depending on the circumstances, a dealer may need to take additional measures, such as disclosing the 

specific basis for any increase in total costs, or amount of any such increase, in order to avoid deceiving 

consumers. 

363 See, e.g., Fed. Trade Comm’n v. Windward Mktg., Inc., No. Civ.A. 1:96-CV-615F, 1997 WL 33642380, 

at *10 (N.D. Ga. Sept. 30, 1997) (“[A]ny representations concerning the price of a product or service are 

presumptively material.”); Removatron Int’l Corp., 111 F.T.C. 206, 309 (1988) (“The Commission 

presumes as material express claims and implied claims pertaining to a product’s . . . cost.” (citing 

Thompson Med. Co., Inc., 104 F.T.C. 648, 817 (1984)); see also Fed. Trade Comm’n v. Crescent Pub. 

Grp., Inc., 129 F. Supp. 2d 311, 321 (S.D.N.Y. 2001) (“Information concerning prices or charges for goods 

or services is material, as it is ‘likely to affect a consumer’s choice of or conduct regarding a product.’”). 

194 
monthly payment, the failure to disclose that the lower monthly payment will increase the 

total amount the consumer will pay to purchase or lease the vehicle, if true, is likely to 

cause substantial injury to consumers who waste time and effort pursuing offers that are 

not actually available at the total payment amount they expect; or who pay more for a 

vehicle sales or lease transaction than they expected by being subject to hidden charges or 

an unexpected down payment or trade-in requirement; or who are subject to the higher 

financing costs and greater risk of default associated with an unexpectedly lengthy loan 

term. 

Furthermore, the injury caused by withholding this information is not reasonably 

avoidable by consumers. During negotiations, if dealers agree to a lower monthly 

payment, consumers have no reason to expect that this apparent “concession” in fact 

means an increased total vehicle cost due to an increased payment term or annual 

percentage rate. Under such circumstances, dealers can also add unwanted, undisclosed, 

or even fictitious add-on charges more easily, by increasing the payment term enough 

that including add-on charges would still result in a lower monthly payment as a 

“concession” to the consumer. The injury to consumers from a lack of price information 

is not outweighed by any benefits to consumers or competition from withholding this 

basic information. Instead, information about increased cost protects consumers from lost 

time and effort, and unexpected charges while increasing competition among dealers, 

who would be able to compete on truthful, standard terms. The costs of stating that the 

total payment has increased—which the dealer determines and can calculate upfront—are 

minimal for dealers that are already making representations about a monthly payment for 

a vehicle, especially when compared to the injury to consumers. 

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Thus, it is an unfair or deceptive act or practice for dealers to fail to disclose, 

when making any comparison between payment options, expressly or by implication, 

directly or indirectly, that includes discussion of a lower monthly payment, that the lower 

monthly payment will increase the total amount the consumer will pay to purchase or 

lease the vehicle, if true. Further, this provision also serves to prevent the 

misrepresentations prohibited by § 463.3—including misrepresentations regarding 

material information about the costs or terms of purchasing, financing, or leasing a 

vehicle—by requiring consumers to be given accurate information that the total payment 

will increase when presented with a lower monthly payment. It also helps prevent dealers 

from failing to obtain the express, informed consent of the consumer for charges, as 

addressed by § 463.5(c), including charges relating to the financing or lease of a 

vehicle.364 Thus, the Commission is requiring dealers to disclose, when making any 

comparison between payment options, expressly or by implication, directly or indirectly, 

that includes discussion of a lower monthly payment, that the lower monthly payment 

will increase the total amount the consumer will pay to purchase or lease the vehicle, if 

true. As with a vehicle’s price, when cost information in the market is distorted or 

concealed—especially in document- and time-intensive vehicle transactions—consumers 

are unable to effectively differentiate between sellers, and sellers trying to deal honestly 

with consumers are put at a competitive disadvantage. 

For the foregoing reasons, and having considered all of the comments that it 

received on this proposed provision, the Commission is finalizing the required disclosure 

at § 463.4(e) largely as proposed, with the minor modifications of capitalizing the defined 

364 See 15 U.S.C. 57a(a)(1)(B) (the Commission “may include requirements prescribed for the purpose of 

preventing” unfair or deceptive acts or practices). 

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term “Vehicle” additional language clarifying that the requirements in § 463.4(e) “also 

are prescribed for the purpose of preventing the unfair or deceptive acts or practices 

defined in this part, including those in §§ 463.3(a) and 463.5(c).” 

E. § 463.5: Dealer Charges for Add-Ons and Other Items 

1. Overview 

Proposed § 463.5 prohibited motor vehicle dealers from charging for add-on 

products or services from which the consumer would not benefit; from charging 

consumers for undisclosed or unselected add-ons unless certain requirements were met; 

and from charging for any item unless the dealer obtains the express, informed consent of 

the consumer for the item. 

In response to the NPRM, various stakeholder groups and individuals submitted 

comments regarding these proposed provisions. Among these were comments in favor of 

the provisions; comments that urged the Commission to include additional restrictions on 

add-on charges; and comments questioning or recommending against the proposed 

provisions. 

After careful consideration of the comments, the Commission has determined to 

finalize § 463.5(a) and (c) without substantive modification and has determined not to 

finalize § 463.5(b) regarding undisclosed or unselected add-ons. The Commission also is 

making minor textual edits to the introductory language in § 463.5 for clarity and 

consistency: substituting “Federal Trade Commission Act” for “FTC Act”; adding 

“Covered” to “Motor Vehicle Dealer” to conform with the defined term at § 463.2(f) 

(“‘Covered Motor Vehicle Dealer’ or ‘Dealer’”), and capitalizing “Vehicles” to conform 

with the defined term at § 463.2(e) (“‘Covered Motor Vehicle’ or ‘Vehicle’”). 

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In the following analysis, the Commission examines each proposed provision in 

§ 463.5; the substantive comments relating to each provision; responses to these 

comments; and the Commission’s final determination with regard to each proposed 

provision. 

2. Paragraph-by-Paragraph Analysis of § 463.5 

a) Add-ons that Provide No Benefit 

Section 463.5(a) of the proposed rule prohibited motor vehicle dealers from 

charging for add-ons if the consumer would not benefit from such an add-on, including a 

pair of enumerated examples. For the following reasons, the Commission is finalizing 

this provision largely as proposed, with modifications to correct a misplaced hyphen; add 

the word “that” before “are duplicative of warranty coverage”; and capitalize the defined 

term “Vehicle” to conform with the revised definition at § 463.2(e). The Commission 

also is adding language to the end of § 463.5(a) clarifying that the requirements in 

§ 463.5(a) “also are prescribed for the purpose of preventing the unfair or deceptive acts 

or practices defined in this part, including those in §§ 463.3(a) & (b) and 463.5(c).” 

Relatedly, the Commission is finalizing the definition of the term “GAP Agreement,” 

which is referenced in this provision and defined in § 463.2(h) of the Final Rule, 

substantively as proposed, with minor modifications to correct a misplaced period, 

substitute “Vehicle” for both “vehicle” and “motor vehicle” to conform with the revised 

definition at § 463.2(e), and remove an extraneous term—“insured’s”—without changing 

the definition’s operation. 

Many commenters, including a number of industry participants and associations, 

stated that products that provide no benefit to the consumer should not be sold in 

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connection with the sale or financing of vehicles. Many commenters that supported the 

provision stated, inter alia, that the examples the Commission enumerated in this 

paragraph were obvious365 and particularly helpful for less-experienced buyers who may 

be led to believe that a particular product or service would be beneficial.366 Some 

individual commenters, for instance, noted that they had no way to confirm whether the 

“nitrogen-filled” tires they purchased with their vehicle actually had more nitrogen than 

naturally exists in the air, even though they were told the purchase of this service was 

mandatory.367 At least one individual commenter described requesting to see the nitrogen 

tank after such a purchase and being denied by the dealer. 

Examples of public comments about add-ons include the following: 

 I would argue that this does not go far enough but it [is ]a good start. As 

someone who is trying to purchase a new vehicle, there is a[n] endless 

supply of “perk packages” or “Family deals” that I “must purchase” if I 

would like to acquire a car from a dealer. These include a variety of 

dubious products such as insurance policies that pay out $3500 if your car 

is stolen (and can’t be found) in the first 90 days of ownership, if your car 

is totaled by your insurance company in the first 90 days they’ll pay 

$3500. Nitrogen in the tires (A $196 value). Vin Etching on the windows, 

plastic stickers on the door handles to prevent scratches. These items are a 

requirement to bundle with the vehicle and a deal that provides “over 

$7000 in value” for $2995. These tricks ignore the obvious, such as your 

car can not be both stolen (unrecovered) AND totaled so it’s impossible to 

collect on both policies so the cumulative “value” of this package is 

overstated.368 

 One of the latest scams is to force you to buy a $1000 gps unit so they can 

recover the car if you miss payments. This shouldn’t be allowed.369 

 Second vehicle I purchased had a $1650 “protection pkg” plus the usual 

nitrogen in the tires BS. This time I asked to be shown the nitrogen tank 

365 See, e.g., Individual commenter, Doc. No. FTC-2022-0046-1608 at 6. 366 See, e.g., Comment of 18 State Att’ys Gen., Doc No. FTC-2022-0046-8062 at 9. 367 See, e.g., Individual commenter, Doc. No. FTC-2022-0046-0565. 368 Individual commenter, No. FTC-2002-0046-0565. 369 Individual commenter, No. FTC-2002-0046-4552. 

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they fill the tires with, they refused saying due to insurance rules 

customers aren’t allowed in the shop. I asked them to take off the paint 

and fabric protection charge also, they declined at first until I reminded 

them they just got the vehicle the night before and there was still plastic 

factory coverings on the seats and strips of plastic on the vehicles body 

protecting certain areas. This time they mumbled some excuse about the 

addendum added to the price is put on the vehicle as soon as it arrives and 

they hadn’t had “time” to apply all the overpriced add[-]ons.370 

 I’m a former carsalesperson [sic]. . . . Dealers should be banned from 

selling . . . special paints to protect from rust . . . . No coatings are 

added.371 

 I worked at a Dodge/Ram dealership for three years at the make ready 

(carwash) department. When new vehicles arrived their tires were rarely 

deflated and then filled with nitrogen. It is my understanding that the 

manufacture initially paid for the nitrogen fill and the customer was later 

charged.372 

 [O]ne of my previous purchases almost ended . . . with GAP that was so 

unnecessary, the lender called us a few days later after we already had the 

car and told us we’d be experiencing a lower monthly payment unless we 

wanted the price of the product back in a check because of the price we 

negotiated and the sizable down payment, it was impossible for GAP to 

ever be required.373 

A number of individual commenters indicated they did not consider nitrogen tires 

a valuable purchase and expressed no desire to purchase them. Many commented that, 

when they informed their respective dealers that they did not want these add-ons, the 

dealers would represent, inter alia, that nitrogen tires were required by law, that their 

insurance premium would increase without the add-on, that new foreign vehicles coming 

into the country must have nitrogen-filled tires under the law, or that the consumer 

needed to purchase nitrogen tires to meet fuel economy standards. 

370 Individual commenter, Doc. No. FTC-2022-0046-0854. 371 Individual commenter, Doc. No. FTC-2022-0046-1393. 372 Individual commenter, Doc. No. FTC-2022-0046-5493. 373 Individual commenter, Doc. No. FTC-2022-0046-6816. 

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Other commenters supported this proposed provision while also recommending 

that the Commission broaden its scope to prohibit the sale of add-on products or services 

that provide only “minimal” benefit to consumers.374 One such commenter, for instance, 

suggested the provision be expanded to prohibit dealers from charging for an add-on 

unless it provides a “substantial, material benefit” to consumers.375 Another commenter 

contended that there are a number of add-ons not meeting such standards being sold in 

connection with the sale or financing of vehicles, including future servicing packages for 

vehicle tune-ups and oil changes that are sold to remote or out-of-State consumers who 

are exceedingly unlikely to return to the dealership for such services; tracking devices 

that are used almost exclusively for electronic repossession; and “vendor’s single 

interest” or “VSI” insurance, which protects the financing entity, but not the consumer, in 

the event that the vehicle is damaged or destroyed.376 

The Commission acknowledges the considerable consumer harm that results from 

the sale of such add-ons and notes that several provisions in the Rule it is finalizing will 

address misconduct related to these and other add-ons, including many of the practices 

described by those commenters recommending further action. For example, to the extent 

that dealers make misrepresentations about any benefit of an add-on, such conduct would 

violate § 463.3(b) of the Final Rule. Thus, were a dealer, for instance, to promote the sale 

of an add-on—such as a tracking device that is used almost exclusively for electronic 

repossession—based on its supposed benefit to the consumer, when the product primarily 

benefits another party, such conduct would violate the Rule even if the product otherwise 

374 See, e.g., Legal Aid Just. Ctr., Doc. No. FTC-2022-0046-7833 at 3. 375 Comment of Legal Action Chi., Doc. No. FTC-2022-0046-8097 at 10. 376 See also Consumer Fin. Prot. Bureau, “What Is Vendor’s Single Interest (VSI) insurance?” (Aug. 16, 

2016), https://www.consumerfinance.gov/ask-cfpb/what-is-vendors-single-interest-vsi-insurance-en-731/. 

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provides an ancillary or marginal benefit to consumers. And if the add-on provided no 

benefit to the consumer and only a benefit to another party, § 463.5(a) would prohibit the 

dealer from charging the consumer for it. Further, to the extent that dealers charge for 

add-ons without express, informed consumer consent for the charge, such conduct would 

violate § 463.5(c). 

The Commission recognizes that there may be significant consumer benefits from 

implementing additional restrictions on the sale of add-on products or services. However, 

without additional information on costs and benefits to consumers or competition 

associated with such restrictions, the Commission has determined not to implement such 

restrictions in this Final Rule. The Commission will continue to monitor the motor 

vehicle marketplace to gather additional information on this issue and will consider 

whether to modify or expand § 463.5(a) in the future, including on the basis of 

stakeholder experience with this provision and whether it effectively addresses unlawful 

conduct. 

Commenters also urged the Commission to adopt a number of additional 

measures regarding the sale of such add-ons. A consumer advocacy organization, for 

instance, proposed that the Commission require dealers to list coverage limitations for 

add-ons that may overlap with a vehicle’s warranty coverage, observing that consumers 

commonly are not aware of important limitations until the add-on, such as a warranty or 

service contract, is needed, and only then does the consumer learn the add-on does not 

provide the anticipated benefits. A State consumer protection agency recommended that 

the Commission require affirmative disclosures for the sale of add-ons that may provide 

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only “nominal” benefit, offering a list of what they characterized as such products for the 

Commission to consider in conjunction with this recommendation. 

In response, the Commission notes that other provisions in part 463 address 

misconduct relating to these issues, including by prohibiting misrepresentations regarding 

material information about add-ons, by requiring disclosures about optional add-ons, and 

by requiring dealers to obtain the express, informed consent of the consumer for add-on 

charges. Thus, misrepresenting the coverage limitations of an add-on; making 

representations regarding an optional add-on without disclosing that it is not required and 

that the consumer can purchase or lease the vehicle without the add-on; and charging for 

an add-on under false pretenses or without the consumer’s express, informed consent 

would violate other provisions the Commission is finalizing. The Commission is 

concerned that requiring additional disclosures may have the effect of reducing the 

saliency of key information in what is already a lengthy, paperwork-heavy transaction. 

Accordingly, the Commission has determined not to adopt additional such disclosure 

measures in this Final Rule. 

In addition, at least one consumer protection agency commenter asked the 

Commission to consider deeming it an unfair or deceptive act or practice to sell any addon product for a price greater than the value of the product itself. The Commission 

declines to restrict the sale of add-on products at a price higher than the value of the 

product itself, absent additional information, including information regarding the costs 

and benefits to consumers and competition of such a restriction.377 

377 One consumer attorney commenter requested that the Commission clarify that warranty disclaimers are 

not a valid defense to common law fraud and statutory consumer fraud, and that, if fraud is proven, 

warranty disclaimers are not an allowable defense to UCC actions. In response, the Commission notes that 

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A number of industry association commenters claimed the provision was vague 

and requested the Commission set forth how to calculate the loan-to-value (“LTV”) ratio 

at which a GAP agreement would be non-beneficial, given that there could be fluctuation 

of the vehicle value in the future. Some suggested that the Commission adopt a 

presumption or safe harbor that dealers complying with an LTV calculation set by the 

Commission be deemed in compliance with the portion of the proposal related to GAP 

agreements. 

Other industry association commenters argued against adopting a set LTV ratio as 

the basis for determining whether a consumer would benefit from a GAP agreement, 

claiming that the vehicle financing entity is best positioned to determine whether such an 

add-on would be beneficial. Relatedly, some industry association commenters contended 

that certain GAP agreements sold on a low-LTV loan, or that limit benefits based on a 

consumer’s LTV ratio, could still provide additional benefits. 

A financing association commenter contended that any final rule should not create 

rules around the calculation of the LTV ratio. Another financing group proposed that the 

Commission require dealers to provide disclosures that would inform consumers of any 

potential value gap between a vehicle’s purchase price and its appraised value. 

With regard to establishing LTV ratio parameters for the sale of GAP agreements, 

without further information from commenters regarding the costs and benefits of 

establishing a particular LTV ratio as the basis for determining whether a consumer 

would benefit from a GAP agreement, or a particular method for calculating the LTV 

ratio, and given the Commission’s previously stated information saliency concerns about 

none of the provisions the Commission is finalizing state that warranty disclaimers are a defense to 

common law fraud or in UCC actions. 

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finalizing additional disclosures in an already lengthy transaction, the Commission has 

determined not to establish in this Final Rule a particular numeric threshold or calculation 

regarding the sale of GAP agreements to consumers, or to require additional associated 

disclosures. Regarding the benefits of certain GAP agreements, this provision restricts 

sales of GAP agreements where the consumer would not benefit. If there are benefits to 

the consumer, dealers must abide by other provisions in the Final Rule, including the 

requirements that the dealer represents the extent of those benefits accurately (§ 463.3(b)) 

and obtains express, informed consent from the consumer for the charges for this item 

(§ 463.5(c)). 

The Commission also received some industry association comments claiming that 

each State imposes differing requirements as to coverage, disclosures, exceptions, and 

product terms of GAP agreements. One such commenter asked for guidance on how a 

bright-line, State-law rule on LTV ratios would interact with the FTC’s proposal. Another 

such commenter requested the FTC reconcile different State-law approaches to the sale of 

GAP agreements, particularly regarding how this proposed provision would interact with 

a State law that, according to the commenter, only requires a dealer to have a reasonable 

belief that the customer may be eligible for a benefit. In response, the Final Rule does not 

disturb State law unless it is inconsistent with part 463, and then only to the extent of the 

inconsistency. Where, for example, State laws restrict the sale of GAP agreements if the 

LTV ratio for the transaction is below a certain threshold, or require that dealers have a 

“reasonable belief” that the GAP agreement would benefit the consumer, dealers in that 

State can, and must, comply with the State law and with the Rule. Pursuant to such State 

law, dealers would be prohibited from selling the product if the LTV ratio is below the 

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established threshold or if they do not reasonably believe the GAP agreement would 

benefit the consumer and, pursuant to the Final Rule, if the LTV ratio would result in the 

consumer not benefitting financially. To the extent there is an actual conflict between the 

Commission’s Final Rule and a State law—and the Commission is skeptical that there is 

such a State law that explicitly allows for the sale of a product that does not benefit the 

consumer—the Commission refers commenters to § 463.9, which sets forth the Rule’s 

relation to State laws. 

With respect to the proposed definition of “GAP Agreement,” an industry 

association commenter contended that the phrase “the actual cash value of the insured’s 

vehicle in the event of an unrecovered theft or total loss” meant the value of the vehicle at 

some point in the future, and asserted that future vehicle values cannot be accurately 

determined at the time of sale. The proposed definition, however, did not prescribe how 

dealers must calculate a vehicle’s cash value; rather, it explains that the term “GAP 

Agreement” means an agreement to indemnify a vehicle purchaser for any difference 

between such value, however determined, in the event of an unrecovered theft or total 

loss, and the amount owed, regardless of what that difference may be. Upon examination 

of this phrase, however, the Commission has determined to remove the term “insured’s” 

because it is extraneous and does not affect the operation of this definition: with or 

without the term, the phrase describes the manner in which a qualifying GAP agreement 

determines the amount to indemnify a vehicle purchaser or lessee. In context in this 

definition, it is clear without the term “insured’s” that the applicable “Vehicle” is the one 

covered by the GAP agreement. Omitting this unnecessary term thus avoids confusion 

without substantively changing this definition. 

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One industry association commenter argued that reference to “GAP insurance” should be 

removed from the definition of “GAP Agreement” because of the McCarran-Ferguson 

Act’s reverse-preemption of certain Federal laws that “invalidate, impair, or supersede” 

State laws enacted “for the purpose of regulating the business of insurance.”378 As 

previously discussed with regard to the definition of “Add-on,” however, commenters 

have provided no evidence that the proposed or Final Rule would invalidate, impair, or 

supersede State laws enacted for the purpose of regulating insurance. Rather than 

affecting any State’s regulation of insurance, the Final Rule prohibits dealers from 

making misrepresentations regarding add-ons, from failing to disclose when add-ons are 

not required, and from charging for add-ons that provide no benefit or for which the 

consumer has not provided express, informed consent. The Commission therefore 

finalizes the definition of “GAP Agreement” largely as proposed in its NPRM with minor 

modifications to correct a misplaced period, substitute “Vehicle” for both “vehicle” and 

“motor vehicle” to conform with the revised definition at § 463.2(e), and remove an 

extraneous term—“insured’s”—without changing the definition’s operation. 

While acknowledging that products or services that provide no benefit to 

consumers should not be sold, commenters including an industry association also argued 

that the Commission’s proposed provision was vague and required more research. Some 

industry association commenters expressed concern regarding how the Commission 

would determine whether an item would not benefit the consumer. In response, the 

Commission provides the following information. Proposed § 463.5(a) included 

enumerated examples of add-ons from which consumers would not benefit: (1) nitrogen378 15 U.S.C. 1012(b). 

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filled tires that contain no more nitrogen than normally found in the air, and (2) products 

or services that do not provide coverage for the vehicle, the consumer, or the transaction, 

or are duplicative of warranty coverage for the vehicle, including a GAP agreement if the 

consumer’s vehicle or neighborhood is excluded from coverage or the LTV ratio would 

result in the consumer not benefitting financially.379 As these examples illustrate, 

determining that a consumer would not benefit from an add-on involves analyzing 

objective standards under the circumstances, such as whether the add-on provides 

benefits; whether the consumer is eligible to use the add-on; whether the add-on’s 

coverage excludes the vehicle at issue; and whether the add-on is incompatible with the 

vehicle at issue. Thus, additional examples of add-ons that would be prohibited by this 

provision include the following: purported rust-proofing add-ons that do not actually 

prevent rust; purported theft-prevention or theft-deterrent add-ons that do not prevent or 

deter theft; and add-ons that the vehicle itself cannot support, including engine oil-change 

services for a vehicle, such as an electric vehicle, that does not use engine oil, or software 

or audio subscription services for a vehicle that cannot support the software or utilize the 

subscription.380 

379 See Consumer Fin. Prot. Bureau, “Supervisory Highlights: Issue 19, Summer 2019” 3-4 (Sept. 2019), 

https://files.consumerfinance.gov/f/documents/cfpb_supervisory-highlights_issue-19_092019.pdf (finding 

instances in which auto lenders sold “a GAP product to consumers whose low LTV meant that they would 

not benefit from the product”).

380 See, e.g., Shannon Osaka, “Electric vehicles are hitting a road block: Car dealers,” Wash. Post (Nov. 9, 

2023), https://www.washingtonpost.com/climate-solutions/2023/11/09/car-dealerships-ev-sales (describing 

a dealership salesperson offering an electric vehicle-buyer a plan for oil changes and an extended warranty 

for a gas-powered car); see also Consumer Fin. Prot. Bureau, “Supervisory Highlights: Issue 24, Summer 

2021” 3-4 (June 2021), https://files.consumerfinance.gov/f/documents/cfpb_supervisory-highlights_issue24_2021-06.pdf (finding servicers added and maintained unnecessary collateral protection insurance (CPI) 

when consumers had adequate insurance and thus the CPI provided no benefit to the consumers, and also 

when consumers’ vehicles had been repossessed even though no actual insurance protection was provided 

after repossession). 

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One association commenter argued that the phrase “nitrogen-filled tire relatedproducts or services that contain no more nitrogen than naturally exists in the air” in 

proposed § 463.5(a)(1) would create a standard with which it may be impossible to 

comply because “no individual set of tires could have a higher total quantity of nitrogen 

than that in ‘the air’ that stretches around the planet.”381 This commenter requested that 

the Commission clarify to avoid this possible reading. Here, the Commission notes that 

the phrase does not prohibit such tires if they do not contain a “higher total quantity of 

nitrogen than that in the air”; instead, charging for a nitrogen-filled tire would fail by this 

standard if it contains “no more nitrogen than” the proportion that “naturally exists in the 

air.” 

One industry association commenter requested more explanation from the 

Commission regarding what would be considered “duplicative of warranty coverage” 

under proposed § 463.5(a)(2), while another contended that vehicle service contracts that 

overlap with a manufacturer’s warranty may still provide additional, beneficial coverage, 

such as after the manufacturer’s warranty expires. In response, the Commission notes that 

this provision prohibits the sale of warranties that are duplicative. A dealer may offer a 

warranty add-on that has some overlap in coverage with existing warranty coverage for 

the vehicle, but the add-on must provide additional protection. Moreover, other 

provisions of the Final Rule address misconduct relating to warranties, including by 

prohibiting misrepresentations regarding material information about any costs, limitation, 

benefit, or any other aspect of the warranty product or service. For example, under the 

Final Rule, a dealer may not mislead a consumer as to the benefits or conditions of the 

381 Comment of Competitive Enter. Inst., Doc. No. FTC-2022-0046-7670 at 6. 

209 
warranty, including amount or length of coverage (§ 463.3(b)). In addition, under 

§ 463.5(c), the dealer must obtain the express, informed consent of the consumer for the 

charge for the warranty (§ 463.5(c)). 

Other commenters, including an industry association, asserted that this proposed 

provision would cause dealers to stop offering beneficial products or services. The 

Commission notes that its proposal did not require such a result and emphasizes that this 

provision would prevent charges to consumers for products or services that provide them 

no benefit. To the extent that a prohibition against charging consumers for items that 

provide no benefit to the consumer may cause some dealers to discontinue offering 

beneficial products, consumers would be free to instead visit other dealerships or to seek 

the same or similar offerings from other providers. Dealers, of course, continue to be free 

under the Final Rule to offer beneficial add-ons to consumers—consistent with existing 

law and with other provisions of this Rule. 

Some commenters, including industry associations and a dealership association, 

raised concerns about compliance administrability for this proposed provision in the case 

of products attached to a vehicle by manufacturers that may provide no benefit, 

questioning whether, if this proposal went into effect, dealers would be prohibited from 

charging for such products. In response, the Commission refers commenters to the 

definition of “Add-on” or “Add-on Product(s) or Service(s)” in § 463.2(a). Notably, 

“Add-on” is defined, in relevant part, as any “product(s) or service(s) not provided to the 

consumer or installed on the Vehicle by the Vehicle manufacturer . . .” Thus, if an add-on 

product or service is installed on the vehicle by the motor vehicle manufacturer, it falls 

outside the scope of this definition, and concomitantly, outside the scope of the provision 

210 
at § 463.5(a). Nonetheless, other provisions in the Final Rule address misconduct relating 

to this issue. For instance, as examined in additional detail in the discussion of § 463.4, in 

SBP III.D, the offering price for the vehicle would be required to incorporate the charges 

for any such items if the dealer requires the consumer to pay for them. In addition, as 

described in additional detail in the discussion of § 463.5(c), in SBP III.E.2(c), a dealer 

may not charge for any such item unless the dealer obtains the express, informed consent 

of the consumer for the charge. 

Another industry association commenter incorrectly stated that this provision was 

beyond the FTC’s authority and correctly noted that the Commission has the authority to 

see that products are marketed and advertised fairly and honestly. As the commenter 

acknowledged, the Commission has the authority to address unfair and deceptive 

conduct; that is precisely what this provision does. Dealerships charging consumers for 

add-ons from which the consumers would not benefit is both a deceptive and unfair act or 

practice in violation of the FTC Act, as discussed in the following paragraphs. To address 

this deception or unfairness, the Commission is finalizing this provision with minor 

modifications, including one to correct a typographical error in the placement of a hyphen 

in a phrase in proposed § 463.5(a)(1). In the NPRM, the relevant phrase appeared as, 

“(1) Nitrogen-filled tire related-products or services”; in the Final Rule, the corrected 

phrase will now read as follows: “(1) Nitrogen-filled tire-related products or services.” 

For clarity, the Commission is also adding the word “that” before “are duplicative of 

warranty coverage;” capitalizing the defined term “Vehicle” to conform with the revised 

definition at § 463.2(e); and adding language clarifying that the requirements of 

211 
 

§ 463.5(a) also are “prescribed for the purpose of preventing the unfair or deceptive acts 

or practices defined in this part, including those in §§ 463.3(a) & (b) and 463.5(c).” 

Dealerships charging consumers for add-ons from which the consumers would not 

benefit involves deceptive conduct. When a dealer charges consumers for add-ons that 

would not benefit the consumers, the dealer either (1) discusses the add-on charges or (2) 

is silent about these items. In the first scenario, if a dealer discusses add-on charges, 

consumers typically would not agree to pay such charges for additional products from 

which they could not benefit unless they are led to believe, directly or by omission, that 

these products would in fact be beneficial to them. Thus, the dealer would be misleading 

consumers, even in the event the dealer subsequently provides a disclaimer indicating the 

add-on would not benefit the consumer.382 In the second scenario, it is reasonable for 

consumers to believe that the terms they have agreed to are what was negotiated, and do 

not include additional charges for optional, undisclosed items—particularly items that 

would not benefit the consumer. If a dealer charges consumers for such items under such 

circumstances, the dealer is misleading the consumer. Misleading consumers about cost 

information is material.383 If consumers knew that a dealership was charging them for 

items from which they would not benefit, such knowledge likely would affect their 

382 Removatron Int’l Corp. v. Fed. Trade Comm’n, 884 F. 2d 1489, 1497 (1st Cir. 1989) (“Disclaimers or 

qualifications . . . are not adequate to avoid liability unless they are sufficiently prominent and 

unambiguous to change the apparent meaning of the claims and to leave an accurate impression. Anything 

less is only likely to cause confusion by creating contradictory double meanings.”).

383 See, e.g., Fed. Trade Comm’n v. Windward Mktg., Ltd., No. Civ.A. 1:96-CV-615F, 1997 WL 33642380, 

at *10 (N.D. Ga. Sept. 30, 1997) (“[A]ny representations concerning the price of a product or service are 

presumptively material.”); Removatron Int’l Corp., 111 F.T.C. 206, 309 (1988) (“The Commission 

presumes as material express claims and implied claims pertaining to a product’s . . . cost.” (citing 

Thompson Med. Co., Inc., 104 F.T.C. 648, 817 (1984)); see also Fed. Trade Comm’n v. Crescent Pub. 

Grp., Inc., 129 F. Supp. 2d 311, 321 (S.D.N.Y. 2001) (“Information concerning prices or charges for goods 

or services is material, as it is ‘likely to affect a consumer’s choice of or conduct regarding a product.’”). 

212 
 

 

 

commercial choices, including whether to continue with, or ultimately consummate, the 

vehicle sale or financing transaction.384 

Such charges are also unfair. When charges for any add-on accompany the 

already lengthy and complex car-buying process, it is difficult to obtain consent that is 

truly express and informed.385 Rather than prohibiting all such charges or taking other 

measures, as specifically contemplated in the NPRM,386 however, this provision focuses 

on charges for add-ons that would not benefit the consumer. Charges for add-ons that 

would not benefit the consumer can cost consumers thousands of dollars and significantly 

increase the overall cost to the consumer in the transaction, including by increasing the 

amount financed and total of payments, thereby increasing the risk the consumer will 

ultimately default on repayment obligations.387 This injury is not reasonably avoidable by 

consumers when dealers are silent about such charges and simply include them in dense, 

384 Even under a hypothetical scenario wherein a consumer understood an add-on would not benefit them 

but wanted to pay extra for the add-on anyway, in the case of an act or practice challenged by the agency as 

deceptive or unfair, “the FTC need not prove that every consumer was injured. The existence of some 

satisfied customers does not constitute a defense . . . .” Fed. Trade Comm’n v. Amy Travel Serv., Inc., 875 

F.2d 564, 572 (7th Cir. 1989), vacated in part on other grounds, Fed. Trade Comm’n v. Credit Bureau Ctr., 

LLC, 937 F.3d 764 (7th Cir. 2019); accord Fed. Trade Comm’n v. Stefanchik, 559 F.3d 924, 929 n.12 (9th 

Cir. 2009). 

385 See, e.g., Consumer Fin. Prot. Bureau, “Supervisory Highlights: Issue 19, Summer 2019” 3-4 (Sept. 

2019), https://files.consumerfinance.gov/f/documents/cfpb_supervisory-highlights_issue-19_092019.pdf 

(describing findings, from supervisory examinations, of lenders selling GAP agreements to consumers 

whose low LTV meant that they would not benefit from the product: “By purchasing a product they would 

not benefit from, consumers demonstrated that they lacked an understanding of a material aspect of the 

product. The lenders had sufficient information to know that these consumers would not benefit from the 

product. These sales show that the lenders took unreasonable advantage of the consumers’ lack of 

understanding of the material risks, costs, or conditions of the product.”). 

386 See, e.g., NPRM at 42030 (Question 33) (“In particular, the Commission is contemplating whether any 

final Rule should restrict dealers from selling add-ons (other than those already installed on the vehicle) in 

the same transaction, or on the same day, the vehicle is sold or leased.”); id. (Question 38) (discussing 

proposed § 463.5(c) and asking “Does the proposal provide a meaningful way to obtain consent in an 

already disclosure-heavy transaction? If it would result in too many disclosures, what other measures could 

be taken to protect consumers from unauthorized charges?”). 

387 See, e.g., Complaint ¶¶ 25-28, Fed. Trade Comm’n v. N. Am. Auto. Servs., Inc., No. 1:22-cv-01690 

(N.D. Ill. Mar. 31, 2022). 

213 
 

 

 

 

 

lengthy contracts, as explained in detail in SBP II.B.2.388 If a dealer instead describes 

what the charges are for, such a description either deceptively states or implies that the 

add-on would benefit the consumer, or acknowledges the add-on would not benefit the 

consumer, the latter of which would create “contradictory double meanings”389 and, if 

discovered, would still result in the dealer wasting the consumers’ time.390 Further, there 

are no benefits to consumers or to competition from charging consumers for add-ons that 

would not benefit them. Moreover, charging for non-beneficial products is inconsistent 

with industry guidance,391 and dealerships that profit from such sales place dealerships 

that do not at a competitive disadvantage. Thus, it is an unfair or deceptive act or practice 

for dealers, in connection with the sale or financing of vehicles, to charge for an add-on 

product or service if the consumer would not benefit from such an add-on product or 

service. This provision also serves to prevent misrepresentations prohibited by § 463.3 of 

the Final Rule, including misrepresentations regarding material information about the 

costs or terms of purchasing, financing, or leasing a vehicle, and about any costs, 

388 See, e.g., Auto Buyer Study, supra note 25, at 13-15, 17-18. 389 See Removatron Int’l Corp. v. Fed. Trade Comm’n, 884 F. 2d 1489, 1497 (1st Cir. 1989) (“Disclaimers 

or qualifications . . . are not adequate to avoid liability unless they are sufficiently prominent and 

unambiguous to change the apparent meaning of the claims and to leave an accurate impression. Anything 

less is only likely to cause confusion by creating contradictory double meanings.”).

390 Even in the hypothetical scenario where some consumers could have avoided the injury because they 

understood that an add-on would not benefit them but wanted to pay extra for the add-on anyway, the 

dealer’s conduct in selling non-beneficial add-ons would still be unfair because it substantially injures other 

consumers who do not wish to pay for items that would not benefit them and, as discussed in the SBP text, 

cannot reasonably avoid the harm, and no countervailing benefits outweigh the costs. See FTC v. 

Amazon.com, Inc., 2016 U.S. Dist. LEXIS 55569, *15, *18-21 (W.D. Wash. Apr. 26, 2016) (finding 

unfairness even though some consumers could have avoided the charge). Additionally, consumers who 

truly wish to purchase add-ons that do not benefit them may still be able to do so directly from the add-on 

provider.

391 See Nat’l Auto. Dealers Ass’n et al., “Voluntary Protection Products: A Model Dealership Policy” 5 

(2019), https://www.nada.org/regulatory-compliance/voluntary-protection-products-model-dealershippolicy (explaining that when determining which voluntary protection products to offer to customers, “the 

dealership should have confidence in the value that the product offers to customers,” including that the 

dealership should understand “whether its coverage is already provided by another product being purchased 

by the customer,” and stating “[i]t is essential that customers have a clearly defined path to receiving such 

benefits.”). 

214 
 

 

limitation, benefit, or other aspect of an add-on. This provision further helps prevent 

dealers from failing to obtain express, informed consent for charges, as prohibited by 

§ 463.5(c).392 

b) Undisclosed or Unselected Add-ons 

The Commission’s proposed provisions relating to undisclosed or unselected addon products or services, at § 463.5(b), prohibited dealers from charging for optional addons before undertaking certain measures. Specifically, proposed § 463.5(b)(1) prohibited 

dealers from charging for optional add-ons unless the dealers disclosed, and offered to 

consummate the transaction for, the cash price at which a consumer may purchase the 

vehicle without such add-ons. This proposed provision also required the consumer to 

decline to purchase the vehicle for the cash price without the add-on by means of a 

written declination, with date and time recorded, and signed by the consumer and a 

manager of the motor vehicle dealer. The proposed requirements of § 463.5(b)(1) applied 

before the dealer referenced any aspect of financing for a specific vehicle, aside from the 

offering price, or before consummating a non-financed sale. Proposed § 463.5(b)(2) 

required similar steps before charging for any optional add-on in a financed transaction, 

including that the dealer disclose, and offer to consummate the transaction for, a vehicle’s 

cash price without optional add-ons plus the finance charge for such transaction, 

separately itemizing the components of the offer. This proposed provision also required a 

written, dated, time-stamped, and signed declination. Finally, proposed § 463.5(b)(3) 

required dealers to disclose the cost of the transaction, whether financed or not, without 

any optional add-ons, as well as the charges for the optional add-ons selected by the 

392 See 15 U.S.C. 57a(a)(1)(B) (the Commission “may include requirements prescribed for the purpose of 

preventing” unfair or deceptive acts or practices). 

215 
 

consumer, separately itemized. Each proposed provision required clear and conspicuous 

disclosure of specific information relating to optional add-ons and their associated costs. 

As discussed in the following paragraphs, the Commission has determined not to 

finalize the proposed provisions at § 463.5(b) regarding undisclosed or unselected addons. Many commenters described the likely benefits of such proposed provisions, and a 

number of commenters indicated how such provisions would be feasible, including by 

reference to similar disclosure regimes already in effect at the State or local level. 

Commenters also credited the Commission’s goals for such provisions. 

However, other commenters opposed these proposed provisions, contending they 

would be burdensome and time-consuming. Others similarly expressed concern that, 

given the duration, complexity, and paperwork-heavy nature of motor vehicle sales and 

financing transactions, these provisions would not effectively resolve the problem of addons being sold without express, informed consumer consent.393 

Having considered the comments, the Commission declines to include in this 

Final Rule the proposed provisions relating to undisclosed or unselected add-on products 

or services at § 463.5(b). The Commission notes that various commenters were 

concerned about the extent to which this proposal would add documents and time to the 

transaction. If finalized, this would have been the sole provision in the Final Rule that 

affirmatively requires the dealer and consumer, in all circumstances, to view and sign 

additional documentation during the purchase, finance, or lease process, in what is 

393 See, e.g., Comment of Nat’l Consumer L. Ctr. et al., Doc. No. FTC-2022-0046-7607 at 30-31. Instead, 

advocates recommended that the Commission require a cooling-off period for add-ons, similar to that 

required by the Commission for door-to-door and other off-premises sales, which would grant consumers 

time to review the paperwork after the transaction, and to cancel unexpected or otherwise unwanted addons for a full refund. Id. This comment is addressed when discussing § 463.5(c) in SBP III.E.2(c). 

216 
already a document-heavy, time-consuming, and complicated transaction. The 

Commission further notes that, as a matter of existing law, dealers are already prohibited 

from engaging in misrepresentations regarding add-ons and from charging for add-ons 

without express, informed consent—conduct which the Final Rule prohibits as well. 

Accordingly, the Commission has determined not to include this provision in its Final 

Rule. 

The Commission will continue to monitor the motor vehicle marketplace for 

issues pertaining to unselected or undisclosed add-ons, and will consider implementing 

additional measures in the future if it determines such measures are necessary to address 

deceptive or unfair practices relating to add-ons. 

c) Any Item Without Express, Informed Consent 

Section 463.5(c) of the proposed rule prohibited motor vehicle dealers, in 

connection with the sale or financing of vehicles, from charging consumers for any item 

unless the dealer obtains the express, informed consent of the consumer for the charge. 

Upon careful review and consideration of the comments, the Commission is finalizing 

this provision with one modification from its original proposal: the addition of language 

to the end of § 463.5(c) clarifying that the requirements in § 463.5(c) “also are prescribed 

for the purpose of preventing the unfair or deceptive acts or practices defined in this part, 

including those in §§ 463.3(a) & (b), 463.4, and 463.5(a).” In addition, the Commission 

is finalizing the corresponding definition of “Express, Informed Consent,” now at 

§ 463.2(g). 

Many commenters favored the proposed provision and expressed the need for 

such a provision. For example: 

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 In one instance a salesman who appeared busy and trying to help me efficiently 

navigate the process rushed me to sign a small paper, “just sign this quickly and 

we’ll be on our way,” I was told, without disclosure that they were selling me 

something that I did not want. I found it later and felt cheated.394 

 They made me sign the sales bill on an electronic device, but the finance guy 

never pointed to me any number I was getting charge[d] for, and never pointed to 

me the total amount I was getting billed for. He seem[ed] to be in a hurry and he 

even told me he had people waiting for him to see. I think it was all planned to 

push the buyer to blindly sign the bill of sale without explaining anything because 

he was scrolling the electronic pages in a hurry and going straight to the sign box 

line. I thought I signed the agreed amount, I trust them, but, instead, they charge 

me for things I never agreed on. I went back to the dealer in less than 48 hours 

when I discovered the fraud and asked them to remove the extra fees they charged 

me for, they refused and they forced me to pay for it, I asked them and requested 

them to take the car back, they refused it again, at the end, they gave me a little bit 

of a discount, but, not compared to what I got charged for. . . .395 

 I am an attorney in private practice in NY representing consumers for 33 years. It 

never ceases to amaze me how car dealers defraud honest trusting consumers 

substantial sums of money through various common deceptive and fraudulent 

practices ranging from altering documents, concealing documents, having 

consumers sign blank documents, lying about the material terms of the deal, 

altering the prices, adding on other contracts or items never discussed and selling 

vehicles with undisclosed damages and defects.396 

 I have worked in the automotive business for many year[s]. I realize there are 

plenty of dealers around the US that have deceptive business practices, however 

this isn’t the case for all dealers. I believe there can be laws that can be put in 

place to help prevent dealers from adding additional backend products without 

consent or knowledge.397 

Others supported the proposed provision and urged the Commission to include 

additional measures, such as a thirty-day “cooling-off” period within which consumers 

would be able to receive a full refund for any add-ons. A number of commenters, 

including consumer advocacy organizations, contended that such an additional time 

frame to review, and potentially cancel, any add-ons would counter the high-pressure, 

394 Individual commenter, Doc. No. FTC-2022-0046-0794. 395 Individual commenter, Doc. No. FTC-2022-0046-0671. 396 Individual commenter, Doc. No. FTC-2022-0046-0073. 397 Individual commenter, Doc. No. FTC-2022-0046-9917. 

218 
confusing environment of the dealership F&I office and undermine any efforts to 

misrepresent add-on charges and coverage. Such commenters also indicated that such a 

provision would allow consumers the opportunity to compare prices and providers, and 

ultimately help increase competition in the marketplace. A few individual commenters 

requested that the Commission provide a cooling-off period not only for add-ons, but for 

the full vehicle purchase, and a prohibition on charging non-refundable deposits. 

The Commission agrees that a “cooling off” provision could offer consumers 

additional protection from unwanted add-ons; however, additional information would 

assist the Commission in evaluating the potential benefits of such a provision. Such 

information might include, for example, what length a cooling-off period would need to 

be in order to offer adequate protection to consumers and to competition, or how 

consumers would most effectively be made aware of such a cooling-off period in the 

course of the complicated, lengthy, and document-heavy vehicle sale or financing 

transaction. Such information would be particularly relevant given that, in the 

Commission’s law enforcement experience, consumers have paid unauthorized charges 

on years-long contracts without learning of the charges.398 Accordingly, the Commission 

will continue to monitor the market to determine whether, after adoption of this Rule, it 

appears that a cooling-off period or other measures would be warranted. 

Other commenters, including consumer advocacy organizations, emphasized the 

importance of having disclosures and other documents available in the language used to 

negotiate the sale or lease. Here, the Commission notes that a dealer does not obtain the 

express, informed consent of the consumer if the consumer’s assent to a charge is 

398 See discussion in SBP II.B.2. 

219 
ambiguous or based on a disclosure the consumer does not easily understand.399 Thus, if a 

dealer uses one language during negotiations and a different language in its contracts, and 

the consumer does not understand and assent to the charges, the dealer is violating 

§ 463.5(c). Furthermore, the Commission notes that the definition of “Express, Informed 

Consent” it is finalizing at § 463.2(g) requires, inter alia, a clear and conspicuous 

disclosure of what the charge is for and the amount of the charge, and the Commission’s 

definition of “Clear(ly) and Conspicuous(ly),” at § 463.2(d)(5), requires disclosures to 

appear “in each language in which the representation that requires the disclosure 

appears.” 

Other commenters, including a consumer advocacy organization and a consumer 

protection agency, recommended the Commission prescribe additional requirements for 

obtaining express, informed consent for charges, such as boxes for signatures and dateand-time recordings, and a requirement that dealers comply with the E-Sign Act. Other 

commenters also discussed obtaining consent through electronic signatures. Commenters 

including consumer advocacy organizations, for instance, reported cases wherein 

documents that were signed and supposedly provided electronically to consumers, were 

never actually delivered to the consumer, or delivered days later. According to these 

commenters, some consumers would sign on a small signature pad where they could not 

see the terms of the document being signed. Other practitioner commenters reported that 

consumers’ electronic signatures were applied to contracts with very different terms from 

what the consumers believed they were accepting. An individual commenter 

399 See § 463.2(g) (defining “Express, Informed Consent” to include an affirmative act communicating 

“unambiguous assent to be charged”); § 463.2(d) (defining “Clear(ly) and Conspicuous(ly)” to include a 

manner that is “easily understandable”). 

220 
recommended that dealers be required to provide paper documents where requested and 

consumers be allowed to consent on paper documents only, noting that elderly consumers 

or those for whom English is a second language may have difficulty with electronic 

signatures. Another individual commenter expressed the view that anyone needing 

assistance understanding the sales price or disclosures should be provided independent 

legal counsel at the dealership’s expense. 

While the Commission agrees that additional measures to promote express, 

informed consent could reduce the incidence of unauthorized charges and aid with 

enforcement efforts, the Commission has determined not to include in this Final Rule 

provisions that would require new forms during the vehicle sale or financing transaction. 

This way, law-abiding dealers would not have to change their practices for obtaining 

express, informed consent. Thus, the Commission declines to add further requirements, 

including those involving signature boxes or date-and-time recordings. Regarding the ESign Act, nothing in the Rule modifies compliance obligations under this Act. Instead, 

the Final Rule requires that, regardless of whether any given signature may have been 

obtained through electronic or other means, the dealer must obtain the express, informed 

consent of the consumer to any item for which the dealer charges the consumer. 

Furthermore, the Commission notes that a dealer has not obtained express, informed 

consent if a dealer has consumers sign an electronic keypad without seeing and 

understanding the terms, or applies their electronic signatures on contracts with terms 

different from those to which the consumer agreed.400 In such circumstances, the 

consumer has not demonstrated informed consent, or unambiguous assent to be charged, 

400 See § 463.2(g) (defining “Express, Informed Consent” to include requiring clear and conspicuous 

disclosures of what the charge is for and the amount of the charge). 

221 
 

including because the signatures are not in close proximity to clear and conspicuous 

disclosures regarding the charges. 

Other commenters, including industry and dealership associations, claimed that 

the Commission did not provide enough information regarding what would constitute 

express, informed consent to charges, contending that additional detail was needed, or 

that the provision and associated definition of “Express, Informed Consent” were too 

vague. The Commission notes, however, that the phrase “Express, Informed Consent” is 

consistent with existing legal standards.401 Commission enforcement actions over the 

years have challenged as deceptive or unfair the failure to get express, informed consent 

to charges, including in actions involving motor vehicle dealers and others: 

 Rushing consumers through stacks of auto paperwork more than 60 pages 

deep and requiring over a dozen signatures, where the paperwork included 

charges for unwanted add-ons.402 

 Double charging certain fees without consumers’ knowledge or consent in 

highly technical documents presented at the close of a long financing process 

after an already lengthy process of selecting a vehicle and negotiating over its 

price.403 

 Presenting consumers with preprinted sales and financing forms that included 

add-ons consumers had not requested, and rushing consumers through the 

closing process while directing them where to sign forms, including forms that 

were blank.404 

 Charging consumers more for a product or service than they agreed to pay.405 

 Charging consumers for more products than they requested.406 

401 See, e.g., Fed. Trade Comm’n v. Amazon.com, Inc., 71 F. Supp. 3d 1158, 1163 (W.D. Wash. 2014). 402 Complaint ¶¶ 24-25, 29-49, 76, Fed. Trade Comm’n v. North Am. Auto. Servs., Inc., No. 1:22-cv-01690 

(N.D. Ill. Mar. 31, 2022). 

403 Complaint ¶¶ 17-19, 44, Fed. Trade Comm’n v. Liberty Chevrolet, No. 1:20-cv-03945 (S.D.N.Y. May 

21, 2020).

404 Complaint ¶¶ 59-64, 91, Fed. Trade Comm’n v. Universal City Nissan, No. 2:16-cv-07329 (C.D. Cal. 

Sept. 29, 2016). 

405 See, e.g., Complaint ¶¶ 29, 47, Fed. Trade Comm’n v. Yellowstone Cap. LLC, No. 1:20-cv-06023-LAK 

(S.D.N.Y. Aug. 3, 2020). 

406 See, e.g., Complaint ¶¶ 11-14, 21, Bionatrol Health, LLC, No. C-4733 (F.T.C. Mar. 5, 2021). 

222 
 

 

 

 Cramming charges onto consumers’ bills for services that the consumers did 

not request without the consumers’ knowledge or consent.407 

Courts have found the failure to obtain express, informed consent to be a violation of the 

FTC Act.408 Other statutes and rules enforced by the Commission include express, 

informed consent requirements for consumer purchases,409 and similar provisions have 

appeared in Commission orders resolving charges that motor vehicle dealers or other 

sellers have levied unauthorized charges on consumers.410 In short, the prohibition in 

§ 463.5(c) against charging consumers for products or services without their express, 

informed consent, and the corresponding definition of “Express, Informed Consent” in 

§ 463.2(g) are consistent with existing law in articulating what motor vehicle dealers 

must do—and already should be doing. 

407 See, e.g., Complaint ¶¶ 8-9, 42, Fed. Trade Comm’n v. T-Mobile USA, Inc., No. 2:14-cv-00967-JLR 

(W.D. Wash. July 1, 2014); Complaint ¶¶ 9, 49, Fed. Trade Comm’n v. AT&T Mobility, LLC, No. 1:14-cv03227-HLM (N.D. Ga. Oct. 8, 2014). 

408 See, e.g., Fed. Trade Comm’n v. FleetCor Techs., Inc., 620 F. Supp. 3d 1268, 1333-38 (N.D. Ga. 2022); 

Fed. Trade Comm’n v. Amazon.com, Inc., No. C14-1038-JCC, 2016 WL 10654030, at *8 (W.D. Wash. 

July 22, 2016); Fed. Trade Comm’n v. Inc21.com Corp., 745 F. Supp. 2d 975, 1005 (N.D. Cal. 2010), aff’d, 

475 F. App’x 106 (9th Cir. 2012). 

409 15 U.S.C. 8402(a)(2), 8403(2) (Restore Online Shoppers’ Confidence Act); 16 CFR 310.4(a)(7) 

(Telemarketing Sales Rule). 

410 The Commission has required express, informed consent provisions in orders against motor vehicle 

dealers and others. See Stipulated Order at Art. IV, Fed. Trade Comm’n v. Passport Auto. Grp., Inc., No. 

8:22-cv-02670-TDC (D. Md. Oct. 18, 2022); Stipulated Order at Art. II, Fed. Trade Comm’n v. North Am. 

Auto. Servs., Inc., No. 1:22-cv-01690 (N.D. Ill. Mar. 31, 2022) Stipulated Order at Art. II, Fed. Trade 

Comm’n v. Liberty Chevrolet, No. 1:20-cv-03945 (S.D.N.Y. May 22, 2020); Stipulated Order at Art. III, 

Fed. Trade Comm’n v. Consumer Portfolio Servs., No. 14-cv-00819 (C.D. Cal. June 11, 2014). Similarly, 

the Commission has required such provisions in orders in other contexts. See, e.g., Stipulated Order at Art. 

III, Fed. Trade Comm’n v. Yellowstone Cap. LLC, No. 1:20-cv-06023-LAK (S.D.N.Y. May 4, 2021); 

Stipulated Order at Art. IV, Fed. Trade Comm’n v. Prog. Leasing, No. 1:20-cv-1668-JPB (N.D. Ga. Apr. 

22, 2020); Decision and Order at Art. VI, Bionatrol Health, LLC, No. C-4733 (F.T.C. Mar. 5, 2021); 

Stipulated Order at Art. I.E, Fed. Trade Comm’n v. BunZai Media Grp., Inc., No. CV 15-4527-GW (PLAx) 

(C.D. Cal. June 27, 2018); Stipulated Order at Art. I, Fed. Trade Comm’n v. T-Mobile USA, Inc., No. 2:14-

cv-00967-JLR (W.D. Wash. Dec. 19, 2014); Stipulated Order at Art. I, Fed. Trade Comm’n v. AT&T 

Mobility, LLC, No. 1:14-cv-03227-HLM (N.D. Ga. Oct. 8, 2014); Decision and Order at Art. I, Google, 

Inc., No. C-4499 (F.T.C. Dec. 2, 2014); Consent Order, Apple Inc., No. C-4444 (F.T.C. Mar. 27, 2014); cf. 

Fed. Trade Comm’n v. Kennedy, 574 F. Supp. 2d 714, 720-21 (S.D. Tex. 2008) (consumers charged 

without express, informed consent for web services could not reasonably avoid harm when told that 

websites were “free”). 

223 
The Commission further notes that the proposed definition of “Express, Informed 

Consent” provided information regarding what was required by § 463.5(c): an affirmative 

act by the consumer communicating unambiguous assent to be charged, made after 

receiving and in close proximity to a clear and conspicuous disclosure, in writing, and 

also orally for in-person transactions, of the following: (1) what the charge is for; and (2) 

the amount of the charge, including, if the charge is for a product or service, all fees and 

costs to be charged to the consumer over the period of repayment with and without the 

product or service. As is evident from this language, there must be an affirmative act that 

itself conveys the consumer’s unambiguous assent to the specific charge: it must clearly 

and expressly communicate both that the consumer has been informed about the charge 

and consents to the charge. This act cannot be susceptible to alternative interpretations, 

i.e., that the consumer meant to communicate something other than the consumer’s 

authorization to be charged for the specific add-on or other item in question. For 

example, a consumer might ask, “how much would it cost to get the car with [a specific 

add-on]?” Such a statement does not convey unambiguous assent to be charged for the 

mentioned add-on; rather, it could merely convey curiosity, interest, or a desire to 

evaluate options. Similarly, if a consumer responds to a salesperson’s description of an 

add-on by saying “OK,” this response may merely confirm that the consumer had heard 

or understood information and does not indicate the consumer’s unambiguous assent to 

purchase, let alone be charged for, such an item. 

Relatedly, some commenters, including dealership associations, suggested that the 

addition, by the consumer, of a signature or set of initials, accompanied by a 

corresponding date can be partial evidence of an affirmative, or “Express,” act. The 

224 
Commission notes that the extent to which these, or other, acts indicate “Express, 

Informed Consent” depends on circumstances and context. A consumer signing a lengthy 

document with pre-checked boxes does not, by itself, demonstrate express, informed 

consent. This is particularly so at the end of an hours-long transaction, at which point 

actions that, under other circumstances, may indicate assent are increasingly less likely to 

do so unambiguously, given that at the close of a transaction, consumers expect to be 

finalizing previously agreed-upon terms instead of discussing new products or services 

hours into the deal. For express, informed consent to be effective, the consumer must 

understand what a charge is for and the amount of the charge, including all costs and fees 

over the length of the payment period. A signed and dated document would not satisfy 

the requirement for express, informed consent, for example, if the consumer was directed 

to sign the final page of a contract or an electronic signature pad and the signed and dated 

document did not reflect the terms to which the consumer had agreed. In such cases, the 

signed and dated document does not represent the consumer’s unambiguous assent to be 

charged, made after receiving, and in close proximity to, a clear and conspicuous 

disclosure of what the charges are for and the amount of the charges. 

Some industry association commenters argued that the proposed definition was 

too prescriptive, and would require, for instance, video records to demonstrate 

compliance, or that the proposed language was overreaching, and requiring express, 

informed consent for every item on a contract would be complicated and timeconsuming. The Commission notes again that, under current law, dealerships are already 

required to obtain consumers’ express, informed consent to charges. If dealers are already 

obtaining such consent, as is required by law, they need not take additional steps, such as 

225 
by using a separate disclosure form or videos, or by spending additional time during the 

transaction to comply with this provision. 

A dealership association commenter requested examples of recordkeeping and 

best practices evidencing oral disclosures that would satisfy the requirement to obtain 

express, informed consent. The express, informed consent requirement and definition 

require the disclosure to be made in writing in addition to orally for in-person 

transactions. Furthermore, under other provisions of the Rule, such as the definition of 

“Clear(ly) and Conspicuous(ly)” at § 463.2(d)(7), dealers are prohibited from 

contradicting information that is required to be disclosed; thus, for example, dealers’ oral 

representations must be consistent with the written disclosure required for obtaining 

express, informed consent. Best practices for satisfying the requirement to obtain express, 

informed consent include presenting key information and finalizing actual terms early in 

the transaction—for example, by including full cost information, such as estimated taxes, 

costs of any selections made by the consumer, and any other components of cost, on 

dealer websites— and maintaining records that this was done. The Commission notes 

that, as a transaction progresses, consumers expect to be finalizing previously agreedupon terms instead of discussing new charges and new products or services. In lieu of 

finalizing additional formal mandates in the Rule regarding recordkeeping and best 

practices evidencing express, informed consent, the Commission recognizes that industry 

members and other stakeholders will have significant room to develop self-regulatory 

programs and guidance tailoring these and other topics to the specifics of their business 

operations. 

226 
Some dealership association commenters expressed concern that such a provision 

would be inconsistent with State laws and would complicate the car buying experience. 

While the Commission is not aware of any laws that allow dealers to charge consumers 

without their express, informed consent, and thus is not aware of any inconsistences with 

this provision, § 463.9 of the Final Rule specifies what dealers must do in the case of 

actual conflicts with State law. State laws may provide more or less specific 

requirements—including requirements that provide greater protection—as long as they 

do not conflict with the Final Rule, as set forth in § 463.9. The Commission also notes 

that to the extent there is overlap with existing law, there is no evidence that duplicative 

prohibitions against deceptive and unfair conduct, including prohibitions against charging 

consumers without express, informed consent, have harmed consumers or competition. 

Commenters, including an industry association, inquired whether the term “item,” 

as used in this proposed provision, differed from the term “Add-on Product or Service” 

defined in § 463.2 of the Commission’s proposal. The industry association also argued 

that requiring express, informed consent is beyond what is required under the Truth in 

Lending Act. The Commission responds as follows: Consistent with its plain meaning, 

the term “item” is broader than, and thereby encompasses, the term “Add-on Product(s) 

or Service(s),” which is limited by its definition in § 463.2 of the Final Rule.411 As 

proposed, § 463.5 addressed “Dealer Charges for Add-ons and Other Items.”412 It did so 

in recognition of the fact that add-ons are one type of “item,” but that “Other Items” for 

which a dealer might charge exist as well. Thus, as proposed, § 463.5 applied to charges 

411 See NPRM at 42046. The term “item” includes “a distinct part in an enumeration, account, or series” as 

well as “a separate piece of news or information.” See Item (defs. 1, 3), Merriam-Webster.com Dictionary, 

https://www.merriam-webster.com/dictionary/item (last visited Sept. 14, 2023). 412 See NPRM at 42046 (emphasis added). 

227 
 

generally, whether such charges were for an add-on or for another item. As previously 

discussed, charging consumers without their express, informed consent to the charge has 

long been an unfair or deceptive practice under the FTC Act. This has been the case 

regardless of what the charge is for. Accordingly, dealers already should be obtaining 

consumers’ express, informed consent for charges, whether it is for an Add-on or any 

other item, regardless of what may be required under other laws. 

Commenters, including this same industry association commenter, also 

questioned how a dealership would calculate “the amount of the charge . . . with and 

without the product or service” as would be required under proposed § 463.2(g)(2), as 

well as how this proposed provision would work in a non-financed transaction.413 

Conversely, an individual commenter stated that current F&I practices already routinely 

disclose the proposed charges with and without the product or service. The Commission 

notes that its proposed definition of “Express, Informed Consent” plainly required 

disclosure of the “amount of the charge, including, if the product is for a product or 

service, all fees and costs to be charged to the consumer over the period of repayment 

with and without the product or service.”414 The amount the dealer will charge the 

consumer over the period of repayment with the product or service is the total charge for 

that product or service. In the event the charge is for an optional product or service, the 

amount the dealer will charge the consumer without the product or service is zero; in the 

event the charge is for a non-optional item, the dealer’s disclosure must clearly indicate 

as such. Regarding non-financed transactions, as with a financed transaction, the amount 

413 This commenter also contended that this provision would result in many disclosures when combined 

with proposed § 463.5(b). Comment of Nat’l Auto. Dealers Ass’n, Doc. No. FTC-2022-0046-8368 at 98-

99. As discussed previously, the Commission declines to finalize proposed § 463.5(b). 414 See NPRM at 42045. 

228 
the dealer will charge the consumer over the period of repayment with the product or 

service is the total charge for that product or service. If the period of repayment is such 

that full payment is due upon receipt of the vehicle, the amount required to be disclosed 

is the total charge for that product or service to be paid upon receipt of the vehicle. The 

amount the dealer will charge the consumer without the product or service, if it is 

optional, is zero; in the event the charge is for a non-optional item, the dealer’s disclosure 

must clearly indicate such. Sharing this basic information with consumers—how much 

they will pay for the item and how much they will pay without it—addresses practices, 

such as hiding add-on charges, misrepresenting whether such charges are required in 

connection with the vehicle sale or financing transaction, or misrepresenting how such 

charges influence the total of payments for the transaction. 

An industry association comment stated that, were the Commission’s proposal to 

become final, the Commission would be able to obtain monetary relief from dealers for 

harmed consumers, and argued that Holder Rule protections for such consumers thus 

would be unnecessary.415 Accordingly, it urged the Commission to modify its proposal to 

include a safe harbor for contract assignees, which it argued would be incapable of 

detecting deficiencies in sale or lease transactions, such as dealer misrepresentations or a 

lack of consumer consent, unless those deficiencies were apparent from the face of the 

contract. Here, the Commission emphasizes that no provision of the Final Rule changes 

the status quo regarding the responsibilities of assignees or other subsequent holders of 

motor vehicle financing under the Holder Rule. The Commission did not include, when 

enacting the Holder Rule, a safe harbor from liability for claims or defenses based on 

415 See Holder Rule, 16 CFR 433.2. 

229 
 

their capability of detection by such assignees or other subsequent holders, and the 

Commission does not believe on the basis of comments received in the course of this 

rulemaking that such a change would be warranted as a consequence of finalizing this 

Rule. The Holder Rule provides important protections for harmed consumers, even when 

there is law that allows the Commission or other law enforcers to obtain remedies for 

harmed consumers, including where the consumers are seeking recourse from, or 

defending themselves against, parties that have not been the subject of law enforcement 

actions.416 Furthermore, while the Commission understands that dealers are often in the 

best position to ensure they have, in the first instance, obtained a consumer’s express, 

informed consent for charges, there are steps an assignee or other subsequent holder of 

the consumer credit contract, such as a third-party financing entity, can take to address 

concerns about contracts obtained without express, informed consent. For example, if a 

financing entity receives complaints from consumers or others that specific charges were 

obtained without authorization or sees that charges for a particular item are occurring 

substantially more frequently at a given dealership than at others, the financing company 

can take steps to make sure the dealer is obtaining express, informed consent. Further, if a 

financing entity is concerned that a dealership may be acting in violation of the Final 

Rule, it may arrange its business relationships accordingly, including by altering or 

withdrawing its business from the dealership.417 

416 See Holder Rule, 16 CFR 433.2; see also Fed. Trade Comm’n, Advisory Opinion Regarding F.T.C. 

Trade Regulation Rule Concerning Preservation of Consumers’ Claims and Defenses (May 3, 2012), 

https://www.ftc.gov/system/files/documents/advisory_opinions/16-c.f.r.part-433-federal-trade-commissiontrade-regulation-rule-concerning-preservation-consumers-claims/120510advisoryopinionholderrule.pdf 

(last visited Dec. 5, 2023). 

417 See Complaint ¶¶ 29-32, Fed. Trade Comm’n v. Tate’s Auto Ctr. of Winslow, Inc., No. 3:18-cv-08176-

DJH (D. Ariz. July 31, 2018) (alleging a financing entity ceased business with Tate’s Auto Center after 

concerns about loan falsification and substantial losses). 

230 
Another industry association commenter asked for clarification regarding the 

extent to which particular rules are necessary to obtain customer authorization for 

charges, thus reflecting what is already necessary under State or Federal law, as opposed 

to preventative measures that the Commission otherwise deems necessary. The 

Commission notes that this provision is consistent with the requirements of the FTC Act, 

which already prohibits charging consumers without express, informed consent, and is 

needed to address unfair and deceptive conduct. As the Commission set forth in its 

NPRM, the length and complexity of motor vehicle transactions has created an 

environment rife with deceptive and unfair conduct. Consumer complaints and the 

Commission’s extensive law enforcement experience, among other sources, indicate that 

some dealers have added thousands of dollars in unauthorized charges to motor vehicle 

transactions, including for add-ons consumers had already rejected.418 Such issues are 

exacerbated when, for example, preprinted dealer contracts automatically include charges 

for optional add-ons that the consumer has not selected; when dealers rush consumers 

through stacks of paperwork with buried charges after a lengthy process; when dealers 

misinform consumers that the documents they are signing represent agreed-upon terms; 

or when dealers ask consumers to sign blank documents. 

Charging consumers without their express, informed consent causes substantial 

injury to consumers in the amount of the unauthorized charge. This injury is not 

reasonably avoidable when dealers do not clearly and conspicuously disclose to the 

consumer what the charge is for and the amount of the charge, since this information is 

within the unilateral control of the dealer. There are no countervailing benefits to 

418 See SBP II.B.2. 

231 
 

 

consumers or to competition that outweigh this injury. To the contrary, if all dealers 

obtained express, informed consent to charges, they would not lose business to dealers 

who do not do so. 

Charging for an item without obtaining the consumer’s express, informed consent 

is also a deceptive practice under Section 5 of the FTC Act.419 When a dealer presents a 

consumer with whom the dealer has negotiated a finalized sale or financing contract, the 

dealer is representing that the contract includes only charges that were negotiated and to 

which the consumer agreed. If the dealer failed to obtain the consumer’s express, 

informed consent, however, such a representation is false or misleading. It is also 

material: if consumers knew that they had not, in fact, authorized a charge that the dealer 

nonetheless included in their sales or financing contract, this information likely would 

have affected the consumers’ willingness to continue to engage with the dealership, as 

well as consumers’ willingness to select and pay for any such item. The express, 

informed consent requirement also serves to prevent the misrepresentations prohibited by 

§ 463.3 of the Final Rule—including misrepresentations regarding material information 

about the costs or terms of purchasing, financing, or leasing a vehicle, and about any 

costs, limitation, benefit, or other aspect of an add-on.420 The requirement also serves to 

prevent violations of the disclosure requirements in § 463.4 and the prohibition against 

charging for non-beneficial add-ons in § 463.5(a). By operation of the definition of 

“Express, Informed Consent” at § 463.2(g), this requirement reduces the likelihood that 

419 See, e.g., Fed. Trade Comm’n v. FleetCor Techs., Inc., 620 F. Supp. 3d 1268, 1334-39 (N.D. Ga. Aug. 

9, 2022); Fed. Trade Comm’n v. Inc21.com Corp., 745 F. Supp. 2d 975, 1001-03 (N.D. Cal. Sept. 21, 

2010). 

420 See 15 U.S.C. 57a(a)(1)(B) (the Commission “may include requirements prescribed for the purpose of 

preventing” unfair or deceptive acts or practices). 

232 
dealers will fail to disclose what a given charge is for and the amount of the charge 

including all fees and costs to be charged to the consumer over the period of repayment 

with and without the charged item, thereby making the disclosures of information 

required by § 463.4 more likely. The same is true regarding the requirements of 

§ 463.5(a): the requirement that dealers obtain informed and unambiguous assent to be 

charged for each product or service makes it less likely that dealers will charge 

consumers for items from which they would not benefit; consumers typically do not 

provide informed, unambiguous assent to be charged for additional products from which 

they could not benefit unless they are led to believe, directly or by omission, that these 

products would be beneficial. 

Thus, the Commission has determined to finalize proposed § 463.5(c), prohibiting 

dealers from charging a consumer for any item unless the dealer obtains the express, 

informed consent of the consumer for the charge, with the addition of language clarifying 

that the requirements in § 463.5(c) “also are prescribed for the purpose of preventing the 

unfair or deceptive acts or practices defined in this part, including those in §§ 463.3(a) & 

(b), 463.4, and 463.5(a).” In addition, the Commission has determined to finalize its 

definition of “Express, Informed Consent,” now at § 463.2(g), substantively as proposed. 

F. § 463.6: Recordkeeping 

Proposed § 463.6 required motor vehicle dealers to create and retain, for a period 

of twenty-four months from the date the record is created, all records necessary to 

demonstrate compliance with the Final Rule, including those in five enumerated 

paragraphs. This proposed section further provided that dealers may retain such records 

in any legible form, and in the same manner, format, or place as they may already keep 

233 
such records in the ordinary course of business, and that failure to keep all required 

records required will be a violation of the Rule. As examined in additional detail in the 

following analysis, several commenters supported the proposal; several urged the 

Commission to adopt broader recordkeeping requirements; and several other commenters 

argued that the proposed requirements were too broad. After careful consideration, the 

Commission has determined to adopt these recordkeeping requirements largely as 

proposed, with two conforming modifications to remove references to proposed 

provisions not adopted in the Final Rule; one typographical modification to include a 

serial comma for consistency; and minor textual changes to ensure consistency with the 

defined terms at § 463.2(e) and (f) by replacing “Motor Vehicle Dealer” with “Covered 

Motor Vehicle Dealer” or “Dealer,” replacing “Motor Vehicle” with “Vehicle,” and 

capitalizing “vehicle.” In the following paragraphs, the Commission discusses each 

proposed recordkeeping requirement, the comments the Commission received on each 

such requirement as well as the Commission’s responses to such comments, and the 

provisions the Commission is finalizing. 

Section 463.6(a) of the proposed rule required motor vehicle dealers to create and 

retain, for a period of twenty-four months from the date the record is created, all records 

necessary to demonstrate compliance with the Final Rule, including (1) copies of 

materially different advertisements, sales scripts, training materials, and marketing 

materials regarding the price, financing, or lease of a motor vehicle that the dealer 

disseminated during the relevant time period; (2) copies of all materially different add-on 

lists and all documents describing such products or services that are offered to 

consumers; (3) copies of all purchase orders; financing and lease documents with the 

234 
 

dealer signed by the consumer, whether or not final approval is received for a financing 

or lease transaction; and all written communications relating to sales, financing, or 

leasing between the dealer and any consumer who signs a purchase order or financing or 

lease contract with the dealer; (4) records demonstrating that add-ons in consumers’ 

contracts meet the requirements of § 463.5, including copies of all service contracts, GAP 

agreements, and calculations of loan-to-value ratios in contracts including GAP 

agreements; and (5) copies of all written consumer complaints relating to sales, financing, 

or leasing, inquiries related to add-ons, and inquiries and responses about vehicles 

referenced in § 463.4. 

Proposed § 463.6(b) provided that a motor vehicle dealer may keep the required 

records “in any legible form, and in the same manner, format, or place as they may 

already keep such records in the ordinary course of business.” This proposed paragraph 

also specified that failure to keep all records required under paragraph (a) of this section 

would be a violation of the Final Rule. 

Many commenters, including State regulators, legal aid groups, consumer 

advocacy organizations, and individual commenters, endorsed the Commission’s 

proposed rule generally, without criticism of its proposed recordkeeping requirements. In 

addition, one such association commenter expressly stated that it supported each of the 

proposed recordkeeping provisions, explaining that these proposed provisions were 

needed to address “bait and switch” tactics, provide evidence of whether required 

disclosures are made, and identify consumers harmed by illegal practices.421 Here, the 

421 Comment of Nat’l Consumer L. Ctr. et al., Doc. No. FTC-2022-0046-7607 at 48-49; see also Comment 

of N.Y.C. Dep’t of Consumer and Worker Prot., Doc. No. FTC-2022-0046-7564 at 6 (noting retention 

requirements are vital to investigations, particularly with respect to mandatory disclosures). 

235 
Commission notes that record retention requirements are necessary to preserve written 

materials that reflect the transactions between the dealer and purchasing consumers, and 

to assist the Commission to enforce its Rule by enabling it to ascertain whether dealers 

are complying with its requirements; to identify persons who are involved in any 

challenged practices; and to identify consumers who may have been injured. Such 

requirements are particularly important in the case of complicated, lengthy, and 

document-heavy vehicle sale or financing transactions, in which law violations may be 

more difficult for consumers and others to detect. Indeed, the Commission routinely 

includes recordkeeping requirements in its rules.422 

Several commenters, including consumer advocacy organizations, consumer 

protection agencies, a group of State attorneys general, and individual commenters, urged 

the Commission to consider expanding the proposed twenty-four-month record retention 

period, noting that the contract period for most retail installment contracts is much longer 

than twenty-four months, and that State limitations periods for claims relating to the 

subject matter of the Commission’s proposed rule often extend well beyond this proposed 

timeframe. Numerous such commenters, for instance, recommended a record retention 

period of the longer of seven years or the length of the consumer’s financing contract. 

The Commission understands that there would be benefits to a longer period, 

especially given that vehicle financing repayment terms are often far longer than twentyfour months, and that many dealers likely already maintain, in the ordinary course of 

business, the types of records set forth in proposed § 463.6. The Commission, however, is 

also mindful that other commenters raised concerns about the costs associated with 

422 See, e.g., Telemarketing Sales Rule, 16 CFR 310.5; Business Opportunity Rule, 16 CFR 437.7. 

236 
record retention, including costs that would increase with any extension of the retention 

period. Rather than limiting the types of records to be maintained, and thus hampering the 

Commission’s ability to ensure compliance with the Final Rule, the Commission has 

determined to adopt a retention period that is shorter than the time period of many motor 

vehicle financing contracts, in order to minimize burdens. In the event the Commission 

subsequently determines that a twenty-four-month retention period is insufficient to 

ensure compliance with this Rule, the Commission may consider other measures in the 

future. 

In addition, a number of commenters, including consumer advocacy 

organizations, recommended additional provisions, including an explicit requirement to 

retain language-translated versions of required records, and a requirement to make 

retained records available to consumers upon request. Regarding language-translated 

versions of required records, § 463.6(a)(3), (a)(4), and (a)(5) require dealers to retain 

copies of “all” listed records, while § 463.6(a)(1) mandates that dealers retain “Materially 

different” copies of records. Thus, for the records listed in § 463.6(a)(3), (a)(4), and 

(a)(5), any translations are required to be retained; in the case of § 463.4(a)(1), the Rule 

requires materially different translations to be maintained.423 The Commission therefore 

has determined not to add to the recordkeeping section of the Rule a standalone 

requirement to retain translated versions. The Commission will continue to monitor the 

marketplace to determine whether additional action or protections are warranted. 

The Commission also declines to include in this Final Rule an additional 

requirement that dealers provide retained records to consumers upon request. Such a 

423 See § 463.2(j). 

237 
requirement may be beneficial; however, it is not clear to what extent dealers currently 

refuse to provide consumers with such records, and there is insufficient information in the 

rulemaking record to assess the impact of—or need for—such a modification of the 

existing requirement to retain and preserve materials in the Rule. The Commission will 

continue to monitor the motor vehicle marketplace, including issues relating to 

information access, to determine whether additional action or protections are warranted. 

Other commenters—particularly auto industry participants—objected to the 

proposed recordkeeping requirements.424 Several such commenters contended that the 

proposed requirements were new obligations that went beyond specific State 

recordkeeping requirements. Some dealership associations argued that existing State 

recordkeeping requirements are sufficient and that a Commission rule was unnecessary. 

One such commenter argued that the existence of overlapping, but different, State and 

Federal standards may make compliance difficult for motor vehicle dealers. 

In response, the Commission notes that the recordkeeping requirement is 

necessary to ensure motor vehicle dealer compliance with the Final Rule, and therefore 

may have different requirements than State standards. To provide dealers with flexibility 

and to minimize burden, however, the proposed rule permitted dealers to retain records 

“in any legible form,” including “the same manner, format, or place” in which records are 

424 One industry commentor questioned the utility of records in FTC actions. This commenter also stated 

that the FTC is not a supervisory agency and thus should not be seeking to create a records inspection 

scheme. As noted previously, recordkeeping requirements are necessary here to prevent unfair and 

deceptive practices by mandating preservation of written materials that reflect dealer transactions and to 

enable effective enforcement of the Rule. The Commission has the authority to prescribe rules for the 

purpose of preventing unfair or deceptive acts or practices. See 15 U.S.C. 57a(a)(1)(B). The Commission 

routinely includes recordkeeping requirements in rules, see, e.g., Telemarketing Sales Rule, 16 CFR 310.5; 

Business Opportunity Rule, 16 CFR 437.7, and courts have ordered companies to maintain records in FTC 

orders, see, e.g., Final Judgment at 20-21, Fed. Trade Comm’n v. Elegant Sols., Inc., No. 8:19-cv-01333-

JVS-KES (C.D. Cal., July 17, 2020); Order for Permanent Injunction and Monetary Judgment at 27-28, 

Fed. Trade Comm’n. v. Consumer Defense, LLC, No. 2:18-cv-00030-JCM-BNW (D. Nev. Dec. 5, 2019). 

238 
 

kept in the ordinary course of business. To the extent dealers have fashioned their 

ordinary record retention practices around State recordkeeping standards, the proposed 

rule thus allowed for record retention in the form required by State recordkeeping 

standards. Additionally, as discussed in the following paragraphs, the Commission is not 

finalizing recordkeeping requirements that dealers maintain Add-on Lists and Cash Price 

without Optional Add-ons disclosures and declinations, further reducing burdens. 

One industry association commenter suggested that this requirement would 

increase risks of identity theft and raise privacy concerns. The Commission notes that 

many dealers already have obligations to retain customer records under State law.425 

Dealers are required to have systems in place to protect this information, given that the 

failure to adequately protect such information violates existing law, including Section 5 

of the FTC Act and the Commission’s Standards for Safeguarding Customer Information, 

also known as the Safeguards Rule.426 Thus, to the extent the Final Rule requires dealers 

to collect personal information beyond that which they are already collecting, they should 

already have systems in place to protect such information. 

Some commenters raised concerns about the requirement in proposed 

§ 463.6(a)(1) to preserve, inter alia, materially different advertisements, sales scripts, and 

marketing materials. One such dealership association commenter argued that dealers 

should not be required to retain sales scripts, training materials, and marketing materials, 

while another dealership association commenter argued that dealers should not be 

425 See, e.g., Va. Code sec. 46.2-1529 (requiring retention for five years of “all dealer records” regarding, 

among other things, vehicle purchases, sales, trades, and transfers of ownership).

426 15 U.S.C. 45; 16 CFR 314; see also Decision and Order, LightYear Dealer Techs., LLC, No. C-4687 

(F.T.C. Sept. 3, 2019) (consent order); FTC Business Guidance, “FTC Safeguards Rule: What Your 

Business Needs to Know,” https://www.ftc.gov/business-guidance/resources/ftc-safeguards-rule-whatyour-business-needs-know (last visited Dec. 5, 2023). 

239 
required to maintain advertisements, positing that these materials are publicly available 

and could be requested from advertisers as concerns arise with respect to particular ads. 

Commenters including two dealership organizations argued that digital advertisements 

would be difficult to retain, with one such commenter urging the Commission to adopt an 

approach that would permit dealers to retain a representative example of a vehicle 

advertisement and the underlying data used to populate vehicle ads. The other such 

commenter suggested that the proposed recordkeeping requirement could be unduly 

burdensome because “all materials” related to its online inventory “could be deemed 

some version of materially different advertisements and marketing materials regarding 

price or financing of a motor vehicle.” Another dealership organization commenter raised 

a similar concern about website listings and questioned whether the term “advertisement” 

includes television ads and email campaigns. 

After considering these comments, the Commission has determined that the 

proposed recordkeeping requirements in § 463.6(a)(1) strike an appropriate balance by 

requiring the retention of materials needed to enable effective enforcement while only 

requiring such records to be retained for twenty-four months and in any legible form. 

Advertisements and marketing materials regarding the price, financing, or lease of a 

motor vehicle are critical to determining compliance with virtually every provision in the 

Final Rule, as they are often consumers’ first contact in the vehicle-buying or -leasing 

process, and often contain key representations about pricing, payments, and other terms. 

Scripts and training materials are important evidence of a dealer’s compliance program 

regarding the Final Rule’s requirements, including of the information and instructions 

that dealership staff are given with respect to the areas that are addressed by the Final 

240 
Rule. Furthermore, regarding the contention that advertisements are available publicly or 

could be requested separately, a core purpose of the recordkeeping requirement is to 

ensure that disseminated representations are preserved for a sufficient period of time to 

allow for compliance concerns to be addressed. A compliance regime that, contrary to the 

Commission’s proposal, allowed the destruction of advertisements after they have been 

publicly presented, or that requires the Commission to try to obtain materials from 

advertisers or third parties, would not serve this purpose. 

With respect to the scope of advertisements that must be retained, the 

recordkeeping requirement does not differ with respect to the form of the advertisement, 

since the same enforcement concerns are raised regardless of whether an ad is presented 

in digital, hardcopy, email, audio, televised, or other format. The recordkeeping 

requirement does not require all advertisements to be retained, however, as § 463.6(a)(1) 

specifically includes the proviso that “a typical example of a credit or lease advertisement 

may be retained for advertisements that include different Vehicles, or different amounts 

for the same credit or lease terms, where the advertisements are otherwise not Materially 

different.” Regarding the commenter’s proposal to allow dealers to retain a 

“representative” example of an advertisement with digital data that can recreate different 

versions of the advertisement, this provision, as proposed, permitted dealers to preserve 

typical examples of advertisements in this manner so long as such records are already 

kept in in the ordinary course of business, capture all differences that would be material 

to consumers, and accurately show how the offers have been presented to consumers. 

Materially different website listings, television advertisements, and email campaigns 

must be preserved, consistent with the plain meaning of the terms used in the section. 

241 
With respect to proposed § 463.6(a)(2)’s requirement to maintain copies of all 

materially different add-on lists, an industry association commenter contended that 

retaining materially different add-on lists would be difficult, given the scope of the term 

“Add-on” and the consequent size of the list as well as its dynamic nature. One dealership 

association commenter argued that the proposed requirement to retain add-on lists was 

unnecessary, contending that concerns could be addressed as they arise, and requesting to 

replace this proposed requirement with a requirement to retain a master copy of each 

insurance product, service contract, or other add-on in the dealer’s general business file. 

After carefully considering the comments, the Commission has determined not to finalize 

the proposed requirement at § 463.4(b) to disclose an add-on list, and consequently will 

not be finalizing the proposed requirement at § 463.6(a)(2) that dealers retain materially 

different add-on lists. 

Several commenters, including industry associations, argued that certain of the 

proposed requirements to preserve written material, including written communications 

under proposed § 463.6(a)(3) and written consumer complaints, and inquiries and 

responses about vehicles referenced in § 463.4, under proposed § 463.6(a)(5), would be 

unduly burdensome. Generally, these commenters contended that the various ways 

consumers may communicate with dealers—including chat features on a dealer’s 

website, e-mails and text messages with salespersons, and social media posts—would 

require the development of new and onerous preservation systems. A dealership 

organization commenter raised concerns about retaining text messages and emails, 

contending that salespeople may use their personal phones and email addresses, even if 

the dealership has policies against such use. One industry association commenter argued 

242 
 

 

that third parties might have records related to add-ons and that this provision should only 

apply to “complaints” relating to add-ons instead of “inquiries” relating to add-ons. One 

dealership association commenter argued that dealers should not be required to retain 

consumer complaints, contending it should be the businesses’ decision whether to 

maintain such materials, and also arguing that the Rule should not require, under 

proposed § 463.6(a)(4), the preservation of materials such as pricing options presented to 

consumers, contending that such materials should be limited to the two parties to the 

agreement. 

After considering these comments, the Commission has determined to finalize 

requirements to retain written materials under § 463.6(a)(3), (4), and (5), with a limiting 

modification to § 463.6(a)(4). These requirements are necessary to address unfair and 

deceptive practices by mandating that dealers preserve written materials that reflect the 

transactions between the dealer and purchasing consumers, and to assist the Commission 

in its enforcement of the Rule.427 Such materials are particularly important given that the 

vast majority of consumers do not file a complaint, and with hidden charges, many 

consumers never know about the illegal conduct in the first place.428 For instance, as 

explained in SBP II.B, a survey of one dealership group’s customers showed that 83% of 

the respondents were subject to the dealer’s unlawful practices related to add-ons. This 

equals 16,848 consumers—far more than the 391 complaints received against the dealer 

over the time period covered by the survey. 

427 As noted previously, a dealership association commenter argued that dealers should not be required to 

preserve complaints and certain add-on materials, contending that it should be a business decision whether 

to retain such records. The Commission declines to substantively modify these requirements from the 

Commission’s original proposal, given the importance of these materials in ensuring compliance with the 

other requirements of the Rule. 

428 See SBP II.B (discussing how complaints represent the tip of the iceberg in terms of actual consumer 

harm). 

243 
 

 

 

To minimize burden, as previously noted, the retention requirements are for a 

period of twenty-four months. Further, as stated previously, § 463.6(b) permits dealers to 

retain records “in any legible form,” which could, for example, include using the backup 

and export features that already exist in many social media services, e-mail platforms, 

chat platforms, and text systems, instead of creating entirely new systems. Regarding 

dealers that use third parties to administer add-ons, commenters did not explain why they 

cannot access records related to add-ons from these parties.429 Further, altering the 

language in the provision to apply to “complaints” rather than “inquiries” related to addons could invite arguments that consumer statements, such as, “Why was I charged for 

this add-on that I did not know about?” are not “complaints,” but simply “inquiries.” 

With respect to the use of salespeople’s personal devices to conduct motor vehicle dealer 

activities, including the sale, financing, or leasing of vehicles, as with any business, 

dealers should ensure that their employees are communicating with consumers through 

appropriate channels that can be monitored and controlled by the dealership. 

Some commenters, including an industry association and a dealership 

organization, also raised concerns about how to determine what would constitute “written 

consumer complaints” under proposed § 463.6(a)(5). For purposes of the Rule, the 

Commission refers commenters to the plain meaning of the terms used in the phrase, 

which terms are commonly used and understood.430 

429 This is consistent with the Commission’s prior enforcement order practice. See, e.g., Stipulated Order at 

25, Fed. Trade Comm’n v. N. Am. Auto. Servs., Inc., No. 1:22-cv-0169 (N.D. Ill. Mar. 31, 2022) (requiring 

retention of “records of all consumer complaints and refund requests, whether received directly or 

indirectly, such as through a third party, and any response”). 

430 The term “written” means “made or done in writing.” See Written, Merriam-Webster.com Dictionary, 

https://www.merriam-webster.com/dictionary/written (last visited Dec. 5, 2023). The term “consumer” 

includes “one that utilizes economic goods.” See Consumer (def. a), Merriam-Webster.com Dictionary, 

https://www.merriam-webster.com/dictionary/consumer (last visited Dec. 5, 2023). The term “complaint” 

244 
 

 

 

Two industry association commenters argued that the proposed requirement to 

retain written communications would be particularly burdensome for recreational vehicle 

dealers, contending that that this was particularly so given that many RV dealers are 

small businesses. In response, the Commission notes that, as explained in the paragraphby-paragraph analysis of § 463.2(e) & (f) in SBP III.B.2(e) & (f), it has determined not to 

finalize the Rule with respect to dealers predominantly engaged in the sale, leasing, or 

servicing of RVs, but it will continue to monitor the marketplace to determine whether 

modifications or revisions may be warranted in the future. 

Finally, one industry association commenter argued that the proposed 

recordkeeping requirements and costs were unwarranted given that the Commission has 

brought an average of fewer than four enforcement actions a year against motor vehicle 

dealers in the past decade. In response, the Commission notes that its experience 

indicates that the number of enforcement actions is not remotely reflective of the total 

violations of law in the auto marketplace. To uncover misconduct and bring actions, law 

enforcement agencies and officials often rely on complaints from affected parties. As 

previously discussed, however, consumer complaints typically represent just the “tip of 

the iceberg” in terms of actual violations, and the vast majority of consumers who are 

subjected to unlawful practices in this area may not realize they are being victimized.431 

Further, the Commission has limited law enforcement resources and jurisdiction over a 

broad range of commerce.432 The number of actions it brings relating to motor vehicle 

includes an “expression of grief, pain, or dissatisfaction,” “something that is the cause or subject of protest 

or outcry,” and “a formal allegation against a party.” See Complaint (defs. 1, 2a, 3), Merriam-Webster.com 

Dictionary, https://www.merriam-webster.com/dictionary/complaint (last visited Dec. 5, 2023). 431 See SBP II.B. 432 See 15 U.S.C. 45(a). 

245 
dealers—as with actions in any area—is necessarily limited by these resource constraints, 

even when there are ongoing, chronic problems that cause substantial consumer harm. 

Despite these constraints, the Commission and its law enforcement partners have taken 

significant action aimed at addressing unfair and deceptive practices in the motor vehicle 

marketplace, as explained in SBP II.C. Given that problems with bait-and-switch 

advertising, add-ons, and other aspects of vehicle-buying and -leasing have continued to 

be a source of consumer harm despite this action, additional measures are warranted. And 

the Commission has taken steps to minimize burden, including by declining to finalize 

the add-on list disclosure requirements in proposed § 463.4(b), as well as the itemized 

disclosures required in proposed § 463.5(b) and their corresponding proposed 

recordkeeping requirements. Moreover, the recordkeeping provisions permit dealers to 

retain records in any legible form, providing a flexible standard that permits the use of 

ordinary and standard forms of data and document retention. 

The Commission adopts in the Final Rule recordkeeping requirements largely as 

they were set forth in the proposed rule, with two substantive modifications. After careful 

consideration, the Commission is removing the requirements to retain copies of add-on 

lists required by proposed § 463.6(a)(2) and records showing compliance with the cash 

price without optional add-ons disclosures and declinations required by proposed 

§ 463.6(a)(4). These changes will reduce record creation and retention burdens for 

dealers. As previously described, the Final Rule also contains one typographical 

modification of adding a serial comma and conforming edits for consistency with the 

defined terms in § 463.2(e) and (f). 

246 
 

The Commission adopts these recordkeeping requirements to promote effective 

and efficient enforcement of the Rule, thereby deterring and preventing deception and 

unfairness. As discussed throughout this SBP, the rulemaking record, including the 

Commission’s law enforcement experience, indicates that there are chronic problems 

confronting consumers in the motor vehicle sales, financing, and leasing process, which 

include advertising misrepresentations and unlawful practices related to add-ons and 

hidden charges.433 The recordkeeping requirements in the Final Rule will assist the 

Commission in investigating and prosecuting law violations and help the Commission 

identify injured consumers for paying consumer redress. The recordkeeping requirements 

are flexible, allowing dealers to retain materials in any legible form, and are limited to a 

period of twenty-four months from the date the record is created. The recordkeeping 

requirements are consistent with, and similar to, the recordkeeping requirements in other 

Commission rules, as tailored to individual industries and markets.434 

G. § 463.7: Waiver Not Permitted 

Proposed § 463.7 prohibited waiver of the requirements of the Final Rule by 

providing that it constituted a violation of the Rule “for any person to obtain, or attempt 

to obtain, a waiver from any consumer of any protection provided by or any right of the 

consumer under” the Rule. Comments that addressed this proposed provision generally 

either supported it or expressed no opinion on it. Comments in support noted that the 

provision would help provide consistency in the protection it would provide to consumers 

433 Some enforcement actions have specifically alleged that a defendant failed to maintain documents 

required under a prior order with the FTC. Complaint ¶¶ 42-45, Fed. Trade Comm’n v. Norm Reeves, Inc., 

No. 8:17-cv-01942 (C.D. Cal. Nov. 3, 2017) (alleging dealer failed to keep records of previous 

advertisements needed to demonstrate compliance with prior order); Complaint ¶¶ 32-35, Fed. Trade 

Comm’n v. New World Auto Imports, Inc., No. 3:16-cv-22401 at (N.D. Tex. Aug. 18, 2016) (same). 434 See, e.g., 16 CFR 310.5 (Telemarketing Sales Rule); 16 CFR 437.7 (Business Opportunity Rule); 16 

CFR 453.6 (Funeral Industry Practices Rule); 16 CFR 301.41 (Fur Products Labeling Rule). 

247 
 

and emphasized that it would prohibit unscrupulous dealers from causing consumers to 

sign away their rights. This proposed provision was modeled on a similar provision in the 

Mortgage Assistance Relief Services (“MARS”) Rule, which was originally promulgated 

by the Commission and subsequently republished by the CFPB.435 Moreover, at least one 

State has a similar waiver provision in its rule covering motor vehicle dealer practices.436 

The Commission concludes that this provision is necessary to prevent circumvention of 

the Rule, and, after review of the comments, adopts this prohibition as it was originally 

proposed. 

H. § 463.8: Severability 

Proposed § 463.8 provided that the provisions of the Final Rule “are separate and 

severable from one another. If any provision is stayed or determined to be invalid, it is 

the Commission’s intention that the remaining provisions will continue in effect.” This 

proposed provision was modeled on similar provisions in other rules, including the 

Commission’s Telemarketing Sales Rule and the MARS Rule.437 A number of 

commenters, including dealership associations, raised general concerns that the proposed 

provisions may be too integrated with each other for severability to be possible. Such 

commenters, however, did not provide examples of any such instances wherein they 

believed certain provisions could not remain in effect if other provisions were stayed or 

determined to be invalid. Upon consideration of the comments, the Commission 

concludes that severability is possible in the event any provision is stayed or determined 

435 See MARS Rule (Regulation O), 12 CFR 1015.8, previously published by the Commission at 16 CFR 

322.1. 

436 See, e.g., Wis. Admin. Code Trans. 139.09 (similar waiver prohibition clause in Wisconsin’s Motor 

Vehicle Trade Practices rule). 

437 See MARS Rule, 16 CFR 322.8 (Commission Rule), 12 CFR 1015.11 (CFPB Rule); Telemarketing 

Sales Rule, 16 CFR 310.9. 

248 
to be invalid. The Rule the Commission is finalizing includes prohibitions against 

misrepresentations regarding material information (§ 463.3), required disclosures 

(§ 463.4), and prohibitions against charging for add-ons that provide no benefit or any 

item without express, informed consent (§ 463.5)—each of which dealers are capable of 

abiding by independently, as well as by the provisions that independently support their 

operation, including Authority (§ 463.1), Definitions (§ 463.2), Recordkeeping (§ 463.6), 

Waiver not permitted (§ 463.7), and Relation to State laws (§ 463.9). Thus, the 

Commission has determined to adopt this provision in the Final Rule as it was originally 

proposed. 

I. § 463.9: Relation to State Laws 

Proposed § 463.9 provided that the Rule does not supersede, alter, or affect “any 

other State statute, regulation, order, or interpretation relating to Motor Vehicle Dealer 

requirements, except to the extent that such statute, regulation, order, or interpretation is 

inconsistent with” the Rule, “and then only to the extent of the inconsistency.” Proposed 

§ 463.9 further provided that, for purposes of this provision, a State statute, regulation, 

order, or interpretation is not “inconsistent” if the protection such statute, regulation, 

order, or interpretation affords any consumer “is greater than the protection provided 

under” the Rule. After carefully considering the comments, the Commission adopts 

§ 463.9 largely as proposed in the Final Rule. 

Numerous State regulator commenters contended that the proposed rule would 

create a uniform baseline of protection that would complement State standards. A 

comment from a group of eighteen State attorneys general contended that many of the 

Proposed rule’s requirements were similar to, or the same as, requirements that currently 

249 
 

 

 

 

 

exist under State laws or regulations, and highlighted the benefit to law enforcement from 

establishing a consistent Federal baseline while providing States with flexibility to 

impose heightened consumer protections.438 

One municipal licensing entity commenter that expressed general support of the 

Commission’s proposed rule also posited that the Commission should broaden proposed 

§ 463.9 to expressly include municipalities. With respect to the applicability of the 

provision to municipalities, the Commission notes that State political subdivisions 

exercise delegated power of their State, and as such, § 463.9 applies to municipal 

standards as well.439 

Other commenters, including dealership associations, referred generally to 

potential conflicts between the Commission’s proposed rule and State laws, but such 

commenters typically did not point to any specific purported conflicts with State law. To 

the extent some such commenters argued that certain proposed provisions would conflict 

with State laws, such arguments are addressed in the SBP’s corresponding paragraph-byparagraph analysis of the relevant Rule provision. Generally, the Commission is not 

aware of State laws that allow dealers to make misrepresentations regarding material 

information; prohibit the disclosure of accurate information regarding a vehicle’s offering 

price, optional vehicle add-ons, or total payment information; or permit dealers to charge 

consumers for add-ons that provide no benefit to the consumer or to charge for items 

without consumers’ express, informed consent. To the extent there truly are conflicts, as 

438 Comment of 18 State Att’ys Gen., Doc. No. FTC-2022-0046-8062 at 11. 439 See City of Columbus v. Ours Garage & Wrecker Serv., Inc., 536 U.S. 424, 433 (2002) (“The principle 

is well settled that local governmental units are created as convenient agencies for exercising such of the 

governmental powers of the State as may be entrusted to them in its absolute discretion.”) (quoting Wis. 

Pub. Intervenor v. Mortier, 501 U.S. 597, 607-08 (1991)). 

250 
discussed in the following paragraphs, § 463.9 establishes the framework for addressing 

any such inconsistencies. 

Commenters including dealership associations also argued that existing State 

standards are sufficient and identified State requirements that the commenters argued 

would be redundant with, or superior to, one or more provisions in the Commission’s 

proposed rule. To the extent the Rule prohibits conduct that is already prohibited by State 

laws, the Commission has not seen evidence that State and Federal standards prohibiting 

the same misconduct has harmed consumers or competition. Moreover, such overlap is 

indicative of dealers’ ability to comply with the relevant provisions in the Rule. To the 

extent State laws have additional requirements that provide greater protections or are not 

otherwise inconsistent with part 463, dealers must continue to follow those laws. 

Several dealership association commenters expressed concern regarding how to 

determine whether a State statute, regulation, order, or interpretation affords “greater 

protection” than a provision in the Commission’s proposed rule. One such commenter, 

for example, raised concerns that proposed § 463.5(a) may conflict with a pending 

California bill that would prohibit the sale of GAP when a vehicle has less than a 70% 

loan-to-value ratio. An industry association commenter claimed that the Commission’s 

proposed definitions of “Dealer or Motor Vehicle Dealer” would conflict with analogous 

State definitions. In response, the Commission emphasizes that § 463.9 would be 

triggered only if there were an actual inconsistency between State law and the Final Rule, 

and in the event of an inconsistency, the Rule only affects such State law to the extent of 

the inconsistency. The commenter examples did not present any such inconsistencies 

because it is possible to comply with both the cited State law examples and with the Final 

251 
Rule. For instance, a dealer operating in a State that prohibits the sale of a GAP 

agreement when a vehicle transaction involves a loan-to-value ratio below 70% would 

need to abide by the ratio set forth by State law and also by the Rule’s prohibition against 

charging for the product if the consumer would not benefit from it. Similarly, 

notwithstanding a commenter’s claims that the proposed rule’s definition of “Dealer or 

Motor Vehicle Dealer” would conflict with analogous State standards, the commenter did 

not identify any actual conflicts; nevertheless, to the extent State and Federal standards 

cover independent areas or actors, each actor must comply with the standards—whether 

State, Federal, or both—under which the actor is covered.440 Further discussion of how 

State laws interact with specific sections of the Rule are explained in the corresponding 

section-by-section analysis for the relevant sections. 

Some such commenters also questioned whether more coordination with States 

and Federal agencies was needed, without explaining what coordination was needed. In 

any event, the Commission coordinates regularly with States and Federal counterparts. 

Many commenters’ concerns focused on the written disclosures proposed in 

§ 463.5(b), which the Commission has determined not to include in this Final Rule. For 

instance, a substantial number of commenters, including industry associations, argued 

that proposed § 463.5(b) would have created different Federal and State requirements for 

written disclosures that would result in duplicative paperwork. A dealership association 

specifically argued that proposed § 463.5(b) may have conflicted with a State precontract disclosure requirement pertaining to six categories of add-ons because it would 

440 See, e.g., Pirouzian v. SLM Corp., 396 F. Supp. 2d 1124, 1131 (S.D. Cal. 2005) (reasoning that the more 

inclusive definition of “debt collector” under California law is not “inconsistent” with the Fair Debt 

Collection Practices Act because by “enlarging the pool of entities who can be sued” the State law offered 

greater protection). 

252 
 

have required an additional disclosure about a broader category of add-ons. An industry 

association similarly pointed to this State’s pre-contract disclosure requirement as a 

reason that additional disclosures under this Rule, including those required by proposed 

§ 463.5(b), could result in consumer confusion. At least four commenters, including 

industry associations and a dealership organization, argued that the proposed rule’s 

requirement under § 463.5(b) to create new documentation may conflict with the “single 

document” requirements, in effect in many States, which mandate that the entire motor 

vehicle sale, financing, or lease agreement—including any add-on products or services— 

be within one document. As discussed in the paragraph-by-paragraph analysis of § 463.5 

in SBP III.E.2, the Commission has determined not to finalize the written disclosures 

requirement under this provision. 

After carefully considering the comments regarding proposed § 463.9, the 

Commission is finalizing this section largely as proposed, with one minor modification: 

the Commission is adding “Covered” to the term “Motor Vehicle Dealer” in § 463.9(a) to 

conform with the revised definition in § 463.2(f). Section 463.9 provides a uniform floor 

of protection with the Commission’s Final Rule, while also permitting States to enact 

stronger protections, using a standard that has been applied in other laws and regulations 

for several decades.441 This provision is necessary to address unfair and deceptive 

practices and to enable the Commission to enforce the Rule. 

IV. Effective Date 

The Final Rule becomes effective on July 30, 2024. One industry association 

441 See, e.g., 10 U.S.C. 987(d)(1) (Military Lending Act); 15 U.S.C. 1692n (Fair Debt Collection Practices 

Act); 12 CFR 1006.104 (Regulation F); 15 U.S.C. 1693q (Electronic Funds Transfer Act); see also 21 

U.S.C. 387p(a)(1) (Family Smoking Prevention and Tobacco Control Act). 

253 
 

 

 

commenter objected that the NPRM did not include an effective date or inquire into the 

timing for feasibly implementing the Rule. Another such commenter requested at least 18 

months for stakeholders to prepare for Rule compliance, but did not explain why it would 

take 18 months to refrain from conduct that is already illegal, such as making 

misrepresentations. Rules are generally required to be published 30 to 60 days before 

their effective date, though in some circumstances, agencies may cite good cause for the 

rule to become effective sooner than 30 days from publication.442 Given the significant 

harm to consumers and law-abiding dealers from deceptive or unfair acts or practices; 

and the fact that, for dealers already complying with the law, compliance with the Rule 

the Commission is finalizing should not be onerous; the NPRM did not propose or 

contemplate any additional delay. Nevertheless, after a review of comments, the 

Commission is providing dealers until July 30, 2024 to make changes to their operations, 

if needed, in light of the Rule’s requirements. 

V. Paperwork Reduction Act 

On July 13, 2022, the Commission submitted the NPRM and an accompanying 

Supporting Statement to the Office of Management and Budget (“OMB”) for review 

under the Paperwork Reduction Act (“PRA”), 44 U.S.C. 3501-3521. On July 29, 2022, 

OMB directed the Commission to resubmit its request when the proposed rule was 

442 See 5 U.S.C. 553(d) (requiring publication of a substantive APA rule “not less than 30 days before its 

effective date” except “as otherwise provided by the agency for good cause found and published with the 

rule”). Significant rules defined by Executive Order 12866 and major rules defined by the Small Business 

Regulatory Enforcement Fairness Act are required to have a 60-day delayed effective date. See E.O. 12866, 

58 FR 51735 (Oct. 4, 1993); 5 U.S.C. 801(a)(3)). 

254 
 

 

 

 

 

 

finalized.443 

The Commission is now submitting the Final Rule and a Supplemental 

Supporting Statement to OMB. The disclosure and recordkeeping requirements of the 

Rule constitute “collection[s] of information” for purposes of the PRA.444 The associated 

burden analysis follows.445 

In the NPRM, the Commission provided estimates and solicited comments 

regarding the proposed rule, including regarding (1) the proposed add-on list disclosure 

requirement; (2) the proposed cash price without optional add-ons disclosure 

requirement; (3) other proposed provisions prohibiting certain misrepresentations and 

requiring certain disclosures; (4) the proposed recordkeeping provisions; and 

(5) estimated capital and other non-labor costs. As previously discussed, after carefully 

reviewing the comments, the Commission has made certain changes to the relevant 

443 OMB assigned the rulemaking control number 3084-0172 for PRA review purposes. 444 44 U.S.C. 3502(3); 5 CFR 1320.3(c). 445 One commenter suggested the FTC did not comply with several provisions of the PRA, specifically 

those contained in 5 CFR 1320.5(a)(1)(iv), 1320.8(d)(1), 1320.11(a), 1320.11(b), and 1320.11(d). The 

commenter does not explain the basis for the purported deficiencies. These provisions generally relate to 

the submission of a collection of information to OMB, and solicitation and consideration of public 

comments. The FTC has complied with these provisions. The FTC submitted an Information Collection 

Request to Office of Management and Budget on July 13, 2022, concurrently with publication of the 

NPRM, in accordance with 5 CFR 1320.11(b). See Motor Vehicle Dealers Trade Regulation Rule, ICR 

202202-3084-001, OMB 3084-0172, https://omb.report/icr/202202-3084-001. Because the FTC complied 

with this requirement, the collection of information proposed in the NPRM is not, as the commenter 

contends, subject to disapproval under 5 CFR 1320.11(d). 

The Commission also did not violate 5 CFR 1320.5(a)(1)(iv) and 1320.11(a), providing for 

comments to be submitted to OMB, as the commenter contends. Those provisions are limited by 5 CFR 

1320.8(d)(3), which provides that the agency need not direct comments to OMB “if the agency provides 

notice and comment through the notice of proposed rulemaking . . . for the same purposes as are listed 

under” 5 CFR 1320.8(d)(1). The Commission solicited comments in the NPRM on the subjects enumerated 

in 5 CFR 1320.8(d)(1), see NPRM at 42028-31, 42035-43, and it was not necessary for the Commission to 

also direct those same comments to OMB. The Commission thus did not violate 5 CFR 1320.5(a)(iv) or 

1320.11(a). 

Further, contrary to the commenter’s assertion, the Commission demonstrated throughout the 

NPRM that the information collection-related requirements it embodies are necessary, offer utility and 

public benefit, and minimize burdens. See, e.g., NPRM at 42027, 42043. Moreover, the Commission 

requested comments on the necessity, utility, benefits, and burdens of the proposed rule, see NPRM at 

42028-31, 42035-43, and has further taken into consideration and addressed comments in this SBP. 

255 
provisions in the Final Rule. Specifically, the Commission has determined not to finalize 

requirements, pursuant to proposed § 463.4(b), that dealers disclose an add-on list or, 

pursuant to proposed § 463.5(b), that dealers refrain from charging for optional add-ons 

unless enumerated requirements relating to the vehicle’s cash price without optional addons are met. 

In the NPRM, the Commission estimated that the disclosure and recordkeeping 

requirements would impact approximately 46,525 franchise, new motor vehicle and 

independent/used motor vehicle dealers in the U.S.446 In the NPRM, the Commission 

explained that this figure was exclusive to automobile dealers, and invited comments 

regarding market information for dealers of other types of motor vehicles, such as boats, 

RVs, and motorcycles.447 In response, one industry association commenter noted the 

absence of such other motor vehicle dealers from the Commission’s estimate. Another 

commenter also noted the absence of such dealers in the estimate and argued that the 

Commission’s estimate also erroneously included independent used motor dealers which 

the commenter contended do not perform any servicing work, but stated that the 

Commission’s estimate was fairly accurate numerically. As discussed in the paragraphby-paragraph analysis of § 463.2(e) in SBP III.B.2(e), the Commission has determined to 

expressly exclude “Recreational boats and marine equipment,” “Motorcycles, scooters, 

and electric bicycles,” “Motor homes, recreational vehicle trailers, and slide-in campers,” 

and “Golf carts” from the Final Rule’s definition of “Covered Motor Vehicle.” Further, 

as examined in the paragraph-by-paragraph analysis of § 463.2(f) in SBP III.B.2(f), the 

plain meaning of the term “servicing” covers activities that are undertaken by 

446 NPRM at 42031. 447 NPRM at 42031 n.154, 42036. 

256 
 

 

 

 

independent used car dealers.448 Thus, the Commission bases its estimate of the entities 

covered by the Final Rule on the same North American Industry Classification System 

(“NAICS”)449 categories—“new car dealers” and “used car dealers”—as it did in the 

NPRM.450 As with other figures in this section, the NAICS data assembled by the U.S. 

Census Bureau have been revised since the publication of the Commission’s NPRM with 

more recent data. Based on these revisions, the Commission now estimates that the Final 

Rule’s disclosure and recordkeeping requirements will impact approximately 47,271 

franchise, new motor vehicle and independent/used motor vehicle dealers in the United 

States.451 

The estimated overall annual hours burden for the Final Rule’s collections of 

information is 1,595,085 hours. The estimated overall annual labor cost for the Final 

Rule’s collections of information is $51,904,537. The estimated overall annual capital 

and other non-labor cost for the Final Rule’s collections of information is $14,181,300. 

448 See also Used Car Rule, 81 FR at 81668 (noting that the term “servicing” used in this same context 

“captures activities undertaken by essentially all used car dealers,” including by preparing vehicles for sale 

by addressing any obvious mechanical problems and by undertaking the general industry practice of 

appearance reconditioning).

449 NAICS is the standard used by Federal statistical agencies in classifying business establishments for the 

purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy. North 

American Industry Classification System, U.S. Census Bureau, https://www.census.gov/naics/. 450 U.S. Census Bureau, “All Sectors: County Business Patterns, including ZIP Code Business Patterns, by 

Legal Form of Organization and Employment Size Class for the U.S., States, and Selected Geographies: 

2019,” https://data.census.gov/cedsci/table?q=CBP2019.CB1900CBP&n=44111%3A44112&tid= 

CBP2019.CB1900CBP&hidePreview=true&nkd=EMPSZES~001,LFO~001 (listing 21,427 establishments 

for “new car dealers,” NAICS code 44111, and 25,098 establishments for “used car dealers,” NAICS code 

44112). See NPRM at 42031. 451 U.S. Census Bureau, “All Sectors: County Business Patterns, including ZIP Code Business Patterns, by 

Legal Form of Organization and Employment Size Class for the U.S., States, and Selected Geographies: 

2021,” 

https://data.census.gov/table?q=CB2100CBP&n=44111:44112&tid=CBP2021.CB2100CBP&nkd=EMPSZ 

ES~001,LFO~001 (listing 21,622 establishments for “new car dealers,” NAICS code 44111, and 25,649 

establishments for “used car dealers,” NAICS code 44112). 

257 
 

A. Add-on List Disclosures 

Section 463.4(b) of the proposed rule required motor vehicle dealers that charge 

for optional add-on products or services to disclose clearly and conspicuously in 

advertisements and on any website, online service, or mobile application through which 

they market motor vehicles, and at any dealership, an itemized add-on list of such 

products or services and their prices. In the NPRM, the Commission estimated costs for 

the add-on list disclosure and solicited comments on its burden analysis.452 One industry 

association made several arguments, including that the Commission underestimated the 

time and resources required because an add-on list can be lengthy, vary by vehicle and 

over time, and require working with several third parties. This commenter also argued 

that periodic revision of such lists would take more than the estimated one hour of 

clerical time per dealer, per year. The commenter, however, did not offer any specific 

estimates for such periodic revision activities. 

As explained in the section-by-section analysis of § 463.4 in SBP III.D.2, after 

careful consideration, the Commission has determined not to finalize its proposed add-on 

list provision at § 463.4(b). 

B. Disclosures Relating to Cash Price Without Optional Add-ons 

Section 463.5(b) of the proposed rule required motor vehicle dealers that charge 

for optional add-on products or services to provide certain itemized disclosures regarding 

pricing and cost information without such add-ons. In response to the Commission’s 

estimates with respect to this proposed provision, one industry association argued that the 

Commission did not provide adequate explanation of the assumptions it used to arrive at 

452 NPRM at 42032-33, 40235, 42040. 

258 
its cost estimates for this proposed provision, and contended that the Commission 

underestimated the costs associated with developing, printing, and presenting the 

proposed disclosures. This commenter also contended that the proposed requirement 

would have required significant training costs; that multiple forms would have been 

required for each motor vehicle transaction; and that aspects of the required disclosures 

would be duplicative of information already provided by dealerships in the ordinary 

course of business. The commenter estimated that developing a disclosure form for this 

proposed provision would cost dealers at least $750 and suggested that other attendant 

costs would be in the hundreds of millions or billions of dollars, without explaining how 

it arrived at such estimated figures. 

As explained in the section-by-section analysis of § 463.5 in SBP III.E, after 

careful consideration, the Commission has determined not to include in this Final Rule 

the itemized disclosure provisions at proposed § 463.5(b). The Commission notes that 

imposing unauthorized charges—including charges buried in lengthy contracts or 

included in contracts that consumers are rushed through—is a violation of both the Final 

Rule’s § 463.5(c) and of the FTC Act. The Commission will continue to monitor the 

market to determine whether additional steps are warranted to combat unauthorized 

charges for add-ons or other items in the motor vehicle marketplace. 

C. Prohibited Misrepresentations and Required Disclosures 

Section 463.3 of the Final Rule prohibits dealers from making any 

misrepresentation regarding material information about the categories enumerated in the 

section. 

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The provisions in this section have been adopted largely without modification 

from the NPRM, wherein the Commission estimated that any additional costs associated 

with the proposed misrepresentation prohibitions would be de minimis.

453 One industry 

association commenter argued that a bar on misrepresentations in the Final Rule would 

require increased training and compliance costs and result in longer transaction times and 

costs related to working with vehicle manufacturers about online advertisements. This 

section, however, does not require any additional disclosures or information collection. 

Thus, while dealers might elect to enhance their training and compliance,454 refraining 

from making misrepresentations does not require additional training or compliance costs 

or transaction time. The Commission therefore affirms its prior estimate that any 

additional costs associated with the prohibitions in § 463.3 against making 

misrepresentations would be de minimis. 

Section 463.4(a) of the Final Rule requires dealers to clearly and conspicuously 

disclose a vehicle’s offering price in advertisements and other communications that 

reference a specific vehicle, or any monetary amount or financing term for any vehicle. 

“Offering Price” is defined in § 463.2(k) of the Rule as “the full cash price for which a 

Dealer will sell or finance the Vehicle to any consumer, provided that the Dealer may 

exclude only required Government Charges.” The information required by § 463.4(a) is 

necessary to address unfair or deceptive conduct associated with the failure to provide 

453 NPRM at 42033, 42039. 454 The Commission produced and considered alternative cost estimate scenarios for the Rule provisions in 

its preliminary regulatory analysis, see NPRM at 42036-44, and its final regulatory analysis in Section VII. 

The Commission also invited comments on the accuracy of its PRA burden estimates, including the validity 

of the methodology and assumptions used, see NPRM at 42035. The Commission provides a single 

estimate per Rule provision for this separate Paperwork Reduction Act burden analysis in conformity with 

the PRA. See 44 U.S.C. 3506(c)(1)(A)(iv) (providing, for each collection of information, including those 

arising from rules published as final rules in the Federal Register, that agencies shall conduct a review that 

includes “a specific, objectively supported estimate of burden”). 

260 
 

 

such price information and unfairly charging unexpected prices or for hidden items that 

can add hundreds or thousands of dollars to a vehicle sale.455 

This provision is being adopted largely as proposed.456 In response to the NPRM, 

one industry association commenter claimed there would be an average of three offering 

price disclosures per transaction, since, according to the commenter, consumers, on 

average discuss three specific motor vehicles per transaction. This commenter also 

contended that the number of required offering price disclosures would obligate dealers 

to incur additional training costs. As the Commission explained in its NPRM, vehicle 

pricing activities and representations are usually and customarily performed by dealers in 

the course of their regular business activities. While this provision may increase the 

importance of those activities, or alter when in the course of business they are 

undertaken, the Commission estimates that any additional attendant costs are de 

457 minimis. 

Section 463.4(d) of the Final Rule require dealers, when making any 

representation about a monthly payment for any vehicle, to disclose the total amount the 

consumer will pay to purchase or lease the vehicle at that monthly payment after making 

all payments as scheduled, as well as the amount of consideration to be provided by the 

455 Some commenters suggested that providing an Offering Price may be difficult due to pricing changes 

over time. As explained in SBP III.D.2(a), limited-time offers should be clearly disclosed as such. 

Advertising prices without disclosing material limitations that would mislead consumers is a deceptive or 

unfair practice.

456 As stated in SBP III.B.2(k) and SBP III.D.2(a), the Commission is finalizing this Offering Price 

definition at § 463.2(k) largely as proposed, with a modification to clarify that dealers may, but need not, 

exclude required government charges from a vehicle’s offering price. In addition, this definition in the 

Final Rule substitutes “Vehicle” for “motor vehicle” to clarify that the term is consistent with the revised 

definition of “‘Covered Motor Vehicle’ or ‘Vehicle’” at § 463.2(e). The Commission also added language 

to the end of § 463.4(a) clarifying that the requirements in § 463.4(a) “also are prescribed for the purpose of 

preventing the unfair or deceptive acts or practices defined in this part, including those in §§ 463.3(a) & (b) 

and 463.5(c).” 

457 See NPRM at 42033, 42039-40. 

261 
 

 

consumer if the total amount disclosed assumes the consumer will provide consideration. 

Section 463.4(e) of the Final Rule requires dealers, when making any comparison 

between payment options that includes discussion of a lower monthly payment to 

disclose, if true, that a lower monthly payment will increase the total amount the 

consumer will pay to purchase or lease the vehicle. 

These provisions have been adopted largely as proposed.458 In response to the 

Commission’s estimates with respect to these proposed provisions, one commenter raised 

concerns that these disclosures would intrude on existing disclosures, and that any 

associated paperwork burden would be confusing, duplicative, and unnecessary. The 

commenter also argued that these disclosures would add time to the transaction process 

and require additional staff training. No commenters provided alternative estimates of the 

costs associated with this provision. 

Failing to disclose information about the total of payments for a vehicle when 

representing monthly payment information is deceptive or unfair, as set forth in SBP 

III.D.2(d). Dealers already generate the required information during the normal course of 

business, and disclosing this total of payments information provides consumers with 

fundamental information that is readily available to the dealer when making 

representations regarding monthly payments, at which time such disclosures are required. 

Nevertheless, there may be upfront labor costs associated with developing procedures to 

provide these disclosures consistently at the appropriate point in the transaction and with 

458 These provisions in the Final Rule capitalize the defined term “Vehicle” to conform with the revised 

definition of “‘Covered Motor Vehicle’ or ‘Vehicle’” at § 463.2(e). The Commission also substituted a 

period for a semi-colon and the word “and” at the end of § 463.4(d)(1), and added language to the end of 

§ 463.4(d) and (e) clarifying that the requirements in these paragraphs “also are prescribed for the purpose 

of preventing the unfair or deceptive acts or practices defined in this part, including those in §§ 463.3(a) 

and 463.5(c).” 

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training employees. The Commission estimates such upfront costs as follows: 8 

compliance manager hours per dealer on implementing a template disclosure script that 

contains the required information and on ensuring sales staff consistently deliver the 

disclosure at an appropriate time during the transaction, for an upfront hours burden of 

378,168 (8 hours × 47,271). Applying labor cost-rates of $31.21 per hour yields 

$11,802,623.28 ($31.21 × 378,168 hours).459 After a review of comments, the 

Commission is adding ongoing training costs. Specifically, the Commission estimates 

annual ongoing costs of 1 hour of training time for sales and related employees per year, 

for an annual hours burden of 417,110 (1 hour × 417,110 sales and related employees). 

Applying labor cost-rates of $29.43 per hour, the total estimated ongoing labor cost 

burden is $12,275,547.30 across the industry (417,110 sales and related employees × 1 

hour × $29.43). 

Further, § 463.4(c) of the Final Rule requires dealers that sell optional add-on 

products or services to disclose to consumers that these add-ons are not required, and that 

the consumer can purchase or lease the vehicle without these add-ons. This requirement 

has been adopted largely as proposed, and is necessary to address deceptive and unfair 

practices regarding these products or services, including misrepresentations that these 

products are required when they are not, and charging consumers for such products 

459 The estimates throughout this section have been updated with more recent data since the publication of 

the NPRM. Labor rates are based on new data from the Bureau of Labor Statistics. See U.S. Bureau of 

Labor Statistics, “May 2022 National Industry-Specific Occupational Employment and Wage Estimates 

NAICS 441100 - Automobile Dealers” (Apr. 25, 2023), 

https://www.bls.gov/oes/current/naics4_441100.htm. The number of dealerships has been updated to reflect 

new data from Census County Business Patterns. See U.S. Census Bureau, “All Sectors: County Business 

Patterns, including ZIP Code Business Patterns, by Legal Form of Organization and Employment Size 

Class for the U.S., States, and Selected Geographies: 2021,” 

https://data.census.gov/table?q=CB2100CBP&n=44111:44112&tid=CBP2021.CB2100CBP&nkd=EMPSZ 

ES~001,LFO~001. 

263 
 

 

 

 

without the consumers’ express, informed consent.460 It requires a simple disclosure of 

information that is known to the dealer, and the Commission anticipates that the 

information collection burdens associated with this requirement is de minimis.

461 

Similarly, § 463.5(c) of the Final Rule requires dealers to refrain from charging 

consumers for any item unless the dealer obtains the express, informed consent of the 

consumer for the charge.462 In response to the Commission’s estimates with respect to 

these proposed provisions, some commenters generally discussed burdens, as addressed 

in the section-by-section analysis in SBP III, that they contended would accompany this 

proposed provision, but none provided sufficient detail for cost estimates. The 

Commission notes that this provision addresses the unfair or deceptive practice of 

charging consumers for items they do not know about or to which they have not agreed, 

or in amounts beyond those to which the consumer has agreed. As dealers must currently 

have policies in place to prevent charges without consent in order to comply with current 

law, the Commission anticipates that any burdens associated with this provision will be 

463 de minimis. 

460 This provision in the Final Rule capitalizes the defined term “Vehicle” to conform with the revised 

definition of “‘Covered Motor Vehicle’ or ‘Vehicle’” at § 463.2(e). The Commission also added language 

to the end of § 463.4(c) clarifying that the requirements in this paragraph “also are prescribed for the 

purpose of preventing the unfair or deceptive acts or practices defined in this part, including those in 

§§ 463.3(a) & (b) and 463.5(c).”

461 As with § 463.3, § 463.5(a) does not require any additional disclosures or information collection. Thus, 

while dealers might elect to enhance their training and compliance policies, or to take steps to document 

compliance with § 463.5(a), any such additional measures are not required by this provision. 462 See SBP III.E.2(c). 463 In its NPRM, the Commission noted that it anticipated this section would require dealers to provide 

readily available information to consumers in direct communications with customers, and that dealers 

complying with existing law have policies in place to prevent charges without consent, thereby estimating 

minimal additional resulting costs. See NRPM at 42033, 42036-44. The Commission did not receive 

comments discussing attendant burdens in sufficient detail for revised cost estimates, and thus affirms its 

prior estimate regarding additional costs associated with § 463.5(c). 

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D. Recordkeeping 

Section 463.6 of the Final Rule requires dealers to create and retain, for a period 

of twenty-four months from the date the record is created, all records necessary to 

demonstrate compliance with the Rule, including with its disclosure requirements. This 

provision has been adopted with revisions to account for other changes in the Final Rule, 

as explained in SBP III.F.464 These recordkeeping provisions are necessary to promote 

effective and efficient enforcement of the Rule, thereby deterring dealers from engaging 

in deceptive or unfair acts or practices. 

In the NPRM, the Commission provided cost estimates and solicited comment on 

its recordkeeping burden analysis.465 The Commission anticipated that dealers would 

incur certain incremental costs related to: (i) recordkeeping systems; and (ii) calculations 

of loan-to-value ratios for contracts with GAP agreements. 

Several commenters, including industry associations, dealership organizations, 

and a dealership association, generally contended that the Commission underestimated 

the burdens of compliance relating to the changes dealers would need to make to their 

existing recordkeeping systems. These commenters, however, did not provide the 

Commission with alternative estimates regarding such burdens. As explained in the 

section-by-section analysis of the Recordkeeping section, § 463.6, in SBP III.F, this 

provision gives dealers the flexibility to retain materials in any legible form, including in 

the same manner, format, and place as they may already keep such records in the 

ordinary course of business. The Commission nonetheless has determined, in response to 

464 The Final Rule also contains one typographical modification to § 463.6—adding a serial comma—and 

minor textual changes to ensure consistency with the defined terms at § 463.2(e) and (f).

465 NPRM at 42033-34, 42043. 

265 
comments, to revise its estimates regarding incremental storage expenses that may be 

associated with the recordkeeping requirements in the Final Rule, and, as provided in the 

capital and other non-labor costs discussion in the following paragraphs, the Commission 

is adding an estimate of incremental additional storage costs to its estimate. 

Further, the Commission notes that its initial recordkeeping cost estimates were 

based on a proposal that required records regarding add-on list disclosures and cash price 

without optional add-on disclosures—records that the Rule the Commission is finalizing 

does not require dealers to retain. Given that the Commission is not finalizing these 

additional record-related requirements, the estimates provided in its NPRM may 

overestimate attendant costs resulting from the Rule’s recordkeeping requirements. 

Notwithstanding this possibility, the Commission maintains its prior calculations of the 

time required to modify existing recordkeeping systems.466 The Commission anticipates 

that it will take covered motor vehicle dealers approximately 15 hours to modify their 

existing recordkeeping systems to retain the required records for the 24-month period 

specified in the Rule. This yields a general recordkeeping burden of 709,065 hours 

annually (47,271 motor vehicle dealers × 15 hours per year). 

The Commission anticipates that programming, administrative, compliance, and 

clerical staff are likely to perform the tasks necessary to comply with the recordkeeping 

requirements in § 463.6 of its Rule. In particular, the Commission estimates this 15-hour 

per-dealer labor hours burden to design, implement, or update systems for record storage 

and create the templates necessary to accommodate retention of all relevant materials, as 

466 In its NPRM, the Commission estimated costs to create and implement a loan-to-value calculation 

process. NPRM at 42034. Such costs are already accounted for in the Commission’s estimates for the time 

required to modify existing recordkeeping systems, and thus are not separately itemized here. 

266 
 

 

follows: 8 hours of time for a programmer, at a cost-rate of $40.24 per hour; 5 hours of 

additional clerical staff work, at a cost-rate of $20.16 per hour; 1 hour of sales manager 

review, at a cost-rate of $80.19 per hour; and 1 hour of review by a compliance officer, at 

a cost-rate of $31.21 per hour.467 Applying these cost-rates to the estimated per-dealer 

hours burden described previously, the total estimated initial labor cost burden is $534.12 

per average dealership (($40.24 per hour × 8 hours) + ($20.16 per hour × 5 hours) + 

($80.19 per hour × 1 hour) + ($31.21 per hour × 1 hour)), totaling $25,248,386.52 across 

the industry ($534.12 per average dealership × 47,271 dealerships). 

The Commission also received comments regarding its cost estimates relating to 

the records of loan-to-value ratios for transactions that include GAP agreement sales. One 

industry association commenter argued that this recordkeeping requirement would also 

require additional training, that creating a loan-to-value calculator template for GAP 

agreements would be difficult given the variation of loan-to-value ratios, and that this 

recordkeeping requirement would lengthen the time to conduct vehicle sale or financing 

transactions.468 No commenter provided alternative estimates of the costs associated with 

the Commission’s proposed recordkeeping requirements. 

As explained in the paragraph-by-paragraph analysis of § 463.5 in SBP III.E.2, 

the Commission is not mandating a particular LTV threshold or method of calculation, 

but rather requiring that dealers not charge a consumer for GAP agreements or other 

products or services if the consumer would not benefit from the product or service. The 

Commission anticipates that, to the extent dealers do not currently retain any materials 

467 Applicable wage rates are based on data from the Bureau of Labor Statistics. See U.S. Bureau of Labor 

Statistics, “May 2022 National Industry-Specific Occupational Employment and Wage Estimates NAICS 

441100 - Automobile Dealers” (Apr. 25, 2023), https://www.bls.gov/oes/current/naics4_441100.htm. 468These arguments are addressed in the section-by-section analysis of § 463.5. See SBP III.E. 

267 
 

used to make such an assessment, dealers may incur certain additional costs. Specifically, 

the Commission anticipates that dealers will expend one minute per sales or financing 

transaction for a salesperson to perform the calculation contemplated by this requirement, 

at a cost rate of $28.41 per hour. The Commission estimates that covered motor vehicle 

dealers sell approximately 31,562,959 vehicles each year, and that approximately 17% of 

such sales include GAP agreements, for an estimated total of 5,444,502 covered vehicle 

sales.469 While the number of motor vehicles sold will vary by dealership, this yields an 

average sales volume of 115 sales transactions per average dealership per year that 

include a GAP agreement (5,444,502 covered vehicle sales / 47,271 dealerships). This 

yields an estimated annual hours burden for all dealers of 90,742 hours (5,444,502 

covered transactions × 1/60 hours). Applying the associated labor rates yields an 

estimated annual labor cost for all dealers of $2,577,980.22 (90,742 hours × $28.41 per 

hour). 

E. Capital and Other Non-Labor Costs 

The Commission anticipates that the Final Rule will impose limited capital and 

non-labor costs. The Commission presented estimates in the NPRM with respect to such 

costs and solicited comments on its burden analysis. Here, the Commission discusses its 

estimates for the capital and non-labor costs associated with the Rule’s disclosure and 

recordkeeping requirements. While some commenters generally discussed burdens that 

469 In response to comments, the Commission has revised the number of transactions across the industry 

from the NPRM to exclude private party and fleet transactions. The estimated percentage of sales including 

GAP agreements is derived from data provided by an industry commenter. Comment of Nat’l Auto. 

Dealers Ass’n, Doc. No. FTC-2022-0046-8368 at 12. 

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they contended would accompany these proposed provisions, none provided any 

alternative cost estimates regarding capital and other non-labor costs.470 

1. Disclosures 

The Commission anticipates that the Rule’s disclosure requirements will impose 

de minimis capital and other non-labor costs. As the Commission noted in the NPRM, 

dealers already have in place existing systems for providing sales- and contract-related 

disclosures to buyers and lessees, as well as to consumers seeking information during the 

vehicle-shopping process.471 While the Final Rule’s disclosure requirements may result in 

limited additions to the information that must be provided during the transaction process, 

depending on a dealer’s current business operations, the Commission anticipates that 

these changes will not require substantial investments in new systems.472 Further, many 

dealers may elect to furnish some disclosures electronically, further reducing total 

costs.473 

The Commission previously estimated non-labor costs for providing disclosures 

in written or electronic form. This estimate was based on proposed § 463.5(b), which 

required written disclosures in all transactions in which dealers charge for optional addons. As discussed in the paragraph-by-paragraph analysis of § 463.5 in SBP III.E.2, the 

Commission has determined not to finalize the proposed provision at § 463.5(b). While 

some commenters generally discussed burden with respect to disclosure requirements 

470 One commenter claimed generally that the Commission underestimated these costs, referring to 

arguments the commenter made with respect to the Commission’s burden analysis of specific disclosure 

and recordkeeping provisions. The Commission has responded to those arguments in the foregoing 

analysis, with the exception of recordkeeping storage costs, which are addressed in the following 

discussion. 

471 NPRM at 42034. 472 Id. 473 Id. 

269 
being finalized by the Commission, no commenter estimated non-labor costs associated 

with such requirements. The Commission estimates that the non-labor costs related to 

disclosures, which relate to fundamental information (the vehicle offering price, that 

optional add-ons are not required, and regarding the total amount to purchase or lease the 

vehicle), will be de minimis. 

2. Recordkeeping 

In the NPRM, the Commission observed that dealers already have in place 

existing recordkeeping systems for the storage of documentation they would retain in the 

ordinary course of business irrespective of the Rule’s requirements.474 Commenters 

including industry associations, a dealership organization, and a dealership association 

argued that the Commission underestimated the burdens associated with the 

Commission’s proposed requirements to retain written communications, as well as the 

need to develop new systems to capture these materials. The Commission disagrees that 

the recordkeeping requirements in § 463.6 mandate the creation of new recordkeeping 

systems. As explained in the section-by-section analysis of § 463.6, this provision gives 

dealers the flexibility to retain materials in any legible form, including in the same 

manner, format, or place as they may already keep such records in the ordinary course of 

business. 

The Commission is, however, revising its estimates regarding incremental storage 

expenses that may be associated with the recordkeeping requirements in the Final Rule to 

add such recordkeeping storage costs to its estimate. The Commission previously noted, 

and continues to believe, that dealers that store records in hard copy are unlikely to 

474 Id. 

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require extensive additional storage for physical document retention, and, due to the low 

cost of electronic storage options, that expanding electronic storage capacity would 

impose minimal costs. 475 The Commission also invited comments on estimated storage 

costs; while some commenters generally discussed burdens, as addressed in the sectionby-section analysis of the recordkeeping requirements in § 463.6, that they contended 

would accompany the proposed provisions, the Commission did not receive any 

comments that provided estimates. The Commission nevertheless has conducted 

additional research, and now estimates that each dealer will need to spend approximately 

$300 per year in investment in additional IT systems and hardware for additional storage 

(either on premises or electronically) to retain records, the annual cost for which would 

be $14,181,300 for all covered dealers ($300 × 47,271 covered dealers).476 

VI. Regulatory Flexibility Act 

The Regulatory Flexibility Act (“RFA”), as amended by the Small Business 

Regulatory Enforcement Fairness Act of 1996,477 requires an agency to provide an Initial 

Regulatory Flexibility Analysis (“IRFA”) and Final Regulatory Flexibility Analysis 

(“FRFA”) of any rule subject to notice-and-comment requirements,478 unless the agency 

head certifies that the regulatory action will not have a significant economic impact on a 

475 NPRM at 42034-35. 476 Our review of dealer transaction records suggests that a typical transaction generates 3.4 MB of data 

under the status quo. Given the average number of transactions per dealer, this suggests that storing all 

these records would require dedicated space of roughly 4.2 GB per year. With a two-year retention 

window, this corresponds to 8.4 GB of storage at any given time. We estimate that the (annual) amount 

budgeted here should be sufficient to maintain at least 1 TB of storage—either on premises or through a 

cloud storage vendor—which is sufficient for more than 100 times the data storage capacity necessary to 

retain all transaction files generated by a typical dealership in a year under the status quo. The Commission 

anticipates that this amount of data storage capacity will be more than sufficient to also allow for dealers to 

keep any necessary records of correspondence with consumers who ultimately do not complete transactions 

at the dealership. 

477 See Public Law 104-121 (1996). 478 5 U.S.C. 603(a), 604(a). 

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substantial number of small entities.479 In the NPRM, the Commission provided an IRFA, 

stated its belief that the proposal will not have a significant economic impact on small 

entities, and solicited comments on the burden on any small entities that would be 

covered.480 In addition to publishing the NPRM in the Federal Register, the Commission 

announced the proposed rule through press releases, social media posts, and blog articles 

directed toward businesses and consumers, as well as through other outreach,481 in 

keeping with the Commission’s history of small business guidance and outreach.482 

The Commission thereafter received over 27,000 public comments, many of 

which identified themselves as being from small dealers, industry associations that 

represent small dealers, and employees of small dealers.483 The Commission greatly 

479 5 U.S.C. 605(b). 480 NPRM at 42035. 481 See, e.g., Press Release, Fed. Trade Comm’n, “FTC Proposes Rule to Ban Junk Fees, Bait-and-Switch 

Tactics Plaguing Car Buyers” (June 23, 2022), https://www.ftc.gov/news-events/news/pressreleases/2022/06/ftc-proposes-rule-ban-junk-fees-bait-switch-tactics-plaguing-car-buyers; Lesley Fair, 

“Proposed FTC Rule Looks Under the Hood at the Car Buying Process,” Fed. Trade Comm’n Business 

Blog (June 23, 2022), https://www.ftc.gov/business-guidance/blog/2022/06/proposed-ftc-rule-looks-underhood-car-buying-process; Alan S. Kaplinsky, A Close Look at The Federal Trade Commission’s Proposed 

Rule for Motor Vehicle Dealers, with Special Guests Sanya Shahrasbi and Daniel Dwyer, Staff Attorneys, 

FTC Bureau of Consumer Protection, Division of Financial Practices, Consumer Finance Monitor (Aug. 

11, 2022), https://www.ballardspahr.com/Insights/Blogs/2022/08/Podcast-The-FTCs-Proposed-RuleMotor-Vehicle-Dealer-Guests-Sanya-Shahrasbi-and-Daniel-Dwyer.

482 Each year since FY2002, the Small Business Administration’s Office of the National Ombudsman has 

rated the Federal Trade Commission an “A” on its small business compliance assistance work. See U.S. 

Small Business Administration, “2013-2020 SBA Nat’l Ombudsman’s Ann. Reps. to Cong.,” 

https://www.sba.gov/document/report--national-ombudsmans-annual-reports-congress (providing reports 

from FY2013-FY2020); Letter from Joseph J. Simons, Chairman of the Federal Trade Commission, to 

Senator James Risch, Chairman of the Committee on Small Business and Entrepreneurship, U.S. Senate, 

and to Congressman Steve Chabot, Chairman of the Committee on Small Business, U.S. House of 

Representatives, https://www.ftc.gov/system/files/documents/reports/federal-trade-commission-rulecompliance-guides-small-businesses-other-small-entities-commission/ 

tenth_section_212_report_to_congress_july_2016-june_2017_1_0.pdf (citing Commission’s “A” rating for 

“Compliance Assistance” by the National Ombudsman from FY2002-FY2016). 

483 The Commission received 27,349 comment submissions filed in response to its NPRM. See Gen. Servs. 

Admin., Doc. No. FTC-2022-0046-0001, Proposed Rule, Motor Vehicle Dealers Trade Regulation Rule 

(July 13, 2022), https://www.regulations.gov/document/FTC-2022-0046-0001 (noting comments received). 

To facilitate public access, 11,232 such comments have been posted publicly at www.regulations.gov. Id. 

(noting posted comments). Posted comment counts reflect the number of comments that the agency has 

posted to Regulations.gov to be publicly viewable. Agencies may choose to redact or withhold certain 

272 
 

appreciates, and thoroughly considered, the feedback it received from such stakeholders 

in developing the Final Rule; made changes from the proposed rule in response to such 

feedback; and will continue to engage with stakeholders moving forward to facilitate 

implementation of the Rule. 

As previously discussed, after reviewing comments, the Commission has 

determined, as an alternative to finalizing the proposed rule in its entirety, to finalize a 

Rule that does not contain the proposed add-on list disclosure requirements at § 463.4(b), 

or the proposed disclosures and declinations pertaining to a vehicle’s cash price without 

optional add-ons at § 463.5(b). Furthermore, as discussed in the paragraph-by-paragraph 

analysis of § 463.2(e) in SBP III.B.2(e), in response to public comments and after careful 

consideration, the Commission has determined to exclude recreational boats and marine 

equipment; motorcycles; and motor homes, recreational vehicle trailers, and slide-in 

campers from the Rule’s definition of “Covered Motor Vehicle.” After careful 

consideration of the comments and following its determination not to finalize the 

proposed rule in its entirety, the Commission is certifying that the Final Rule will not 

have a significant economic impact on a substantial number of small entities. In the 

following paragraphs, the Commission discusses comments from the public, as well as 

from the U.S. Small Business Administration Office of Advocacy (“SBA Advocacy”), 

and the reasons for the Commission’s conclusion that the Rule will not have a significant 

economic impact on a substantial number of small entities.484 Given, however, that the 

submissions (or portions thereof) such as those containing private or proprietary information, inappropriate 

language, or duplicate/near duplicate examples of a mass-mail campaign. Gen. Servs. Admin., 

Regulations.gov Frequently Asked Questions, https://regulations.gov/faq. 484 The Office of Advocacy has emphasized that, while it is housed within SBA, it is an independent, standalone office that has its own statutory charter, leadership structure, and appropriations account. SBA 

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Commission believes that the vast majority of covered entities are small entities and 

provided an IRFA in the NPRM, in the interest of thoroughness, the Commission has also 

performed an FRFA, as described in SBP VI.B.2. 

A. Significant Impact Analysis 

1. Comments on Significant Impact 

In the NPRM, the Commission stated its belief that the proposed rule would not 

have a significant economic impact on a substantial number of small entities, and invited 

comments.485 Several commenters, including industry associations and a dealership 

Advocacy, “Background Paper: Office of Advocacy 2017-2020” 111-19 (Jan. 2021), 

https://advocacy.sba.gov/wp-content/uploads/2021/02/Background-Paper-Office-of-Advocacy-2017-2020-

web.pdf; see also 15 U.S.C. 634a through 634g. SBA Advocacy’s Chief Counsel is appointed from civilian 

life by the President, with the advice and consent of the Senate, and most of SBA Advocacy’s professionals 

serve at the pleasure of the Chief Counsel. 15 U.S.C. 634a, 634d(1) (empowering Chief Counsel for 

Advocacy to employ and fix the compensation of additional staff personnel); SBA Advocacy, “Background 

Paper: Office of Advocacy 2017-2020” 95 (Jan. 2021), https://advocacy.sba.gov/wpcontent/uploads/2021/02/Background-Paper-Office-of-Advocacy-2017-2020-web.pdf. SBA Advocacy does 

not circulate its work for clearance with the SBA Administrator, OMB, or any other Federal agency prior to 

publication. 15 U.S.C. 634f. 

485 An industry association commenter argued that the Commission did not make a formal Section 605(b) 

certification, publish the certification in the Federal Register, or provide the certification to the Chief 

Counsel for Advocacy of the Small Business Administration. This comment misunderstands the RFA. The 

RFA does not require certification when a rule is proposed. See 5 U.S.C. 605(b) (providing that the head of 

the agency may make the certification “at the time of publication of the final rule”). The Commission’s 

NPRM stated its belief that the proposal would not have a significant economic impact on a substantial 

number of small entities, invited comment on this issue, and also provided an IRFA. The Commission has 

carefully reviewed the SBA’s and others’ comments, is making changes to the proposal, and is now 

publishing the Final Rule and making a formal certification, as is required by the RFA. 

Although the Commission included the NPRM in its Fall 2022 Regulatory Agenda, and explained in its 

NPRM that the proposed rulemaking was not included in the Commission’s Spring 2022 Regulatory 

Agenda because the Commission first considered the NPRM after the publication deadline for the 

Regulatory Agenda, see NPRM at 42031 n.153, the same commenter argued that the RFA and Executive 

Order 12866 required the Commission to include it in earlier Regulatory Agendas. As an initial matter, 

Executive Order 12866 does not apply to independent agencies such as the FTC. Regardless, as discussed 

in SBP II.C, Commission has engaged in a sustained effort over many years to engage with consumer and 

dealer groups, and other stakeholders, regarding the issues addressed in the Rule. See supra note 90. 

Neither the RFA nor Executive Order 12866 precludes the Commission from promulgating the Rule 

regardless of whether it was included in an earlier Regulatory Agenda (or even arguably could have been). 

Section 602(d) of the RFA explicitly provides that “[n]othing in this section precludes an agency from 

considering or acting on any matter not included in a regulatory flexibility agenda.” See Coastal 

Conservation Ass’n v. Locke, No. 2:09-CV-641-FTM-29, 2011 WL 4530631, at *38 (M.D. Fla. Aug. 16, 

2011), report & recommendation adopted sub nom. Coastal Conservation Ass’n v. Blank, No. 2:09-CV274 
 

 

 

 

association, generally argued that the Rule would impose substantial economic burdens 

on small entities, and some suggested that small entities may be disproportionately 

burdened by the Rule given limited legal and compliance staff. No commenters provided 

comprehensive alternative empirical cost or revenue data that could be used to put costs 

in context. Commenters, including an industry association and SBA Advocacy, argued 

that the Commission did not provide a sufficient factual basis for, or analysis of, the 

effects on small entities, and that the proposed rule would be unduly burdensome for 

smaller motor vehicle dealers.486 The comment from SBA Advocacy further argued that 

the Commission provided no information about the economic impact of the proposed rule 

on small entities, but noted that if the total estimated cost of $1,360,694,552 were divided 

by the number of dealers estimated in the NPRM (46,525), the cost would be roughly 

$29,000 per such dealer.487 The comment from SBA Advocacy also argued that the 

Commission failed to include familiarization and training costs or costs that the 

Commission could not quantify, such as investments in additional IT systems and 

hardware.488 

The Commission has considered these comments carefully and has taken them 

into account in setting forth the factual basis for the certification in SBP VI.A.2, 

including by modifying its analysis to add an estimate of familiarization and training 

641-FTM-29, 2011 WL 4530544 (M.D. Fla. Sept. 29, 2011) (denying request for injunction based on 

allegation of noncompliance with 5 U.S.C. 602(d)). Similarly, Executive Order 12866 explicitly provides 

that it “does not create any right or benefit, substantive or procedural, enforceable at law or equity by a 

party against the United States,” let alone one that would preclude adoption of the Rule. See E.O. 12866, 58 

FR 51735, 51744 (Sept. 30, 1993); see also Trawler Diane Marie, Inc. v. Brown, 918 F. Supp. 921, 932 

(E.D.N.C. 1995), aff’d sub nom. Trawler Diane Marie, Inc. v. Kantor, 91 F.3d 134 (4th Cir. 1996) (denying 

request to invalidate regulation based on allegation of noncompliance with Executive Order 12866). 486 See Comment of SBA Advocacy, Doc. No. FTC-2022-0046-6664 at 3. 487 Comment of SBA Advocacy, Doc. No. FTC-2022-0046-6664 at 3. 488 Comment of SBA Advocacy, Doc. No. FTC-2022-0046-6664 at 3. 

275 
 

 

 

 

 

 

 

 

costs in response to such concerns.489 The Commission notes, as SBA Advocacy did in its 

comment, that the NPRM estimated a total cost for the proposed rule of $1,360,694,552. 

This estimate was for costs over a ten-year time period. Thus, dividing this estimate by 

the number of affected dealers estimated in the NPRM yields a cost of roughly $29,000 

per dealer over a ten-year period—or approximately $2,900 per year per dealer.490 This 

figure—$2,900—is slightly more than the average gross profit described in the NPRM 

for a single vehicle sale by a new vehicle dealer, and less than half of the average gross 

profit described in the NPRM for a single vehicle sale by an independent used vehicle 

dealer.491 

After carefully reviewing the comments, the Commission does not conclude that 

the Final Rule will impose a significant economic burden on a substantial number of 

smaller entities.492 As described in SBP VI.A.2(b), the estimated economic impact of the 

Final Rule, controlling for firm size based on available census data, is less than or equal 

489 After additional research, the Commission estimates that each dealer will need to spend approximately 

$300 per year on storage (either on premises or in the cloud) to store the records the Rule requires them to 

maintain. Based on a review of the transaction records the Commission has received from dealers through 

investigations, this amount is likely to be more than sufficient. Commission review suggests that a typical 

vehicle transaction generates 3.4 MB of data under the status quo. Given the average number of 

transactions per dealer, this suggests that storing all these records would require dedicated space of roughly 

4.2 GB per year. With a two-year retention window, this corresponds to 8.4 GB of storage at any given 

time. The Commission estimates that the $300 annual amount budgeted here should be sufficient to 

maintain at least 1 TB of storage—either on premises or through a cloud storage vendor—which is 

sufficient for more than 100 times the data storage capacity necessary to retain all transaction files 

generated by a typical dealership in a year under the status quo. The Commission anticipates that this 

amount of data storage capacity will be more than sufficient to also allow for dealers to keep any necessary 

records of correspondence with consumers who ultimately do not complete transactions at the dealership. 490 NPRM at 42013. 491 As noted in the NPRM, new vehicle dealers averaged a gross profit of about $2,444 per new vehicle, 

and about $2,675 per used vehicle, and independent used vehicle dealerships had an average gross profit of 

more than $6,000 per vehicle. See NPRM at 42014 (citing Nat’l Auto Dealers Ass’n, “Average Dealership 

Profile” 1 (2020), https://www.nada.org/media/4136/download?attachment 

[http://web.archive.org/web/20220623204158/https://www.nada.org/media/4136/download?attachment] 

(June 23, 2022) and Nat’l Indep. Auto Dealers Ass’n, “NIADA Used Car Industry Report 2020” at 21). 492 Notably, while many industry commenters claimed that the burden of the Rule would be substantial, 

none provided data on revenue or profit. 

276 
 

 

to 0.27% of annual sales, 1.49% of the gross margin, and 4.12% of the gross margin 

minus operating expense for dealerships of all sizes.493 The Commission further notes 

that, in response to comments from SBA Advocacy and others, the Paperwork Reduction 

Act analysis incorporates additional estimates for training and storage costs beyond those 

estimated in the NPRM. 

2. Certification of the Final Rule 

The Commission hereby certifies that the Final Rule will not have a significant 

economic impact on a substantial number of small entities. 

As an initial matter, the Commission believes that a substantial number of small 

entities are covered by the Rule. New vehicle dealers (NAICS code 44111) are classified 

as small entities if they have an average of 200 or fewer employees, and used car dealers 

(NAICS code 44112) are classified as small entities if they have average annual revenues 

of $30.5 million or less.494 Census data indicate that the vast majority of dealers classified 

into these NAICS codes are small entities.495 There are approximately 47,271 covered 

493 U.S. Census Bureau, “Annual Retail Trade Survey: 2021” (Dec. 15, 2022), 

https://www.census.gov/data/tables/2021/econ/arts/annual-report.html. Gross margin minus operating 

expenses was determined by deducting total 2021 operating expenses ($144,268 million) from 2021 gross 

margin ($226,118 million). Gross margin represents total sales less the cost of goods sold. Operating 

expenses include but are not limited to annual payroll, commissions, data processing, equipment, 

advertising, lease and rental payments, utilities, and repair and maintenance. See Glossary, U.S. Census 

Bureau, https://www.census.gov/glossary (last visited Dec. 5, 2023). Note that the operating expenses 

amount may include some costs—such as payments for deceptive advertising or commissions earned on 

unauthorized charges—that are not legitimate expenses. If these were excluded, the gross margin minus 

operating cost figures would be even lower than those described in the text. 

494 See North American Industry Classification System, U.S. Census Bureau, 

https://www.census.gov/naics/. These standards are determined by the Small Business Size Standards 

component of the NAICS, which is available at https://www.sba.gov/document/support-table-sizestandards. 

495 The census report does not provide sufficient detail to provide a precise numerical estimate of the 

number of small entities covered by the Rule. The census data provide the number of dealers with fewer 

than 250 employees, and also provide revenue and gross margin figures for the motor vehicle dealers 

industry, without further breakdown. For that reason, the census data do not provide sufficient information 

to calculate the specific number of dealers that are small entities. Nor did commenters provide 

comprehensive alternative firm size data. 

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dealers in the United States, of which over 93% have fewer than 100 employees. Thus, 

while the Commission cannot determine the precise number of small entities affected by 

the Rule, census data suggest that the vast majority of covered dealers are small entities. 

The Commission certifies that the Rule will not have a significant economic 

impact on a substantial number of small entities. The Commission has analyzed the costs 

of the Rule (1) based on industry averages and (2) accounting for dealer size based on the 

number of employees. Under either measure, the Rule will not have a significant 

economic impact on a substantial number of small entities. 

a) Industry Averages 

The Commission estimates a total cost for the Final Rule, at the scenario 

reflecting the Commission’s highest cost estimates, of $1.075 billion to $1.270 billion 

over a ten-year period.496 Using the highest end of this highest-cost scenario, the Rule 

will have an estimated cost of $1.270 billion over ten years using a 3% discount rate. This 

translates to an average estimated per-year cost of $127 million ($1.270 billion × 0.1). 

Census data show that, in 2021, automobile dealers had annual sales of $1.265 trillion, 

gross margin of $226.118 billion,497 and gross margin minus operating expenses of 

496 The $1.075 billion figure was determined by summing the unrounded total highest estimated costs 

associated with the Final Rule’s total of payments disclosure requirements ($246 million), offering price 

disclosure requirements ($46 million), requirements regarding certain add-ons and express, informed 

consent ($406 million), prohibitions on misrepresentations ($130 million), and recordkeeping requirements 

($248 million), using a 7% discount rate. The $1.270 billion figure was determined by summing the 

unrounded total highest estimated costs associated with the Final Rule’s total of payments disclosure 

requirements ($296 million), offering price disclosure requirements ($46 million), requirements regarding 

certain add-ons and express, informed consent ($475 million), prohibitions on misrepresentations ($157 

million), and recordkeeping requirements ($296 million), using a 3% discount rate.

497 U.S. Census Bureau, “Annual Retail Trade Survey: 2021, Sales” (Dec. 15, 2022), 

https://www2.census.gov/programs-surveys/arts/tables/2021/sales.xlsx (showing $1,264,635 million in 

estimated annual sales in 2021 for automobile dealers, NAICS code 4411); U.S. Census Bureau, “Annual 

Retail Trade Survey: 2021, Gross Margin” (Dec. 15, 2022), https://www2.census.gov/programssurveys/arts/tables/2021/gm.xlsx (showing $226,118 million in estimated annual gross margin in 2021 for 

automobile dealers, NAICS code 4411); U.S. Census Bureau, “Annual Retail Trade Survey: 2021, Total 

278 
 

 

 

$81.850 billion. Discounting these numbers over a 10-year period using a 3% discount 

rate equates to average annual sales of $1.079 trillion, gross margin of $192.883 billion, 

and gross margin minus operating expenses of $69.820 billion. The estimated yearly cost 

of the Rule therefore is approximately 0.01% of annual sales ($127 million / $1.079 

trillion), 0.07% of gross margin ($127 million / $192.883 billion), and 0.18% of gross 

margin minus operating expenses ($127 million / $69.820 billion) across the industry.498 

b) Dealer Size Based on the Number of Employees 

In addition to considering industry averages, the Commission has analyzed the 

cost of the Rule accounting for dealer size based on the number of employees. Certain 

costs are fixed (i.e., remain the same regardless of the number of employees) while other 

costs scale with dealer size. We consider both (1) first-year compliance costs and (2) 

costs in subsequent years. 

(1) First-year compliance costs. First-year compliance costs are the sum of: (1) 

upfront fixed costs; (2) one year of annual ongoing costs that are fixed; and (3) one year 

of annual ongoing costs that scale. 

The Commission estimates the upfront fixed costs per dealer under the highestcost scenario as follows: $963.44 to update policies and procedures to provide the 

offering price disclosure required by § 463.4(a) ((8 estimated pricing hours499 × $80.19 

per hour) + (8 estimated programming hours × $40.24 per hour)); $249.68 to design 

disclosures required by § 463.4(d) and (e) and inform associates of their obligations to 

Operating Expenses” (Dec. 15, 2022), https://www2.census.gov/programssurveys/arts/tables/2021/exp.xlsx (showing $144,268 million in estimated annual operating expenses in 

2021 for automobile dealers, NAICS code 4411). 

498 The calculations in this analysis were performed using unrounded inputs in order to maintain accuracy. 

Nevertheless, for ease of reference, such inputs have been rounded where they are described in the text.

499 As used here, “pricing hours” means time spent by a sales and marketing manager reviewing dealership 

policies and procedures for determining the public-facing prices of vehicles in inventory. 

279 
 

provide these disclosures (8 estimated compliance manager hours × $31.21 per hour); 

$1,783.56 to cull add-ons with no consumer benefit from offerings, develop policies 

regarding when certain add-ons may or may not be sold, and create nonmandatory 

disclosures, in response to the requirements of § 463.5 ((16 estimated compliance 

manager hours × $31.21 per hour) + (12 estimated sales manager hours × $80.19 per 

hour) + (8 estimated programmer hours × $40.24 per hour)); and $534.12 to upgrade 

recordkeeping systems and create the templates necessary to accommodate retention of 

all relevant material under § 463.6 ((8 estimated programmer hours × $40.24 per hour) + 

(5 estimated clerical hours × $20.16 per hour) + (1 estimated sales manager hour × 

$80.19 per hour) + (1 estimated compliance manager hour × $31.21 per hour)). These 

figures total $3,530.80 per dealer.500 

The Commission estimates the annual fixed ongoing costs per dealer for the first 

year under the highest-cost scenario as follows: $390.13 to conduct a heightened 

compliance review of public-facing representations to ensure compliance with § 463.3 

(150 estimated documents per year × 5 estimated minutes of review per document × 

$31.21 per hour of compliance officer review); and $300 estimated for expanded storage 

to retain records required under § 463.6. These figures total $690.13 per dealer per year. 

The Commission estimates annual ongoing costs that scale with dealer size based 

on number of employees as follows. The Commission estimates that annual costs that 

scale with dealer size are $76.86 per employee per year. Annual ongoing costs that scale 

with dealer size include: $26.53 per employee to provide the total of payments 

500 Applicable wage rates throughout this section are based on data from the Bureau of Labor Statistics. See 

U.S. Bureau of Labor Statistics, “May 2022 National Industry-Specific Occupational Employment and 

Wage Estimates NAICS 441100 - Automobile Dealers” (Apr. 25, 2023), 

https://www.bls.gov/oes/current/naics4_441100.htm. 

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disclosures required by § 463.4(d) and (e) (((417,110 sales & related employees × 1 

estimated hour for training × $29.43 per hour) + (19,228,256 total covered transactions 

involving monthly payments or financing × (2/60 estimated disclosure hours per 

transaction × $28.41 per hour + $0.15 printing costs per disclosure))) / 1,257,877 total 

employees); $36.40 per employee for training and the delivery of a disclosure under a 

regime in which dealers choose to deliver an itemized disclosure to comply with § 463.5 

(((417,110 sales & related employees × 1 estimated hour for training × $29.43 per hour) 

+ ((10,343,319 new vehicle sales + 21,219,640 used vehicle sales) × (2/60 estimated 

disclosure hours per sale transaction × $28.41 per hour + $0.11 physical costs per 

disclosure))) / 1,257,877 total employees); and $13.93 per employee to generate and store 

calculations required to be retained under § 463.6 ((31,562,959 vehicle sales × 1/60 

estimated hours per transaction × $28.41 per hour / 1,257,877 total employees) + 

(5,444,502 vehicle sales with GAP agreement × 1/60 estimated hours per transaction × 

$28.41 per hour / 1,257,877 total employees)). 

Next, the Commission uses census data on the average number of employees at 

dealerships within different dealer size cohorts to determine the per-dealer cost for each 

dealer cohort.501 Multiplying the estimated cost per employee ($76.86) by the average 

501 Based on 2021 census data, dealers with fewer than five employees have an average of 1.62 employees 

(34,616 employees at all dealerships with fewer than five employees / 21,356 dealers with fewer than five 

employees); dealers with 5-9 employees have an average of 6.50 employees (35,794 employees / 5,507 

dealers); dealers with 10-19 employees have an average of 13.77 employees (52,852 employees / 3,837 

dealers); dealers with 20-49 employees have an average of 33.62 employees (253,365 employees / 7,536 

dealers); dealers with 50-99 employees have an average of 69.52 employees (423,351 employees / 6,090 

dealers); dealers with 100-249 employees have an average of 140.31 employees (386,001 employees / 

2,751 dealers); dealers with 250-499 employees have an average of 317.25 employees (57,105 employees / 

180 dealers); dealers with 500-999 employees have an average of 580.56 employees (5,225 employees / 9 

dealers); and dealers with 1,000 or more employees have an average of 1,913.60 employees (9,568 

employees / 5 dealers). See U.S. Census Bureau, “All Sectors: County Business Patterns, Including ZIP 

Code Business Patterns, by Legal Form of Organization and Employment Size Class for the U.S., States, 

and Selected Geographies: 2021,” 

281 
number of employees within different dealer size cohorts yields annual ongoing scaled 

costs per dealer of: $124.59 per dealer with fewer than 5 employees ($76.86 × 1.62 

employees); $499.59 per dealer with between 5 and 9 employees ($76.86 × 6.50 

employees); $1,058.73 per dealer with between 10 and 19 employees ($76.86 × 13.77 

employees); $2,584.18 per dealer with between 20 and 49 employees ($76.86 × 33.62 

employees); $5,343.19 per dealer with between 50 and 99 employees ($76.86 × 69.52 

employees); $10,784.88 per dealer with between 100 and 249 employees ($76.86 × 

140.31 employees); $24,384.79 per dealer with between 250 and 499 employees ($76.86 

× 317.25 employees); $44,623.26 per dealer with between 500 and 999 employees 

($76.86 × 580.56 employees); and $147,085.08 per dealer with 1,000 or more employees 

($76.86 × 1,913.60 employees). 

Thus, the total first-year compliance costs based on dealer size are $4,345.51 

($3,530.80 + $690.13 + $124.59) per dealer with fewer than 5 employees; $4,720.51 

($3,530.80 + $690.13 + $499.59) per dealer with between 5 and 9 employees; $5,279.66 

($3,530.80 + $690.13 + $1,058.73) per dealer with between 10 and 19 employees; 

$6,805.11 ($3,530.80 + $690.13 + $2,584.18) per dealer with between 20 and 49 

employees; $9,564.12 ($3,530.80 + $690.13 + $5,343.19) per dealer with between 50 and 

99 employees; $15,005.80 ($3,530.80 + $690.13 + $10,784.88) per dealer with between 

100 and 249 employees; $28,605.72 ($3,530.80 + $690.13 + $24,384.79) per dealer with 

between 250 and 499 employees; $48,844.18 ($3,530.80 + $690.13 + $44,623.26) per 

dealer with between 500 and 999 employees; and $151,306.01 ($3,530.80 + $690.13 + 

$147,085.08) per dealer with 1,000 or more employees. 

https://data.census.gov/table?q=CB2100CBP&n=44111:44112&tid=CBP2021.CB2100CBP&nkd=LFO~0 

01. 

282 
To analyze the economic effect of the costs of the Rule by dealer size, the 

Commission compares per-dealer costs to per-dealer sales, gross margin, and gross 

margin minus operating expenses. The Commission does not have data on how sales, 

gross margin, and operating expenses are apportioned to dealerships based on the number 

of employees. Accordingly, the Commission assumes that sales, gross margin, and 

operating expenses are apportioned to dealerships pro rata with the number of 

employees. Dividing the 2021 industry-wide figures for annual sales ($1.265 trillion), 

gross margin ($226.118 billion), and gross margin minus operating expenses ($81.850 

billion) by the total number of employees (1,257,877),502 each employee represents an 

additional $1,005,372.54 in sales ($1.265 trillion / 1,257,877 employees), $179,761.61 in 

gross margin ($226.118 billion / 1,257,877 employees), and $65,069.96 in gross margin 

minus operating expenses ($81.850 billion / 1,257,877 employees). Multiplying these 

per-employee figures by the average number of employees of dealers within different size 

cohorts provides per-dealer sales, gross margin, and gross margin minus operating 

expenses for each cohort. For instance, dealers with fewer than 5 employees have 

estimated annual sales of $1,629,611.16 (1.62 employees × $1,005,372.54 sales per 

employee), annual gross margin of $291,376.10 (1.62 employees × $179,761.61 gross 

margin per employee), and annual per-dealer gross margin minus operating expenses of 

$105,472.17 (1.62 employees × $65,069.96 gross margin minus operating expenses per 

employee). 

502 Data on the number of employees comes from the 2021 census. See U.S. Census Bureau, “All Sectors: 

County Business Patterns, Including ZIP Code Business Patterns, by Legal Form of Organization and 

Employment Size Class for the U.S., States, and Selected Geographies: 2021,” 

https://data.census.gov/table?q=CB2100CBP&n=44111:44112&tid=CBP2021.CB2100CBP&nkd=EMPSZ 

ES~001,LFO~001. 

283 
 

The Commission then divides first-year compliance costs by these figures to yield 

cost as a percentage of sales, gross margin, and gross margin minus operating costs. 

Applying this method to each of the dealer size cohorts, first-year compliance costs are 

equivalent to: 0.27% of annual sales ($4,345.51 / $1,629,611.16), 1.49% of gross margin 

($4,345.51 / $291,376.10), and 4.12% of gross margin minus operating expenses 

($4,345.51 / $105,472.07) for dealers with fewer than 5 employees; 0.07% of annual 

sales ($4,720.51 / $6,534,647.69), 0.40% of gross margin ($4,720.51 / $1,168,401.53), 

and 1.12% of gross margin minus operating expenses ($4,720.51 / $422,936.98) for 

dealers with 5-9 employees; 0.04% of annual sales ($5,279.66 / $13,848,305.89), 0.21% 

of gross margin ($5,279.66 / $2,476,090.91), and 0.59% of gross margin minus operating 

expenses ($5,279.66 / $896,293.27) for dealers with 10-19 employees; and less than onehalf of one percent of the annual sales, gross margin, and gross margin minus operating 

expenses for the remaining categories of dealers. 

(2) Costs in subsequent years. The estimated cost of compliance with the Rule 

drops after the first year, given the absence of upfront costs, which are not incurred after 

the first year. Compliance costs in subsequent years—which are limited to annual 

ongoing costs (both fixed and those that scale with dealer size)—are therefore a smaller 

percentage of annual sales, gross margin, and gross margin minus operating expenses, 

equal to less than two percent of these metrics for dealers of all sizes.503 

503 Average ongoing compliance costs after the first year equal: 0.05% of annual sales, 0.28% of gross 

margin, and 0.77% of gross margin minus operating expenses for dealers with fewer than 5 employees, and 

less than one-half of one percent of annual sales, gross margin, and gross margin minus operating expenses 

for the remaining categories of dealers. 

284 
 

The Commission does not find that these compliance costs represent a significant 

economic burden. The Commission therefore certifies that the Final Rule will not have a 

significant economic impact on a substantial number of small entities. 

B. Initial and Final Regulatory Flexibility Analysis 

The NPRM noted the Commission’s belief that the proposed rule would not have 

a significant economic impact on small entities, but nevertheless examined the six IRFA 

factors, and invited comment on the proposed rule’s burdens on small businesses. In the 

following paragraphs, the Commission discusses comments and then sets forth a FRFA. 

1. Comments on the Initial Regulatory Flexibility Analysis 

a) Description of the Reasons Why Action by the Agency Is 

Being Considered 

The IRFA explained that the Commission proposed the Rule to address 

misleading practices and unauthorized charges to consumers during the vehicle buying or 

leasing process, and to deter dealer misconduct and remedy consumer harm. The 

Commission further noted that its law enforcement, outreach and other engagement in 

this area, and the hundreds of thousands of consumer complaints received by the FTC, 

indicated that dealership misconduct and deceptive tactics persisted despite Federal and 

State law enforcement efforts. In response, the comments from SBA Advocacy and one 

industry group argued that the number of complaints received by the Commission is 

insufficient to support a rulemaking given the total number of vehicle transactions in the 

United States.504 Similarly, the industry group argued that the Commission has not filed 

504 Comment of SBA Advocacy, Doc. No. FTC-2022-0046-6664 at 6. SBA Advocacy also raised concerns 

that the proposal could make the buying process more cumbersome and confusing, noting that the proposal 

requires additional disclosures, and the proposal prohibited dealers from relying on a signed or initialed 

document, by itself, or prechecked boxes to establish express, informed consent. These arguments are 

285 
 

 

 

 

 

 

 

 

 

enough law enforcement actions against motor vehicle dealers to justify the proposal, and 

that, where it has brought enforcement actions, the Commission has managed to obtain 

redress for harmed consumers without the need for an additional monetary remedy. As 

explained in SBP II.B and in the section-by-section analysis of the recordkeeping 

requirements in § 463.6 in SBP III.F, consumer complaints represent the “tip of the 

iceberg” of actual misconduct, as many unlawful practices go undetected or unreported 

by consumers. Further, the Commission has taken significant action aimed at addressing 

law violations in the motor vehicle dealer marketplace, despite limited resources and a 

broad mandate to address unlawful practices across much of the nation’s commercial 

addressed in the discussion of disclosures in §§ 463.4, 463.5 and the definition of “Express, Informed 

Consent” in § 463.2. 

The industry group also argued that the number of complaints is overstated because it includes: (1) 

complaints that are not applicable to motor vehicle dealers or conduct addressed by the Rule, and (2) 

consumers who did not report a loss. This industry group also argued that the Commission failed to take 

notice of survey data indicating that the majority of consumers are satisfied with their vehicle purchases. 

See, e.g., Cox Auto., “2021 Cox Automotive Car Buyer Journey Study” (2022) [hereinafter 2021 Cox 

Automotive Car Buyer Journey Study], https://www.coxautoinc.com/wp-content/uploads/2022/01/2021-

Car-Buyer-Journey-Study-Overview.pdf. First, in the Commission’s experience, complaints understate 

harm caused by unlawful conduct in a given category, notwithstanding any inclusion of complaints that 

may pertain to ancillary or related issues. See SBP II.B (discussing how complaints represent the tip of the 

iceberg in terms of actual consumer harm and citing case where prior to FTC action, there were 391 

complaints about add-ons and other issues but survey results during the same period indicted that at least 

16,848 customers were subject to unlawful practices related to add-ons alone). Moreover, the 

Commission’s reported complaint numbers may be underinclusive of relevant complaints filed by 

consumers (e.g., complaints about vehicle financing issues may be filed under the “Banks and Lenders” 

category; vehicle repossession issues may be filed under the “Debt Collection” category; and complaints 

about deceptive online vehicle shopping may be filed under the “Online Shopping and Negative Reviews” 

category). With regard to consumers who did not report a loss, the Commission disagrees that such 

consumers were not harmed or that their experience is not relevant to the Rule. For example, many 

consumers experience a law violation or other harmful conduct, but choose not to consummate the 

transaction, including consumers who waste time pursuing misleading offers. Further, survey data 

indicating that a majority of customers are “satisfied” do not indicate whether those customers had hidden 

charges in their contracts and whether they ever became aware of such charges. Surveys cited by the 

Commission have identified situations where customers are unaware of add-on charges in their contracts; 

indeed, in one case, 79% of consumers were unaware of such charges. See SBP II.B (discussing hidden 

charges in auto contracts). Consumers might be satisfied with a purchase until they later learn they are 

paying for items they did not authorize, if they learn this at all. Further, “the FTC need not prove that every 

consumer was injured. The existence of some satisfied customers does not constitute a defense . . . .” Fed. 

Trade Comm’n v. Amy Travel Serv., Inc., 875 F.2d 564, 572 (7th Cir. 1989), vacated in part on other 

grounds, Fed. Trade Comm’n v. Credit Bureau Ctr., LLC, 937 F.3d 764 (7th Cir. 2019); accord Fed. Trade 

Comm’n v. Stefanchik, 559 F.3d 924, 929 n.12 (9th Cir. 2009). 

286 
 

activity,505 and, particularly given the Supreme Court’s 2021 ruling limiting the FTC’s 

ability to obtain redress for consumers, it is difficult to get full redress for consumers.506 

Despite these Commission actions, as well as the hundreds of additional actions brought 

by other Federal and State regulators, the deceptive or unfair acts or practices addressed 

by the proposed rule persist. 

b) Succinct Statement of the Objectives of, and Legal Basis 

for, the Proposed Rule 

The objectives of the Rule and its legal basis, including the specific grant of 

rulemaking authority under Section 1029 of the Dodd-Frank Act, 12 U.S.C. 5519, were 

set forth in the IRFA.507 The objectives and legal basis, and comments on these topics, 

additionally have been discussed throughout this SBP. 

c) Description of and, Where Feasible, Estimate of the 

Number of Small Entities to Which the Proposed Rule Will 

Apply 

In its IRFA, the Commission estimated that there were approximately 46,525 

franchise, new motor vehicle, and independent/used motor vehicle dealers.508 As 

505 One industry group argued that the majority of the FTC’s enforcement actions have pertained to 

deceptive advertising, and few have alleged unlawful conduct involving add-ons. The Commission agrees 

that many of its actions have alleged deceptive pricing. In focusing on certain actions that involved 

allegations that dealers placed unauthorized charges for add-ons, however, the commenter leaves out other 

unlawful conduct related to add-ons. Such conduct includes, for example, misrepresentations regarding the 

pricing of add-ons (Complaint ¶¶ 6-12, TT of Longwood, Inc., No. C-4531 (F.T.C. July 2, 2015)), or failing 

to disclose that mandatory add-ons were included in the cost of credit (Consent Order ¶¶ 73-75, Y King S 

Corp., CFPB No. 2016-CFPB-0001 (Jan. 21, 2016)). In addition, unauthorized charges are likely to go 

unnoticed by consumers, which can hamper enforcement efforts. See, e.g., Auto Buyer Study, supra note 

25, at 14 (describing several study participants who thought they had not purchased add-ons, or that addons were free, and only learned during the study that they were charged for add-ons).

506 See AMG Cap. Mgmt., LLC v. Fed. Trade Comm’n, 141 S. Ct. 1341 (2021). 507 NPRM at 42035. 508 Id. at 42035. The Commission explained that, because of the relative size of the automobile market 

compared to other types of motor vehicle dealers, and the greater availability of relevant information for 

this market, its NPRM analysis exclusively considered automobile dealers. The Commission invited 

submissions of market information for other types of motor vehicles such as boats, RVs, and motorcycles 

that would allow expansion of the scope of its analysis. See NPRM at 42035-36. 

287 
 

 

 

discussed in the Paperwork Reduction Act analysis in SBP III.V, the Commission 

received comments from SBA Advocacy and others on this estimate, and the 

Commission has responded to those comments by making certain changes to the proposal 

in light of the comments received. The Commission has revised its estimate of covered 

dealers to 47,271 franchise, new motor vehicle, and independent/used motor vehicle 

dealers based on newly available NAICS data assembled by the U.S. Census Bureau.509 

Regarding the estimate of the number of small entities affected by the Final Rule, 

as noted in the Certification of the Final Rule,510 while the Commission cannot determine 

the precise number of small entities, the data the Commission does have reinforce the 

Commission’s initial view that most covered entities are small entities. 

d) Description of the Projected Reporting, Recordkeeping, 

and Other Compliance Requirements of the Proposed Rule 

An industry association commenter argued that the Commission did not 

“accurately” lay out the proposed rule’s projected requirements. The commenter did not 

provide an explanation of what it alleged to be inaccurate in the Commission’s 

description. This comment notwithstanding, the NPRM described the proposed rule’s 

projected requirements, including by elaborating on the proposed recordkeeping 

requirements and providing estimates regarding the anticipated recordkeeping time and 

resource obligations for programmers, clerical staff, sales managers, and compliance 

509 U.S. Census Bureau, “All Sectors: County Business Patterns, Including ZIP Code Business Patterns, by 

Legal Form of Organization and Employment Size Class for the U.S., States, and Selected Geographies: 

2021,” 

https://data.census.gov/table?q=CB2100CBP&n=44111:44112&tid=CBP2021.CB2100CBP&nkd=EMPSZ 

ES~001,LFO~001 (listing 21,622 establishments for “[n]ew car dealers,” NAICS code 44111, and 25,649 

establishments for “[u]sed car dealers,” NAICS code 44112). 

510 See SBP VI.A.2. 

288 
 

 

officers.511 The NPRM also provided a detailed description of the recordkeeping 

requirements for entities to be covered by the Rule.512 

e) Duplicative, Overlapping, or Conflicting Federal Rules 

An industry association commenter argued that the Commission failed to identify 

relevant Federal rules that may duplicate, overlap, or conflict with the proposal. This 

commenter’s arguments that the proposed rule conflicts with Federal statutes are 

addressed in the section-by-section analysis in SBP III. Commenters provided no 

examples of actual conflicts between the proposals and Federal law. Further, there is no 

evidence that duplicative laws prohibiting misrepresentations or unfair acts or practices 

have harmed consumers or competition. Moreover, the additional remedies provided by 

the Final Rule will benefit consumers who encounter conduct that is already illegal and 

will assist law-abiding dealers that presently lose business to competitors that act 

unlawfully. 

f) Description of Any Significant Alternatives to the Proposed 

Rule Which Accomplish the Stated Objectives of Applicable 

Statutes and Which Minimize Any Significant Economic 

Impact of the Proposed Rule on Small Entities 

Statutory examples of “significant alternatives” include different requirements or 

timetables that take into account the resources available to small entities; the clarification, 

consolidation, or simplification of compliance and reporting requirements under the Rule 

for small entities; the use of performance rather than design standards; and an exemption 

from coverage of the Rule, or any part thereof, for small entities.513 Comments from SBA 

511 NPRM at 42035; see also id. at 42033-34 (describing recordkeeping requirements and analyzing cost 

burden). To avoid duplicative or unnecessary analysis, the information required by the IRFA can be 

provided with or as part of any other analysis required by any other law. 5 U.S.C. 605(a). 

512 See NPRM at 42027, 42035 (enumerating records to be retained and time period for retention). 513 See 5 U.S.C. 603(c)(1)-(4). 

289 
 

Advocacy and from a national industry association argued that the Commission did not 

set forth alternatives to the proposed rule.514 

In its Regulatory Flexibility Act compliance guidance to Federal agencies, the 

SBA Office of Advocacy provides that, “[i]f an agency is unable to analyze small 

business alternatives separately, then alternatives that reduce the impact for businesses of 

all sizes must be considered.”515 As the Commission explained in its NPRM, it 

“envisioned and drafted this Rule mindful that most motor vehicle dealers are small 

entities,” and drafted its proposal in the first instance to minimize economic impact on all 

motor vehicle dealers.516 For example, the Rule prohibits conduct that already violates the 

FTC Act, but still takes steps to minimize burdens for dealers of all sizes, by, for 

example, allowing records to be kept in any legible form already kept in the ordinary 

course of business, and by limiting recordkeeping requirements to twenty-four months 

from the date the record is created despite the fact that motor vehicle financing terms are 

generally years longer than this period. Commenters generally appear to understand the 

relevant market in a similar manner. For instance, the possible alternatives raised by the 

comment from SBA Advocacy would apply uniformly to both large and small 

businesses. These alternatives included excluding vehicle dealers that do not sell 

automobiles, regardless of the size of the dealer, and creating a carve-out for banks and 

other financing companies that would cover multi-billion dollar institutions.517 Comments 

514 Comment of SBA Advocacy, Doc. No. FTC-2022-0046-6664. 515 Off. of Advoc., U.S. Small Bus. Admin., “A Guide for Government Agencies: How to Comply with the 

Regulatory Flexibility Act” 39 (2017), https://advocacy.sba.gov/wp-content/uploads/2019/06/How-toComply-with-the-RFA.pdf. 

516 NPRM at 42036-37; see also id. at 42029-30 (indicating, in Questions for Comment 26.b, 28.a, & 30 

that the Commission was considering alternative approaches). 

517 See Comment of SBA Advocacy, Doc. No. FTC-2022-0046-6664 at 4-6. As addressed in SBP III.C.2(a) 

and SBP III.E.2(c), in responding to a similar comment by financial institutions, the Final Rule does not 

290 
 

 

 

 

 

 

 

 

 

 

from SBA Advocacy and a national industry association also discussed the proposed 

rule’s disclosure requirements in an industry-wide manner, not limiting their comments to 

businesses under any particular size threshold.518 Nevertheless, the Commission has 

reviewed these comments carefully, has responded to comments on alternatives in the 

corresponding sections of its section-by-section analysis, and has determined to modify 

the definition of “Covered Motor Vehicle” at § 463.2(e) and not to finalize the 

requirements proposed in §§ 463.4(b) and 463.5(b).519 

2. Final Regulatory Flexibility Analysis 

Although the Commission is certifying that the Rule will not have a significant 

economic impact on a substantial number of small entities, the Commission has prepared 

the following FRFA with this Final Rule. In the following paragraphs, the Commission 

change the status quo regarding the responsibilities of contract assignees or other subsequent holders of 

motor vehicle financing under the Holder Rule, and the Commission declines to create a safe harbor for 

contract assignees where it did not previously exist. 

Similarly, one comment recommended that the Commission add a rule provision authorizing an 

alternative compliance mechanism, stating that such a provision would aid not just smaller entities but 

larger entities as well. Under this alternative mechanism, independent accountability organizations could 

apply to the Commission for authorization to review and assess auto dealers’ adherence to a set of rule 

compliance guidelines that would be created. See Comment of BBB Nat’l Programs, Doc. No. FTC-2022-

0046-8452 at 1-3. This comment suggested that such an alternative compliance mechanism would have 

several benefits, including educating industry participants and allowing for industry oversight beyond the 

capacity of the FTC. The Commission agrees with the goals of educating stakeholders and maximizing 

resources used to ensure compliance with the Rule but notes that these goals can be furthered without 

adding alternate mechanisms with as-yet unknown guidelines, that may or may not be sufficient to protect 

consumers, to the Rule that the Commission is finalizing. The Commission notes that the Rule finalizes 

certain baseline protections that should already be in place under the law. The Commission encourages 

stakeholders, such as auto dealer trade associations, BBB, and others, to educate their members and the 

public about the Rule and encourage compliance, as such groups have done when issuing guidance on other 

aspects of the law. 

518 Comment of SBA Advocacy, Doc. No. FTC-2022-0046-6664 at 5-6; see generally Comment of Nat’l 

Auto. Dealers Ass’n, Doc. No. FTC-2022-0046-8368. The National Automobile Dealers Association also 

argues that the Commission should have considered whether to do a rule in the first instance. The NPRM 

provides a detailed explanation of why, more than a decade after Congress granted the FTC APA 

rulemaking authority with respect to motor vehicle dealers, and continued enforcement, outreach, and other 

initiatives, a rule is needed to address ongoing problems related to bait-and-switch tactics and hidden 

charges.

519 Separately, the Commission notes that the NPRM identified and solicited comments on 

alternatives to every substantive requirement, including the areas specifically addressed by the commenters. 

See, e.g., NPRM at 42028-30 (Q4-7, Q10, Q16, Q28, Q33, Q36-38); id. at 42040-41. 

291 
provides the information required for a FRFA: (1) a statement of the need for, and 

objectives of, the Rule; (2) a statement of the significant issues raised by public 

comments in response to the IRFA, including any comments filed by the Chief Counsel 

for Advocacy of the Small Business Administration in response to the proposed rule, the 

Commission’s assessment and response, and any resulting changes; (3) a description of 

and an estimate of the number of small entities to which the Rule will apply or an 

explanation of why no such estimate is available; (4) a description of the projected 

reporting, recordkeeping, and other compliance requirements; and (5) a description of the 

steps the agency has taken to minimize the significant economic impact on small entities 

consistent with the stated objectives of applicable statutes, including a discussion of any 

significant alternatives for small entities.520 

a) Statement of the Need for, and Objectives of, the Rule 

The FTC issues this Final Rule to address deceptive and unfair acts or practices 

during the vehicle buying or leasing process, and to provide an additional enforcement 

tool to remedy consumer harm and assist law-abiding dealers. As detailed in SBP II.B.1, 

these deceptive and unfair practices include bait-and-switch tactics, such as dealers 

advertising deceptively low prices or other deceptive terms to induce consumers to visit 

the dealership, and charging such consumers additional, unexpected amounts, including 

after the consumers have invested significant time and effort traveling to, and negotiating 

at, the dealership premises. At present, consumers may never learn that they are paying 

substantial unexpected charges, given the complexity and length of the motor vehicle 

sale, financing, or lease transaction and its attendant contracts and other documents. Law 

520 5 U.S.C. 604(a)(1)-(6). 

292 
 

 

enforcement, outreach and other engagement in this area, as well as the number of 

consumer complaints each year regarding motor vehicle dealer practices, indicate that 

unlawful conduct persists despite Federal and State law enforcement efforts. 

b) Issues Raised by Comments, Including Comments by the Chief 

Counsel for Advocacy of the SBA, the Commission’s 

Assessment and Response, and Any Changes Made as a Result 

The comments regarding the IRFA are addressed in SBP VI.B, and the comments 

regarding the other provisions of the NPRM are discussed in the SBP’s section-bysection analysis in SBP III. As noted, the Commission has made certain changes to the 

Rule after carefully reviewing the comments. These changes include modification of the 

definition of “Covered Motor Vehicle” at § 463.2(e), removal of the add-on list 

disclosure requirement in proposed § 463.4(b) and the requirements in proposed 

§ 463.5(b), and removal of the corresponding recordkeeping requirements in proposed 

§ 463.6(a)(2) and (a)(4). 

c) Description and Estimate of the Number of Small Entities to 

Which the Final Rule Will Apply or an Explanation of Why No 

Such Estimate Is Available 

The Final Rule applies to covered motor vehicle dealers, as defined in § 463.2(f), 

of covered motor vehicles at § 463.2(e): “any self-propelled vehicle designed for 

transporting persons or property on a public street, highway, or road,” and, in light of 

comments received, excludes specific categories as detailed in § 463.2(e).521 As 

explained in the Certification,522 the Commission cannot determine the precise number of 

small entities to which the Final Rule applies, but census data indicate that the vast 

521 The Commission is authorized to prescribe rules with respect to a motor vehicle dealer that is 

predominantly engaged in the sale and servicing of motor vehicles, the leasing and servicing of motor 

vehicles, or both, as defined in 12 U.S.C. 5519(a). 

522 See SBP VI.A.2. 

293 
majority of the estimated 47,271 dealers covered by the Rule are small entities according 

to the applicable U.S. Small Business Administrator’s relevant size standards. 

d) Description of the Projected Reporting, Recordkeeping, and 

Other Compliance Requirements 

The Final Rule prohibits certain unfair or deceptive acts or practices and contains 

recordkeeping requirements. The Final Rule contains no reporting requirements. 

The Final Rule requires covered motor vehicle dealers to clearly and 

conspicuously disclose the offering price of a vehicle in certain advertisements and in 

response to consumer communications. It also requires dealers to make certain other 

disclosures during the sale, financing, or leasing process. To enforce the Rule and prevent 

the unfair or deceptive practices prohibited by the Rule, the Rule further requires dealers 

to retain records necessary to demonstrate compliance with the Rule. Such records 

include advertising materials and copies of purchase orders and financing and lease 

documents. The Rule requires such records to be retained for a period of twenty-four 

months from the date they are created and provides that they may be kept in any legible 

form, and in the same manner, format, or place as they may already be kept in the 

ordinary course of business. Further details on these provisions are discussed throughout 

this SBP, including in the section-by-section analysis of the recordkeeping requirements 

in § 463.6, as well as in the preceding Paperwork Reduction Act analysis. 

294 
e) Description of the Steps the Commission Has Taken To 

Minimize the Significant Economic Impact on Small Entities 

Consistent with the Stated Objectives of Applicable Statutes 

The Final Rule addresses certain unfair or deceptive acts or practices in motor 

vehicle sales, financing, and leasing. In drafting its NPRM, reviewing public comments, 

and modifying the Rule from its original proposal, the Commission has taken specific 

steps to avoid unduly burdensome requirements for small entities. The Commission 

believes that the Final Rule—including the prohibitions against making specific 

misrepresentations and against charging consumers for any item unless the dealer obtains 

the express, informed consent of the consumer for the charge—is necessary to protect 

consumers, including small-business consumers that purchase, finance, or lease motor 

vehicles. By addressing these practices, the Rule also will benefit competition by 

preventing law-abiding dealers, many of which are small businesses, from losing 

business due to unlawful practices by other dealers. 

For each provision in the Rule, the Commission has attempted to reduce the 

burden on businesses, including small entities. For example, the Commission limited the 

number of disclosures that dealers are required to make under the Final Rule, and in 

response to comments, further limited such disclosures by determining not to finalize the 

disclosures in proposed §§ 463.4(b) and 463.5(b). Similarly, the Commission has limited 

the duration of the Rule’s recordkeeping requirements to twenty-four months from the 

date the relevant record is created, even though this period is far shorter than the length of 

many financing contracts. 

As previously noted, the Commission does not believe the Final Rule imposes a 

significant economic impact on a substantial number of small entities. Nonetheless, the 

295 
Commission has taken care to avoid extensive requirements related to form. For example, 

the Commission does not specify the form in which records required by the Final Rule 

must be kept. Moreover, the Rule’s disclosure requirements do not mandate specific font 

sizes. In sum, the Commission has worked to minimize any significant economic impact 

on small businesses. 

VII. Final Regulatory Analysis Under Section 22 of the FTC Act 

A. Introduction 

The Federal Trade Commission (FTC) is finalizing a Rule to address unfair or 

deceptive acts or practices by covered motor vehicle dealers when engaging with 

consumers who are shopping for covered motor vehicles. The Rule contains several 

provisions targeted at addressing price-related deception and unfairness for consumers 

with respect to purchasing, leasing, and financing new and used motor vehicles. The 

Final Rule prohibits misrepresentations regarding material information about certain 

aspects of motor vehicles and motor vehicle financing. The Final Rule also mandates 

certain disclosures about vehicle price, payments, and add-ons, while prohibiting charges 

for add-on products and services that would not benefit the consumer or for any item 

unless the dealer obtains the express, informed consent of the consumer for the charge. 

Section 22 of the FTC Act, 15 U.S.C. 57b-3, requires the Commission to issue a 

final regulatory analysis when publishing a final rule. The final regulatory analysis must 

contain (1) a concise statement of the need for, and objectives of, the final rule; (2) a 

description of any alternatives to the final rule which were considered by the 

Commission; (3) an analysis of the projected benefits, any adverse economic effects, and 

any other effects of the final rule; (4) an explanation of the reasons for the determination 

296 
 

of the Commission that the final rule will attain its objectives in a manner consistent with 

applicable law and the reasons the particular alternative was chosen; and (5) a summary 

of any significant issues raised by the comments submitted during the public comment 

period in response to the preliminary regulatory analysis, and a summary of the 

assessment by the Commission of such issues. 

As discussed previously, the FTC issues this Final Rule to address deceptive and 

unfair acts or practices during the vehicle buying or leasing process, and to provide an 

additional enforcement tool to remedy consumer harm and assist law-abiding dealers. 

These deceptive and unfair practices include bait-and-switch tactics, such as dealers 

advertising deceptively low prices or other deceptive terms to induce consumers to visit 

the dealership; and charging such consumers additional, unexpected amounts, including 

after the consumers have invested significant time and effort traveling to, and negotiating 

at, the dealership premises. At present, consumers may never learn that they are paying 

substantial unexpected charges, given the complexity and length of the motor vehicle 

sale, financing, or lease transaction and its attendant contracts and other documents. Law 

enforcement, outreach, and other engagement in this area, as well as the number of 

consumer complaints each year regarding motor vehicle dealer practices, indicate that 

unlawful conduct persists despite Federal and State law enforcement efforts. 

In response to public comments, the Commission considered and made a number 

of revisions from the proposed rule, which in turn have necessitated revisions to the 

regulatory analysis, resulting in this final regulatory analysis.523 The most significant 

523 These revisions and alternatives the Commission considered are described in detail in the Commission’s 

Statement of Basis and Purpose, as is the Commission’s explanation why the Final Rule will attain its 

objectives in a manner consistent with applicable law. 

297 
revisions to the proposed rule impacting the regulatory analysis are the removal of 

proposed §§ 463.4(b) (requiring the disclosure of add-on lists) and 463.5(b) (requiring 

various itemized disclosures relating to undisclosed or unselected add-ons). As a result of 

the Commission’s determination not to finalize these sections of the proposed rule, costs 

and benefits associated with those provisions have been excluded from the final 

regulatory analysis. The Commission also has made revisions in response to public 

comments, the availability of newer data, the identification of additional relevant data, 

and the application of newer scholarly research. The final regulatory analysis thus builds 

upon the preliminary regulatory analysis, while incorporating several updates: 

 The analysis of consumer time savings has been revised in response to 

public comments and changes following the NPRM. 

 A section quantifying the reduction in deadweight loss resulting from the 

Rule has been added, based upon recent research that allows the 

Commission to quantify both how dealer markups will respond to price 

transparency and how new and used vehicle quantities will respond to 

changes in price. 

 Training costs have been added for some provisions in response to public 

comments. 

 Information systems costs have been added to the Recordkeeping section 

in response to public comments, based on estimates of how much data 

would be required and the cost of cloud or on-premises data storage. 

 Wages used to monetize labor costs have been updated to reflect new data 

from the Bureau of Labor Statistics. 

 The number of dealers has been updated to reflect new data from Census 

County Business Patterns. 

 The number of transactions subject to the Rule has been revised in 

response to public comments, and the Commission’s identification of 

298 
additional data sources that can be used to exclude private party and fleet 

transactions. 

The Final Rule contains requirements in the following areas: 

1. Prohibited misrepresentations; 

2. Required disclosure of offering price in certain advertisements and in response to 

inquiry; 

3. Required disclosure of total of payments for financing and leasing transactions; 

4. Prohibition on charging for add-ons in certain circumstances; 

5. Requirement to obtain express, informed consent before any charges; and 

6. Recordkeeping. 

In the following analysis, we describe the anticipated impacts of the Final Rule. 

Where possible, we quantify the benefits and costs and present them separately by 

provision. If a benefit or cost is quantified, we indicate the sources of the data relied 

upon. If an assumption is needed, the text makes clear which quantities are being 

assumed. 

A period of 10 years is used in the baseline scenario because FTC rules are 

generally subject to review every 10 years.524 Quantifiable aggregate benefits and costs 

across three different sets of assumptions are summarized as the net present value over 

this 10-year time frame in Table 1.1. Quantifiable benefits include time savings from a 

more efficient shopping and sales process and a reduction in deadweight loss, both of 

which ultimately result from greater transparency under the Rule. Quantifiable costs 

primarily reflect the resources expended by automobile dealers in developing the systems 

524 See Fed. Trade Comm’n, Notification of Intent to Request Public Comment, Regulatory Review 

Schedule, 87 FR 47947 (Aug. 5, 2022), https://www.govinfo.gov/content/pkg/FR-2022-08-05/pdf/2022-

16863.pdf. 

299 
 

necessary to comply with the provisions of the Rule. In addition, we expect additional 

benefits and costs that we are presently unable to quantify. Among the unquantified 

benefits are time savings that accrue to individuals who abandon vehicle transactions 

entirely; additional time savings on activities that individuals engage in digitally under 

the status quo; reductions in deadweight loss resulting from direct price effects in the 

markets for used vehicles or vehicle add-ons; and the benefit of reduced stress, 

discomfort, and unpleasantness experienced by motor vehicle consumers under the status 

quo. Among the unquantified costs would be any potential reductions in consumer 

information resulting from changes in dealers’ policies regarding marketing and 

advertisements. The discount rate reflects society’s preference for receiving benefits 

earlier rather than later; a higher discount rate is associated with a greater preference for 

benefits in the present. The present value is obtained by multiplying each year’s net 

benefit by a discount factor a number of times equal to the number of years in the future 

the net benefit accrues.525 

525 While whole calendar years are used here for ease of reference, this analysis estimates costs and benefits 

over a ten-year period running from the Rule’s effective date. For the purposes of discounting, the 

Commission assumes that any upfront costs or benefits occur immediately upon the effective date of the 

Rule and are therefore not discounted. The Commission further assumes that ongoing costs and benefits 

occur at the end of each period, such that even ongoing costs/benefits that occur in year 1 are discounted. 

300 
 

 

 

 

 

Table 1.1—Present Value of Net Benefits (in millions), 2024-2033 

Low Estimate Base Case High Estimate 

3% 

Discount 

Rate 

7% 

Discount 

Rate 

3% 

Discount 

Rate 

7% 

Discount 

Rate 

3% 

Discount 

Rate 

7% 

Discount 

Rate 

Benefits

 Time Savings $7,463 $6,145 $14,926 $12,290 $24,036 $19,790 

Deadweight 

Loss Reduction 

$568 $468 $1,298 $1,069 $2,307 $1,899 

Total Benefits $8,031 $6,613 $16,224 $13,359 $26,343 $21,690 

Costs

 Finance/Lease 

Total of Payments 

Disclosure 

$296 $246 $296 $246 $117 $98 

Offering Price 

Disclosure 

$46 $46 $46 $46 $0 $0 

Prohibition re: 

Certain Add-ons & 

Express, Informed 

Consent 

$475 $406 $475 $406 $147 $128 

Prohibition on 

Misrepresentations 

$157 $130 $157 $130 $0 $0 

Recordkeeping $296 $248 $296 $248 $296 $248 

Total Costs $1,270 $1,075 $1,270 $1,075 $559 $474 

Net Benefits $6,761 $5,538 $14,954 $12,284 $25,784 $21,216 

Note: “Low Estimate” reflects all lowest benefit estimates and high cost scenarios and “High 

Estimate” reflects all highest benefit estimates and low cost scenarios. “Base Case” reflects 

base case benefit estimates and high cost scenarios. Not all impacts can be quantified; 

estimates only reflect quantified costs and benefits. 

B. Estimated Benefits of Final Rule 

In this section, we describe the beneficial impacts of the Rule, by (1) providing 

quantitative estimates where possible, (2) identifying quantitative benefits that cannot be 

estimated at this time due to a lack of data, and (3) describing benefits that can only be 

assessed qualitatively. The benefits cut across multiple areas addressed by the Rule and 

301 
 

these benefits are impossible to identify separately by area. As a result, we enumerate the 

benefits of the Rule not by provision, but by category. 

1. Consumer Time Savings When Shopping for Motor Vehicles 

Several provisions of the Rule would benefit consumers by saving them time as 

they complete motor vehicle transactions. Required disclosures of relevant prices and 

prohibitions of misrepresentations, inter alia, would save consumers time when shopping 

for a vehicle by requiring the provision of salient, material information early in the 

process and eliminating time spent pursuing misleading offers. The Commission’s 

enforcement record shows that consumer search and shopping is sometimes influenced 

by unfair or deceptive advertising that draws consumers to a dealership in pursuit of an 

advertised deal, only to find out at some point later in the process (if at all) that the 

advertised deal is not actually available to them.526 This bait-and-switch advertising has 

the effect of wasting consumers’ time traveling to and negotiating with unscrupulous 

dealerships, time which would otherwise be spent pursuing truthful offers in the absence 

of deception and unfairness. If consumers are faced with hard constraints on their time or 

other resources, this wasted time may mean that they are unable to find the deal that best 

fits their needs and preferences. Additionally, motor vehicle consumers frequently begin 

the process of shopping for a motor vehicle (e.g., by visiting a dealership in response to 

an ad or initiating negotiations in response to a quoted price that is incomplete) and then 

later abandon the nascent transaction entirely when additional information is revealed. In 

these instances, consumers do not purchase or lease a vehicle at all. The Rule would also 

save consumers time by avoiding these abandoned transactions. However, because the 

526 See SBP II.B-C. 

302 
Commission has been unable to identify data to determine the quantity of such 

abandoned transactions and the amount of time spent pursuing them, this benefit remains 

unquantified in the analysis. 

Obviously, many consumers end up purchasing and leasing vehicles under the 

status quo—either because full revelation of prices and terms still results in a mutually 

beneficial transaction or because full revelation never occurs and consumers are deceived 

into completing a transaction that is not mutually beneficial. These consumers also spend 

additional, unnecessary time discovering information that dealers would be required to 

disclose earlier once the Rule is in effect. The Commission expects the Rule’s required 

disclosures and prohibitions against misrepresentations to improve information flows and 

consumer search efficiency, including but not limited to, addressing the influence of 

deception and unfairness on consumer search and shopping behavior. 

The Commission’s preliminary analysis estimated that the proposed rule would 

allow consumers to spend 3 fewer hours completing each motor vehicle transaction and 

result in (quantifiable) overall time savings valued at between $30 billion and $35 billion. 

In this final regulatory analysis, the Commission takes into account the effects of 

revisions to the proposed rule and additional data, addresses industry comments, and 

employs an alternative analytical approach with a sensitivity analysis. This sensitivity 

analysis reflects a “high-end” estimate that consumers will save as many as 3.3 hours per 

completed transaction; a “base case” estimate—representing the most likely scenario— 

that consumers will save 2.05 hours per transaction; and a possible “low-end” savings 

estimate of 1.02 hours. Using a 7% discount rate, these time savings estimates result in a 

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range of between $6.1 billion and $19.8 billion in total savings, with a base case of $12.3 

billion. 

In its preliminary analysis, the Commission relied on results from the 2020 Cox 

Automotive Car Buyer Journey study, which showed that consumers spent roughly 15 

hours researching, shopping, and visiting dealerships for each motor vehicle 

transaction.527 Based on the proposed rule provisions prohibiting misrepresentations and 

requiring price transparency, the Commission assumed each consumer who consummated 

a vehicle transaction would spend 3 fewer hours shopping online, corresponding with 

dealerships, visiting dealer locations, and negotiating with dealer employees. The 3 hours 

corresponded to 20% of an average consumer’s time spent on such activities in 2019 

(pre-COVID). 

The Commission received a number of comments emphasizing the unnecessary 

time consumers must spend to ascertain the price and terms when attempting to 

consummate a vehicle transaction. One group of commenters, for example, asserted that 

“[t]he most important factor for consumers purchasing a vehicle is its price, yet the price 

is almost impossible to ascertain without spending hours at the dealership.”528 Another 

group of commenters provided a compilation of numerous consumer complaints, 

including many that described consumers spending hours at a dealership trying to 

ascertain the final price and terms of the transaction.529 The improved information flow 

527 NPRM at 42037 & n.180. 528 Comment of Am. for Fin. Reform et al., Doc. No. FTC-2022-0046-7607. 529 Comment of Consumer Reps. et al., Doc. No. FTC-2022-0046-7520 at 3, 11, 12, 16, 38 (including story 

from Illinois consumer describing “[spending] about 4 hours at the dealership while the salesman kept 

changing the terms of the deal . . . .”; story from Connecticut consumer describing how, “[a]fter nearly 

three hours of paperwork . . . I was finally presented with the official bill to pay the balance. The price was 

now higher than the original adjusted sticker.”; story from New Jersey consumer describing how, “[a]fter 4 

hours of negotiations . . . I finally got nearly the same price as the verified offer [for the vehicle] but about 

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under the Final Rule will provide quantifiable benefits for consumers by reducing or 

eliminating this unnecessary need to spend time penetrating opaque pricing and terms, 

and will provide qualitative benefits by reducing frustration and stress in the car buying 

process. 

Some industry commenters questioned the appropriateness of the data and 

assumptions used to quantify the time savings benefit. A number of industry association 

commenters argued that the 15-hour figure did not represent a reasonable base from 

which time savings attributable to the Rule could be derived. One such commenter 

criticism asserted that the publication from which it was sourced only surveyed 

consumers who used the internet during research and shopping and therefore could not be 

representative of the time spent by consumers who do not use the internet. Still other 

commenters noted that additional data from the same organization were available. The 

Commission disagrees that the 15-hour estimate is an unreasonable base from which to 

derive time savings from the Rule. While the Cox Automotive Study acknowledges only 

internet users were surveyed, the study also indicates its “[r]esults are weighted to be 

representative of the buyer population.”530 Also, while more recent data were available at 

the time of the analysis for the NPRM, those data were from an extraordinary period (the 

COVID-19 pandemic). The Commission expects that the data used for the preliminary 

analysis are more representative of consumer experiences over the analysis window than 

the more recent data. While not dispositive, the limited data available since the NPRM 

$1000 less on my trade-in[ ](that was also part of the verified offer). The [dealer] also added on 

Accessories ‘other products’ [of] $474.00 . . . .”; story from Texas consumer describing how “[t]he 

[dealership] finance manager kept me there for two hours, and said the deal was done. I went to get my 

wife, when we got back the price had gone up $3,000.00.”). 

530 2020 Cox Automotive Car Buyer Journey, supra note 25, at 1. 

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was published bears this hypothesis out. In the 2021 Cox Automotive Car Buyer Journey 

Study, consumers spent roughly 12-and-a-half hours researching, shopping, and visiting 

dealerships for each motor vehicle transaction.531 In contrast, in the 2022 Car Buyer 

Journey study, consumers spent roughly 14-and-a-half hours researching, shopping, and 

visiting dealerships for each motor vehicle transaction.532 This admittedly short trend 

suggests that the COVID-19 pandemic had a significant effect on motor vehicle 

shopping, reducing the amount of time the typical consumer spent on these activities, and 

that time spent on these activities has already rebounded to previous levels.533 

Another industry association commenter suggested that the figure included 

categories of time use that could not conceivably be affected by the proposed rule, such 

as online research into vehicle features, and that attention should be restricted to time 

spent shopping. The Commission finds that several provisions in the Rule clearly have 

the potential to reduce time spent across most categories covered by the 15-hour figure, 

including the largest category (“Researching and Shopping Online”). This category of 

time use would include comparing listed vehicle prices across dealerships that, under the 

Rule, would be transparent and comparable in a way that they were not in the status quo, 

thus saving consumers time. 

Some commenters also noted that the total base of transactions reported in the 

preliminary analysis appeared to overstate the number of transactions to which the 

proposed rule would apply. First, commenters asserted that the 62.1 million transactions 

531 See 2021 Cox Automotive Car Buyer Journey Study, supra note 504, at 16. 532 See 2022 Car Buyer Journey, supra note 25, at 6. 533 Interestingly, consumer satisfaction with the car buying process, as measured by this same survey, was 

highest during the COVID-19 pandemic when the time spent on research, shopping, and visiting 

dealerships was lowest, and has since dropped back to pre-pandemic levels. 2022 Car Buyer Journey, supra 

note 25, at 5. 

306 
 

double-counted new vehicle leases in the data source from which it was obtained (2019 

National Transportation Statistics, Table 1-17). Second, commenters asserted that the 

number included private party transactions that would be entirely unaffected by the 

proposed rule. Finally, commenters argued that the transactions number contained 

wholesale and fleet transactions, where the amount of time spent researching, shopping, 

and visiting dealers is likely to be substantially different relative to a household 

consumer. 

The Commission has verified that the source data were revised to fix the 

erroneous double-counting of leases between the time they were accessed by the 

Commission for the drafting of the preliminary analysis and the time that comments were 

received. The final analysis uses the revised data. In addition, in response to comments 

that private party transactions should be excluded from the analysis, the Commission is 

revising its analysis. Additional data would be necessary to quantify any time savings 

benefits for wholesale and fleet transactions. Accordingly, the Commission has excluded 

all transactions occurring through non-retail channels from the final analysis.534 

A number of comments raised concerns about the foundations of the 3-hour timesavings assumption. One industry organization noted that the Cox Automotive study cited 

in the NPRM does not itself address the proposals in the NPRM (which the survey, of 

534 When the transaction volume from the preliminary analysis is applied to the Commission’s current 

methodology and sensitivity analysis, time savings under the Final Rule ranges from a high-end of $35 

billion to a low-end of $11 billion, with a base case of $22 billion (assuming a 7% discount rate). In 

comparison, the preliminary analysis computed savings under the proposed rule as approximately $31 

billion (also assuming a 7% discount rate). The residual difference in base case savings is attributable to 

less time saved per transaction—partially explained by additional provisions in the NPRM that the 

Commission is not finalizing—as well as updates to the underlying wages used to monetize the consumer 

time savings. 

307 
 

 

 

 

 

 

 

course, predated) and does not estimate time savings.535 Another organization expressed 

confusion as to whether the assumption was intended as a flat 3-hour time savings or a 

20% time savings, asserting that dynamism in automotive retailing will likely lead to 

evolution in the total amount of time spent shopping. 

While the Commission believes its 3-hour time-saving assumption in the NPRM 

remains reasonable, the Commission has conducted additional analyses, the results of 

which demonstrate the positive net benefits of the Rule even when applying more 

conservative assumptions around time savings and adjusting for the removal of certain 

proposed provisions from the NPRM.536 Using recent figures from Cox Automotive’s Car 

Buyer Journey 2019 study, the Commission notes that consumers who do various 

activities in the vehicle buying process digitally (“digital consumers”) save time at the 

dealership relative to those who do not (“non-digital consumers”).537 The Commission’s 

535 This same organization commissioned a study that was recently released asserting the proposed rule 

would lead to an increase in consumer transaction time. This survey, however, had numerous 

methodological shortcomings rendering its results unreliable. For example, the survey presented each 

respondent at the outset with a leading statement telling them the rule would impose “new duties [that] are 

expected to create additional monitoring, training, forms, and compliance review responsibilities as well as 

a modification of record keeping systems and coordination with outside IT and other vendors” and 

“increase the time of a motor vehicle transaction, inhibit online sales, limit price disclosures, and increase 

customer confusion and frustration.” Edgar Faler et al., Ctr. for Auto. Rsch., “Assessment of Costs 

Associated with the Implementation of the Federal Trade Commission Notice of Proposed Rulemaking 

(RIN 2022 – 14214), CFR Part 463” 34-36 (2023), https://www.cargroup.org/wpcontent/uploads/2023/05/CAR-Report_CFR-Part-463_Final_May-2023.pdf (introductory instructions on 

the survey instrument sent to respondents). Moreover, the survey started with a sample size of 60 dealers 

(id. at 7) in an industry with an estimated 46,525 dealers, NPRM at 42,031 & n.154, but only 40 dealers 

actually completed responses to many key questions (id. at 29). The survey does not describe how these 40-

60 dealers were chosen. Although the survey estimates that the proposed rule would require consumers to 

spend additional time on motor vehicle transactions, this conclusion is based on the responses of just 40 

dealers and included no consumers. Id. at 29-32. Moreover, the survey report attributed much of this 

estimated increase to proposed rule provisions that are not in the Final Rule. Id. at 25. 536 In fact, the sensitivity analysis in Table 2.3 of this final regulatory analysis presents a range of 

reasonable estimates for time savings that includes the 3-hour time-saving assumption from the preliminary 

analysis in the NPRM. 

537 Cox Auto. et al., “Car Buyer Journey 2019” (2019) [hereinafter Car Buyer Journey 2019], 

https://www.coxautoinc.com/wp-content/uploads/2019/06/2019-Car-Buyer-Journey-Study-FINAL-6-11-

19.pdf. While Cox Automotive has released subsequent Car Buyer Journey studies, none of these 

subsequent studies quantify time savings from shopping digitally. In addition, to the extent that shoppers 

308 
 

 

revised base case time savings calculation assumes that only the fraction of consumers 

who are not currently shopping digitally will experience time savings, and that these 

savings will be proportional to the time savings found in the Car Buyer Journey 2019 

study for digital consumers.538 Because the Commission expects the provisions of the 

Rule to emulate some of the time-saving features of completing these activities digitally, 

the time savings benefits of the Rule are assumed to be a proportion of the time saved by 

status quo digital consumers, with the proportion determined by how closely the status 

quo digital shopping experience is expected to resemble the shopping experience for all 

consumers once the Rule is in effect. Additionally, because these numbers only reflect 

time saved at the dealership of purchase, we assume that these same consumers will also 

save time on these activities to the extent that they are initiated at dealerships visited prior 

to the dealership at which they purchase (“non-purchase dealerships”). Based on 2020 

data from Cox Automotive, the average consumer visits 1 non-purchase dealership for 

each transaction.539 Table 2.1 documents both the fraction of consumers performing 

activities digitally under the status quo and the time saved at the dealership by these 

consumers on each activity. 

compensate by spending more time at home on these activities, these time savings should be reduced to 

reflect net time savings from performing these activities digitally. We believe that the nature of performing 

these activities digitally vs. at the dealership suggests these offsets should be small. 538 The 2020 Cox Automotive Digitization of End-to-End Retail study reports the fraction of consumers 

who are already engaging in various activities online under the status quo. Cox Auto., “Digitization of Endto-End Retail” (2021) [hereinafter Digitization of End-to-End Retail], https://www.coxautoinc.com/wpcontent/uploads/2021/01/2020-Digitization-of-End-to-End-Retail-Study-FINAL.pdf. While the activities 

listed across studies do not match perfectly, we map the activity categories to the closest corresponding 

activity in the other study and, in our final analysis, exclude from the time savings calculation the 

percentage of transactions corresponding to the fraction of consumers already engaging in that activity 

online. While it is likely that consumers shopping digitally under the status quo will also experience some 

additional time savings under the Rule, there is insufficient data to estimate this marginal savings and so we 

leave this benefit unquantified in the analysis. 

539 2020 Cox Automotive Car Buyer Journey, supra note 25, at 15 (noting an average of 2.2 dealerships 

visited among new car buyers). 

309 
Table 2.1—Completing Activities Digitally 

Activity % of Consumers Time Saved at 

Digital (2020 Dealership (2019 

Digitization) Journey) 

Negotiating the Purchase Price 20% 43 minutes 

Select F&I Add-Ons 18% 33 minutes 

Discussing and Signing Paperwork 13% 45 minutes 

Get a Trade-In Offer 31% 26 minutes 

Source: Car Buyer Journey 2019 and Digitization of End-to-End Retail. 

Based on the description of these activities and the anticipated effects of the Rule, 

our base case estimates assume that non-digital consumers will save an amount of time 

negotiating a vehicle purchase price equal to the amount of time saved by those 

negotiating purchase price digitally under the status quo (43 minutes). For non-digital 

consumers, it is currently time-consuming to obtain comparable price quotes from 

dealerships. Many dealerships will not initiate price negotiations in earnest without a 

competing price quote in writing, which can only be obtained by visiting a dealership for 

the non-digital consumer. Mandating offering price disclosures—which are comparable 

across dealerships by definition—early in the shopping process will emulate the price 

discovery function of negotiating prices online, in which comparable price quotes can be 

obtained (with effort) via email.540 

The Commission anticipates that the impact of the Rule on time spent selecting 

F&I add-ons and discussing and signing paperwork will be moderate. In our base case 

estimates, non-digital consumers will save an amount of time doing these activities equal 

540 Shoppers who negotiate purchase price digitally under the status quo will likely also obtain time savings 

from mandatory offering price disclosures, corresponding to the time and effort they put into contacting 

and exchanging email with dealerships. We lack sufficient data on the time spent on these activities to 

quantify these benefits, however. 

310 
 

 

to the half the amount of time saved by those doing these activities digitally under the 

status quo (33 × 0.5 = 16.5 minutes and 45 × 0.5 = 22.5 minutes, respectively). Time 

saved selecting add-ons flows primarily from the prohibitions on various 

misrepresentations, the mandatory disclosures regarding whether add-ons are required, 

and the prohibition on charging for add-ons under certain circumstances.541 Time saved 

discussing and signing paperwork also flows from the prohibitions on various 

misrepresentations, several disclosures mandated by the Rule, and the prohibition on 

charging for items without express, informed consent.542 For non-digital consumers, 

considerable time must be spent at the dealership both closely reviewing paperwork (e.g., 

to ensure that unwanted optional add-ons are not being added to the transaction; to ensure 

that the financing terms, including monthly payments, total payments, and term length, 

are as expected; and to confirm that terms in the contract generally conform to what was 

discussed) and waiting for sales and F&I staff at the dealership to consult with managers 

and revise paperwork as needed. Digital consumers, however, may have access outside 

the dealership to add-on menus where they can select their desired F&I products 

affirmatively without worry that dealership staff will misrepresent the products or 

pressure them into selecting something unwanted. In addition, digital consumers may 

receive and review paperwork before arriving at the dealership. This way, any necessary 

revisions can be performed by the dealership asynchronously so that the consumer is free 

to spend that time as they wish instead of being stuck in an F&I office. The noted Rule 

provisions will give consumers confidence that the add-on options presented to them are 

541 See §§ 463.3(a), (b), & (f); 463.4(c); and 463.5(a) & (c). The Commission notes that time savings would 

likely be higher in this category had it determined to finalize proposed § 463.4(b), which would have 

required disclosure of an add-on list. 

542 See §§ 463.3; 463.4(c), (d), & (e); and 463.5(c). 

311 
 

non-deceptive and the contract paperwork they are asked to review will not yield any 

unpleasant surprises. As a result, on average they will neither need to engage in such 

close scrutiny of their contract documents, nor spend as much time waiting for dealership 

staff to speak to managers or make changes as the first draft will be more likely to 

conform to their expectations.543 

The Commission assumes that the Rule will likely not assist consumers much (if 

at all) in reducing time spent obtaining a trade-in offer. In our base case estimates, we 

assume non-digital consumers will not save additional time on obtaining a trade-in offer 

under the Rule. There are various provisions in the Rule that touch trade-in offers made 

by dealerships544 and may increase consumer confidence in dealer contracts as discussed 

previously. In addition, trade-in values are an important piece of transaction pricing, so 

greater price transparency may save consumers time on the trade-in aspect of transactions 

that involve them. There is a concern, however, that dealers may spend more time trying 

to extract maximum value out of any given trade-in opportunity once the Rule is in effect. 

Because the Commission believes that greater transparency in vehicle pricing and addons will lead to reduced markups on these products (see “Reductions in Deadweight 

Loss”), it is possible that dealers will attempt to make up these lost profits by maximizing 

trade-in margins, which may lead to increased time spent on negotiations. Since we do 

not have sufficient data to determine the balance of these two effects, we assume in the 

base case that they offset. In sensitivity analyses where we explore alternative 

assumptions, note that time savings from this activity only apply to the roughly 50% (by 

543 Again, status quo digital shoppers will likely obtain time savings on these activities as well, to the extent 

that their paperwork will also be less likely to require close scrutiny and revisions. We lack sufficient data 

on the time spent on these activities to quantify these benefits, however. 

544 See §§ 463.3(i) & (j); 463.4(d). 

312 
 

one estimate) of vehicle purchase transactions at dealerships where consumers trade in a 

vehicle.545 

Finally, data from the 2021 Cox Automotive Car Buyer Journey Study reveal that 

consumer time spent at non-purchase dealerships is roughly 82% of the time spent at the 

dealership of purchase.546 Additionally, the average consumer visits 1 non-purchase 

dealership for each transaction, so under the dual assumptions that (1) the proportions of 

time spent at dealerships across these activities is consistent across purchase and nonpurchase dealerships and (2) the noted time savings are constant as a fraction of time 

spent, we multiply the time savings numbers by this ratio to obtain the additional time 

saved at non-purchase dealerships. 

Proceeding as in the preliminary analysis, we assume that motor vehicle purchase, 

financing, and lease transactions will be stable at the 2019 level of 57.9 million 

transactions per year.547 As discussed previously, the final analysis excludes private 

party, fleet, and wholesale transactions. According to Edmunds Automotive Industry 

Trends 2020, 19.3% of new vehicle sales in 2019 were fleet sales.548 This fraction of the 

17.1 million new vehicle sales and leases in the data are excluded from the analysis. An 

Automotive News article from January 2023 (citing data from Cox Automotive) states 

545 See Progressive, “Consumers embrace online car buying,” 

http://www.progressive.com/resources/insights/online-car-buying-trends/ (last visited Dec. 5, 2023). 546 See 2021 Cox Automotive Car Buyer Journey Study, supra note 504, at 16 (noting total time of 2:09 

spent “Visiting Other Dealerships/Sellers” and total time of 2:37 spent “With the Dealership/Seller Where 

Purchased”).

547 See U.S. Dep’t. of Transp., Off. of the Sec’y of Transp., Bureau of Transp. Stat., “National 

Transportation Statistics 2021, 50th Anniversary Edition” 21 (2021), 

https://www.bts.dot.gov/sites/bts.dot.gov/files/2021-12/NTS-50th-complete-11-30-2021.pdf (Table 1-17). 548 See Edmunds, “Automotive Industry Trends 2020” 7 (2020), https://static.ed.edmundsmedia.com/unversioned/img/industry-center/insights/2020-automotive-trends.pdf. 

313 
 

 

 

 

 

 

 

that 48% of all used vehicle sales occurred outside of the retail channel.549 As with new 

vehicle sales, this fraction of the 40.8 million used vehicle transactions in the data are 

excluded from the analysis. Adding up the covered transactions (35 million)550 and 

applying the time savings calculated from the base case assumptions, we anticipate that 

the Rule will generate a total time savings of more than 72 million hours per year. 

According to the Bureau of Labor Statistics Occupational Employment Statistics, the 

average hourly wage of U.S. workers in 2021 was $29.76, and recent research suggests 

that individuals living in the U.S. value their non-work time at 82% of average hourly 

earnings.551 Thus, the value of non-work time for the average U.S. worker would be 

$24.4 per hour. As a result, our final analysis refines the estimate to a present value of 

between $12.3 billion and $14.9 billion as described in Table 2.2, which translates to 

savings of roughly $1.75 billion per year.552 

549 See Auto. News, “Used-vehicle volume hits lowest mark in nearly a decade” (Jan. 13, 2023), 

https://www.autonews.com/used-cars/used-car-volume-hits-lowest-mark-nearly-decade (estimating 

19,100,000 of used vehicle sales in the year 2022 occurred within the retail channel). The same Automotive 

News source reports a total used vehicle sales number of approximately 40 million for 2019. Id. The 

conclusions of the analysis are robust to using this total figure instead.

550 A recent report by the Center for Automotive Research estimates that there approximately 43 million 

non-fleet, non-private party sales in 2019 based on privately sourced data. Edgar Faler et al., Ctr. for Auto. 

Rsch., “Assessment of Costs Associated with the Implementation of the Federal Trade Commission Notice 

of Proposed Rulemaking (RIN 2022 – 14214), CFR Part 463” 5 (2023), https://www.cargroup.org/wpcontent/uploads/2023/05/CAR-Report_CFR-Part-463_Final_May-2023.pdf. While this would result in a 

savings estimate approximately 22% higher, the Commission relies on its analysis of the publicly available 

data described herein. 

551 Daniel S. Hamermesh, “What’s to Know About Time Use?” 30 J. Econ. Survs. 198, 201 (2016), 

https://onlinelibrary.wiley.com/doi/epdf/10.1111/joes.12107. 552 Note that we assume only one consumer is involved in each transaction; to the extent that multiple 

members of a household may visit dealerships for each transaction, these calculations are likely to 

underestimate the total time savings. 

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Table 2.2—Estimated Benefits of Time Savings for Completed Transactions 

2024-2033 

Completed Transactions

 Avg. minutes saved at dealership of purchase / other dealers (by activity)a

 Negotiating the Purchase Price 34 / 28 

 Select F&I Add-Ons 14 / 11 

Discussing and Signing Paperwork 20 / 16 

Get a Trade-In Offer 0 / 0 

Hours saved per transaction 2.05 

 Number of covered vehicle transactions 34,986,253 

per yearb

 Value of time for vehicle-shopping $24.40 

consumersc

Abandoned Transactions Unquantified 

Total Quantified Benefits (in millions) 3% discount rate $14,926 

Total Quantified Benefits 7% discount rate $12,290 

Note: Benefits have been discounted to the present at both 3% and 7% rates. 

a Averages are across all retail transactions; transactions where consumers performed activity 

digitally under the status quo will have a time savings of 0 for that activity. 

b For total volume, National Transportation Statistics Table 1-17. For retail/non-fleet fraction, 

Edmunds Automotive Industry Trends 2020 (for new vehicles), supra note 548548, and Cox 

Automotive via Automotive News (for used vehicles), supra note 549549. 

c BLS Occupational Employment Statistics (May 2022) and Hamermesh (2016) 

Due to the uncertainty surrounding how the Rule will translate into time savings 

for consumers and to which activities it will most strongly apply, we explore a range of 

alternative assumptions regarding what fraction of the documented time savings digital 

consumers experience will be received by non-digital consumers under the Rule. In our 

low-end scenario, we assume that the Rule will result in half the consumer time savings 

of the base case. In our high-end scenario, we assume that all the time savings 

experienced by digital consumers under the status quo—including time saved getting a 

trade-in offer—will be received by non-digital consumers under the Rule. The low-end 

315 
 

assumptions correspond to a total time savings of more than 35.85 million hours per year 

while the upper bound assumptions correspond to a total time savings of more than 

115.47 million hours per year. The results of this analysis are presented in Table 2.3. 

Importantly, over the whole range of these alternative assumptions we find that benefits 

exceed costs. In fact, holding other benefit and cost estimates constant, the time savings 

generated by the Rule could be de minimis and the implied benefits would still exceed the 

costs. While there are some activities in the car buying process that the Rule may not 

affect (e.g., test driving vehicles, etc.), the data discussed suggest that there is ample 

room for the Rule to eliminate unnecessary time across various activities. And even 

though digital consumers spend less time on these activities, results across several studies 

suggest that this reduction in time leads to a better experience for consumers.553 

553 See Car Buyer Journey 2019, supra note 537, at 9 (Consumers who negotiate (88% vs. 64%) and 

complete paperwork online (74% vs. 65%) are more satisfied with their dealership experience.); 2022 Car 

Buyer Journey, supra note 25, at 22 (“More [financing] steps completed online = higher satisfaction & less 

time at the dealership”); Cox Auto., “Cox Automotive Car Buyer Journey Study: Pandemic Edition” 22 

(2021), https://www.coxautoinc.com/wp-content/uploads/2021/02/Cox-Automotive-Car-Buyer-JourneyStudy-Pandemic-Edition-Summary.pdf (“Heavy Digital Buyers were the Most Satisfied”). 

316 
 

 

 

 

 

 

 

Table 2.3—Sensitivity Analysis of Time Savings 

Low 

End 

Base Case High End 

Avg. minutes saved at dealership of purchase / other dealers (by 

activity)a

 Negotiating the Purchase 

Price 

17 / 14 34 / 28 34 / 28 

Selecting F&I Add-Ons 7 / 6 14 / 11 27 / 22 

Discussing and Signing 

Paperwork 

10 / 8 20 / 16 39 / 32 

Get a Trade-In Offer 0 / 0 0 / 0 18 / 15 

Hours saved per transactionb 1.02 2.05 3.3 

Total Quantified Benefits 

(in millions) 

3% discount 

rate 

$ 7,463 $14,926 $24,036 

Total Quantified Benefits 7% discount 

rate 

$ 6,145 $12,290 $19,790 

Note: Benefits have been discounted to the present at both 3% and 7% rates. 

a Averages are across all retail transactions; transactions where consumers performed activity 

digitally under the status quo will have a time savings of 0 for that activity. 

b Time savings for “Get a Trade-In Offer” assumed to be zero for lease transactions or sales 

without trade-ins (estimated at 50%). 

2. Reductions in Deadweight Loss 

The status quo in this industry features consumer search frictions, shrouded 

prices, deception, and obfuscation. As a result, dealers likely charge higher prices for a 

number of products and services than could be supported once the Rule is in effect. 

Recent research suggests that when consumers are able to observe prices for vehicles 

before visiting dealerships—as is intended by the Rule—prices and dealer profits are 

likely to fall.554 When not accompanied by changes in quantity (due to a fixed supply of 

554 Marco A. Haan et al., “A Model of Directed Consumer Search,” 61 Int’l J. Indus. Org. 223, 223-55 

(2018), https://doi.org/10.1016/j.ijindorg.2018.09.001; José Luis Moraga-Gonzalez et al., “Consumer 

Search and Prices in the Automobile Market.” 90 Rev. Econ. Stud. 1394-1440 (2023), 

https://doi.org/10.1093/restud/rdac047. 

317 
 

 

 

the good), price adjustments serve to transfer welfare from one side of the market (e.g., 

dealers) to the other (e.g., consumers), which typically have no net effect on the outcome 

in a regulatory analysis.555 A decrease in vehicle prices, however, will likely also lead to 

an increase in the number sold as the supply is not fixed. As a result, this quantity 

expansion effect unambiguously increases welfare by reducing the deadweight loss that 

occurs when firms can charge prices that are marked up over marginal costs. 

3. Framework 

When a policy reduces the price of a good—either through a reduction in firm 

costs or, as in this case, a reduction in firm market power—the quantity of the good sold 

will typically increase. If a distortion exists in the market causing the product in question 

to be sold at a price above the marginal (social) cost of production (e.g., a tax, an 

externality, or a markup enabled by market power), this quantity expansion has the effect 

of reducing deadweight loss in that market. In the simple case where there is one good 

subject to the policy and that good has no close substitutes or complements, this welfare 

effect can be easily illustrated as in Figure 1. 

555 See Off. of Mgmt. & Budget, Exec. Off. of the President, “Circular A-4” 38 (2003), 

https://www.transportation.gov/sites/dot.gov/files/docs/OMB%20Circular%20No.%20A-4_0.pdf: “A 

regulation that restricts the supply of a good, causing its price to rise, produces a transfer from buyers to 

sellers. The net reduction in the total surplus (consumer plus producer) is a real cost to society, but the 

transfer from buyers to sellers resulting from a higher price is not a real cost since the net reduction 

automatically accounts for the transfer from buyers to sellers.” To the extent any price changes caused by 

the Rule result in transfers to consumers from dealers who were in violation of existing laws, such transfers 

would be consistent with the agency’s mission of providing redress to injured consumers and its history of 

doing so in enforcement actions. 

318 
1 

- po 

~ 

Q) 

0 p, ·;:: 

CL 

MC 

Quantity 

-- • • 1 Demand ._ , _, Status Quo OWL 

- Ex post OWL - Reduction in OWL 

The solid line reflects the demand for the good, where some quantity is purchased 

at a market price of p0 (point A), which is higher than marginal costs (MC). Because of 

this wedge between price and marginal costs, there is a reduction in welfare relative to 

the outcome where prices equal marginal costs; this deadweight loss is illustrated on the 

graph by the bordered triangle (ACD). Holding everything else constant, when prices fall 

from p0 to p1, this deadweight loss is reduced to some extent. Part of this increase in 

welfare will go to consumers, and part will go to producers. 

Imagine that this graph depicts the market for new automobiles. The Final Rule 

will increase price competition, thus reducing market power and shifting prices closer to 

marginal costs in the new automobile market. If this market satisfied the criteria for the 

simple case described herein (i.e., no close substitutes or complements), the only data we 

would need to estimate this change in total welfare would be the predicted change in 

319 
price, the predicted change in quantity (which can be calculated from an estimate of the 

slope or elasticity of the demand curve for new vehicles), and some information or 

assumption about the shape of the demand curve between points A and B. Of course, the 

new automobile market is closely linked to the used automobile market, so this simple 

picture does not capture the entire story. 

When a good has a close substitute (like used versus new vehicles), a price 

decrease for that good will cause demand for the related good to decrease. Also, in the 

case of automobiles, there is a long-run link between the new and used vehicle markets as 

a new vehicle purchased today becomes a potentially available used vehicle tomorrow. 

These linkages between the markets will dampen the demand response to any given price 

change in the primary market. In practice, this means that our estimates of the 

responsiveness of new vehicle purchases to price changes (i.e., the price elasticity of 

demand for new vehicles) will overstate the change in quantity resulting from a change in 

prices, because such estimates typically assume that all other prices remain constant. In 

addition, if there are distortions present in the market for related goods (i.e., used vehicles 

are also sold at a markup over marginal costs) only examining the welfare effect in the 

primary market will understate the total welfare effect, as there will be an analogous 

reduction in deadweight loss in the market for the related good. These linkages between 

markets for related goods become difficult to explain graphically. However, we have 

included in the technical appendix an algebraic derivation of the total welfare effect in 

new and used vehicle markets resulting from the finalization of the Rule. The resulting 

formula requires estimates of seven parameters in order to compute the welfare effect: 

two “policy elasticities” that reflect the responsiveness of quantities of new and used 

320 
vehicles sold to a change in prices in the new vehicle market after all adjustments have 

occurred in both markets, two baseline markups that represent the differences between 

prices and marginal costs for new and used vehicles, two quantities that reflect the 

aggregate costs of all new and used vehicles sold under the status quo, and the predicted 

change in prices due to the Rule. 

4. Estimation 

To obtain “policy elasticities” we reference a U.S. Environmental Protection 

Agency report titled “The Effects of New-Vehicle Price Changes on New- and UsedVehicle Markets and Scrappage” (“EPA Report”).556 In this report, the authors 

“developed a theoretical model of the relationships between new- and used-vehicle 

markets, scrappage, and total vehicle inventory” that allows for simulation of prices and 

quantities in these markets. The model is calibrated using a range of demand elasticity 

estimates from a review of the relevant literature on auto markets. The resulting 

simulations examine the long-run “steady state” of vehicle inventories and demand, 

accounting for cross-market demand effects as well as the endogenous supply of used 

vehicles resulting from changes in demand for new vehicles in previous periods. 

Importantly, among the outputs of their simulations are the “policy price elasticities” 

required by our welfare change formula. Our base case estimates of deadweight loss 

reduction use the long-run policy price elasticities that result from calibrating the model 

with the EPA Report’s intermediate values for the aggregate new vehicle and outside 

option demand elasticities, but we explore sensitivity to other calibration scenarios. 

556 Assmt. & Standards Div., Ofc. of Transp. & Air Quality, U.S. Env’t Prot. Agency, “The Effects of NewVehicle Price Changes on New- and Used-Vehicle Markets and Scrappage” (2021), 

https://cfpub.epa.gov/si/si_public_file_download.cfm?p_download_id=543273&Lab=OTAQ. 

321 
 

 

 

To obtain baseline estimates of new-vehicle markups, we refer to a recent paper 

entitled “The Evolution of Market Power in the US Automobile Industry” by Paul 

Grieco, Charles Murry, and Ali Yurukoglu.557 The authors specify a model of the U.S. 

new car industry to explore trends in concentration and markups. The authors find that 

markups in the industry have been falling over time generally, but have been fairly stable 

since the early 2000s.558 As our baseline, we use their most recent estimate of industry 

markups, which was 15% in 2018.559 While this estimate reflects markups over 

production costs by manufacturers and not markups over wholesale prices paid by 

dealers, it is the wedge between retail price and production cost that matters for welfare. 

As we are unaware of any publicly available data measuring used-vehicle markups, we 

explore two alternatives that we believe reflect the limiting cases: (1) used vehicles have 

no markup and (2) used-vehicle markups are the same as new-vehicle markups. 

We obtain both quantities of new- and used-vehicles sold as well as average 

prices from National Transportation Statistics, Table 1-17. As before, we exclude private 

party, fleet, and wholesale transactions. This exclusion is likely to bias our estimate of the 

total welfare effect downward because, unlike the time savings benefits of the Rule which 

may be restricted to dealer-consumer transactions, the price effects of the Rule are likely 

to carry over to private party and fleet transactions. Using these aggregate figures along 

557 See Paul L. E. Grieco et al., “The Evolution of Market Power in the US Automobile Industry” (2022), 

mimeo. 

558 Paul L. E. Grieco et al., “The Evolution of Market Power in the US Automobile Industry” 19 (2022), 

mimeo. 

559 Paul L. E. Grieco et al., “The Evolution of Market Power in the US Automobile Industry” 19 (2022), 

mimeo. 

322 
 

with an estimate of baseline markups, we estimate the aggregate cost of new- and usedvehicles sold in 2019.560 

Finally, based on the academic literature on search costs in the automobile 

market, the Rule is expected to reduce prices of new vehicles by reducing the markup that 

dealers are able to charge over marginal costs. We have identified two papers that 

empirically estimate the effect of price transparency or reduced search frictions on auto 

markups by specifying a structural model of the new-vehicle market, estimating the 

structural parameters, and then conducting counterfactual simulations where search 

frictions are reduced. Murry and Zhou (2020) simulate a full information counterfactual 

in the Ohio automobile market where search frictions are eliminated entirely and find that 

markups are reduced by $333.561 Moraga-Gonzalez et al. (2022) simulate a counterfactual 

in the Dutch automobile market where prices are observed prior to costly consumer 

search (i.e., visiting dealerships) and find that markups are reduced from 40.52% to 

32.59%.562 For our base case estimates, we use the smaller Murry and Zhou (2020) 

estimate, primarily because their model is estimated using U.S. data consistent with our 

setting. However, we note that Moraga-Gonzalez et al. offers evidence to suggest that 

significantly larger changes in markups may result from the Rule. 

Using these parameters obtained from the literature in combination, we 

implement the formula for the change in total welfare given in the technical appendix. 

For each market—new and used—the formula multiplies the policy price elasticity by the 

560 Aggregate cost of good i is equal to ሺ1 െ μ௜ሻ ൈ p௜ ൈ Q௜, where μ௜, p௜, and Q௜ are the markup, price, and 

quantity sold of good i, respectively. 561 Charles Murry & Yiyi Zhou, “Consumer Search and Automobile Dealer Colocation,” 66 Mgmt. Sci. 

1909-1934 (2020), https://doi.org/10.1287/mnsc.2019.3307.

562 José Luis Moraga-Gonzalez et al., “Consumer Search and Prices in the Automobile Market,” 90 Rev. 

Econ. Stud. 1394-1440 (2022), https://doi.org/10.1093/restud/rdac047. 

323 
 

 

percent change in price to get the percent change in quantity, and then multiplies this by 

the aggregate markup (as given by the price-cost markup563 at baseline times the 

aggregate cost of baseline transactions) to get the approximate change in total welfare per 

year. As an example, our base case estimate assumes a policy price elasticity of newvehicle demand of -0.25, a policy price elasticity of used-vehicle demand (with respect to 

new-vehicle price) of -0.04, and used car markups equal to new car markups (15%), 

resulting in the following calculation: 

dWሺθሻ/dθ dτே/dθ dτே/dθ

ൌ Xேτேε̂ ൅ X௎τ௎ε௎ே μ ேே 1 ൅ τே̂ 1 ൅ τே

= 18% × $334,115,569,664 × -0.25 × -1% + 18% × $371,555,893,248 × -0.04 × -1% 

= $152,143,550 per year 

This annual reduction in deadweight loss is then applied to each year of the 10-

year analysis period and discounted to the present to yield the total benefit. We highlight 

this base case (bolded in Table 2.4) but explore several scenarios that vary along two 

dimensions: (1) the “policy elasticity” of new- and used-vehicle demand with respect to 

the change in price and (2) the existence of baseline markups in the used-vehicle market. 

In Table 2.4, baseline markups for used vehicles vary across columns while the relevant 

policy price elasticities vary across rows: Scenario A corresponds to new-/used-vehicle 

elasticities of -0.14 and 0.01, Scenario B corresponds to new-/used-vehicle elasticities of 

-0.17 and -0.04, Scenario C corresponds to new-/used-vehicle elasticities of -0.23 and -

0.10, and Scenario E corresponds to new-/used-vehicle elasticities of -0.39 and -0.12. 

563 The baseline new vehicle markup estimate of 15% is defined as the ratio of the price-cost margin to unit 

price, i.e. ሺp௜ െ MC௜ሻ/p௜, and is sometimes referred to as the Lerner index. With knowledge of either price 

or marginal cost, this can be rearranged to express the price-cost markup, i.e. ሺp௜ െ MC௜ሻ/MC௜, which is 

used in the formula referenced here. 

324 
 

Table 2.4—Reduction in Deadweight Loss (in millions), 2024-2033 

No used-vehicle markups Symmetric markups 

Scenario Total @ 3% Total @ 7% Total @ 3% Total @ 7% 

discount discount discount discount 

A $ 617 $ 508 $ 568 $ 468 

B $ 749 $ 617 $ 945 $ 778 

C $ 1,014 $ 835 $ 1,504 $ 1,238 

D $ 1,102 $ 907 $ 1,298 $ 1,069 

E $ 1,719 $ 1,415 $ 2,307 $ 1,899 

Note: Benefits have been discounted to the present at both 3% and 7% rates. Scenarios 

correspond to those in Table 7-2 of “The Effects of New-Vehicle Price Changes on New- and 

Used-Vehicle Markets and Scrappage.” New-vehicle demand elasticities range from -0.4 

(Scenarios A, B, and C) to -0.8 (Scenario D) to -1.27 (Scenario E). Outside option elasticities 

vary from 0 (Scenario A) to -0.05 (Scenarios B and D) to -0.14 (Scenarios C and E). New/Used 

cross-price elasticities are set such that substitution away from new vehicles flows almost 

entirely to used-vehicles, with only small effects on the total number of vehicles. All scenarios 

hold scrappage elasticity fixed at -0.7. 

5. Benefits Related to More Transparent Negotiation 

An additional, albeit difficult to quantify, benefit is the reduction in discomfort 

and unpleasantness that consumers associate with negotiating motor vehicle transactions 

under the status quo. According to the 2020 Cox Automotive Car Buyer Journey study, 

filling out paperwork, negotiating vehicle price, and dealing with salespeople are three of 

the top four frustrations for consumers at car dealerships.564 Once the Rule is in effect, all 

three of these issues will be mitigated somewhat by the transparency facilitated by the 

Rule’s required disclosures and the time that consumers spend shopping and negotiating 

motor vehicle transactions will be less stressful. While we expect an increase in social 

welfare through this channel, due to a lack of data allowing this more qualitative benefit 

564 2020 Cox Automotive Car Buyer Journey, supra note 25, at 37. 

325 
 

 

to be translated into a quantitative gain, these benefits are left unquantified in the 

analysis. 

C. Estimated Costs of Final Rule 

In this section, we describe the costs of the Rule provisions as enumerated in SBP 

VII.A, provide quantitative estimates where possible, and describe costs that we can only 

assess qualitatively. Some industry commenters questioned the appropriateness of the 

data and assumptions used in the NPRM, including the discussion of costs in the 

preliminary regulatory analysis. The Commission used a variety of data sources in its 

calculations for the NPRM and in the Rule, including wage data from the Bureau of 

Labor Statistics Occupational Employment Statistics, establishment counts from U.S. 

Census County Business Patterns, transaction counts from National Transportation 

Statistics, and breakdowns of motor vehicle transactions (e.g., by financing, GAP 

agreement, F&I add-ons) from numerous industry sources. Where such data was not 

available (e.g., regarding time devoted to compliance tasks), the Commission made 

assumptions based on a review of previous regulatory analyses that featured similar 

requirements, with adjustments made based on our understanding of the particulars of 

motor vehicle dealer operations.565 

Throughout this section, the cost of employee time is monetized using wages 

obtained from the Bureau of Labor Statistics Industry-Specific Occupational 

Employment and Wage Estimates for Automobile Dealers.566 This is valid under the 

565 See, e.g., Off. of the Sec’y, Dep’t of Transp., Dkt. No. DOT-OST-2010-0140, “Enhancing Airline 

Passenger Protections II - Final Regulatory Analysis” (Apr. 20, 2011), 

https://www.regulations.gov/document/DOT-OST-2010-0140-2046. 566 Applicable wage rates for the Commission’s preliminary regulatory analysis, which was published in its 

NPRM, were based on data from the Bureau of Labor Statistics’ May 2020 National Industry-Specific 

326 
 

 

assumption that the opportunity cost of hours spent in compliance activities is hours spent 

in other productive activities, the social value of which is summarized by the employee’s 

wage.567 To the extent that these activities can be accomplished using time during which 

employees would otherwise be idle under the status quo, our estimates will overstate the 

welfare costs of the Rule. 

1. Prohibited Misrepresentations 

In its preliminary analysis, the Commission presented two scenarios that 

estimated the costs associated with the Rule provisions prohibiting misrepresentations. 

First, as all the misrepresentations prohibited by the Rule are material and therefore 

deceptive under Section 5 of the FTC Act, one scenario assumed that all motor vehicle 

dealers are compliant with Section 5 under the status quo and will therefore conduct no 

additional review. 

The second scenario allowed for costs incurred by firms because of the enhanced 

penalty associated with violating the Rule (relative to a de novo violation of Section 5 of 

the FTC Act) under the assumption that dealers may expend additional resources to 

ensure compliance. This “heightened compliance review” scenario assumed that each of 

the 46,525 dealers would have a professional spend 5 additional minutes reviewing each 

public-facing representation (assumed to be 150 per year on average). At a labor rate of 

Occupational Employment and Wage Estimates for NAICS industry category 441100—Automobile 

Dealers, which is available at https://www.bls.gov/oes/2020/may/oes_nat.htm. Labor rates in the present 

analysis have been updated based on data from the Bureau of Labor Statistics’ May 2022 National 

Industry-Specific Occupational Employment and Wage Estimates for NAICS industry category 441100— 

Automobile Dealers, which is available at https://www.bls.gov/oes/current/naics4_441100.htm. 567 This assumption would hold, for example, if both the product and labor markets in this industry were 

competitive. 

327 
$26.83 per hour for compliance officers employed at auto dealers, this cost was estimated 

to be $15.6 million per year. 

The Commission received comments about the appropriateness of the data and 

assumptions used to estimate the cost of complying with this provision of the Rule. The 

most specific criticism contended that the number of documents dealers would need to 

review would be “several times” the 150 assumed and that review would require at least 

15 minutes per document because “dealers typically do not fully control the advertising 

platforms they use given the direct involvement of the vehicle OEMs . . . and that of other 

third parties. Also, many dealers, and especially small business dealers do not employ 

internal compliance officers or attorneys who could conduct marketing reviews.”568 

As there is scant empirical evidence provided for these assertions, the 

Commission’s preliminary estimates remain unchanged (with the exception of updates to 

more recent data where available). However, we have conducted a sensitivity analysis in 

which all labor hours in the base case analysis are increased by an order of magnitude, in 

keeping with the spirit of the comments discussed; see SBP VII.G. As can be seen in the 

results from that analysis, the Rule clearly still generates net benefits for society. 

568 Comment of Nat’l Auto. Dealers Ass’n, Doc. No. FTC-2022-0046-8368 at 299-300. 

328 
 

 

 

 

 

Table 3.1—Estimated Compliance Costs for Prohibited Misrepresentations 

2024-2033 

Scenario 1—No Review

 No Cost $0 

Total Cost $0 

Scenario 2—Heightened Compliance 

Review

 Number of dealersa 47,271 

Number of documents per dealer per year 

Minutes of review per document 

Cost per hour of review 

150 

5 

$31.21 

Total Cost 3% discount rate $ 157,310,579 

Total Cost 7% discount rate $ 129,526,073 

Note: In scenarios with ongoing expenses, costs have been discounted to the present at both 3% 

and 7% rates. 

a County Business Patterns 2021, NAICS Code 4411 (Automobile Dealers, used and new) 

2. Required Disclosure of Offering Price in Advertisements and in 

Response to Inquiry 

The Rule requires all dealers to disclose an offering price in any advertisement 

that references an individual vehicle or in response to any consumer inquiry about an 

individual vehicle. For this provision, the Commission’s preliminary analysis presented 

two cost scenarios for dealers when complying with the Rule. First, because dealers 

already price all vehicles in inventory under the status quo, one scenario assumed that 

there would be no additional cost of complying with this provision. This scenario 

assumes that the initial pricing and any subsequent re-pricing of vehicles in inventory 

would take no (or minimal) additional time under the Rule. 

As with the prohibition on misrepresentations, the second scenario considers the 

enhanced penalty associated with violating the Rule and allows for costs given that 

329 
dealers may expend additional resources to ensure that the prices they disclose conform 

to the Rule’s definition of offering price, thus minimizing the risk of penalties should 

they fail to conform to that definition. The latter scenario assumed that, in the first year 

under the Rule, each of the 46,525 dealers would have a sales and marketing manager 

spend 8 hours reviewing their policies and procedures for determining the public-facing 

prices of vehicles in inventory. In addition, each dealer would employ a programmer for 

8 hours to update any automated systems that need to be updated in accordance with 

these new policies and procedures. At labor rates of $63.93 per hour and $28.90, 

respectively, this cost was estimated at $34.5 million. Both scenarios assume that, once 

calculated, the time required to train employees to include prices in response to consumer 

inquiries about specific vehicles will either be negligible or be subsumed by training 

costs included under other provisions. Finally, the time required to deliver the disclosures 

is also negligible, as prices are already typically disclosed in advertisements and in 

interactions with consumers under the status quo; the Rule just requires the price to 

conform to a specific definition. 

Some commenters raised issues with the assumptions regarding the time and 

resources necessary to determine compliant prices as well as deliver the required 

disclosures. The comments asserted that vehicle prices change frequently in response to 

market conditions, which would make it difficult to ensure that offering prices are 

accurate. Additionally, comments disputed the notion that delivery of the information to 

consumers in accordance with the Rule’s provisions would not be costly, in terms of 

employee time and consumer time. One comment suggested that “there would be an 

average of three Offering Price disclosures based there [sic] being an average of three 

330 
 

dealer-customer discussions regarding three specific motor vehicles, per transaction,”569 

asserting that the frequency of these disclosures would have implications for the cost 

estimates that had not been considered in the preliminary analysis. 

If indeed the Rule required significant additional employee time spent per 

transaction, that would have implications for the cost estimates. However, as previously 

discussed, it is the understanding of the Commission that virtually all dealer-customer 

discussions regarding specific motor vehicles that occur under the status quo already 

include time devoted to a discussion of the vehicle’s price. The only change under the 

Rule is that, within that price discussion an offering price (as defined by the Rule) must 

be provided. The cost of determining this price is included under the second scenario in 

our preliminary analysis, and sensitivity to the specific assumptions of that scenario have 

been explored in the Appendix. The results from our analysis indicate that the Rule 

generates net benefits for society under a wide range of plausible assumptions about the 

inputs to our cost calculations. 

Commenters also raised concerns about the potential for behavioral adjustment by 

dealerships, choosing to refrain from advertising individual vehicles or responding to 

consumer inquiries about specific vehicles and thus increasing consumers’ costs of 

search. The Commission, however, has not been presented with compelling evidence that 

dealers will forego competition with other dealers on price, choosing instead to default to 

advertising a focal price (such as MSRP). Indeed, the Commission’s offering price 

disclosure requirement is similar to existing requirements in a number of States, and the 

Commission is not aware of any such behavioral adjustments (e.g., eliminating prices 

569 Comment of Nat’l Auto. Dealers Ass’n, Doc. No. FTC-2022-0046-8368 at 300. 

331 
 

 

 

 

 

 

 

 

 

from advertisements, refusing to respond to consumer inquiries, etc.) having occurred in 

those States. As a result, the Commission’s preliminary estimates remain unchanged 

(with the exception of updates to more recent data where available). 

Table 3.2—Estimated Compliance Costs for Offering Price Disclosures 

2024 

Scenario 1—No Review

 No Cost $0 

Total Cost $0 

Scenario 2—Calculation of Offering Price

 Number of dealersa

 Pricing hours per dealer 

Cost per hour of pricing 

Programming hours per dealer 

Cost per hour of programming 

Total Cost $ 

47,271 

8 

$80.19 

8 

$40.24 

45,542,772 

a County Business Patterns 2021, NAICS Code 4411 (Automobile Dealers, used and new) 

3. Disclosure of Add-on List and Associated Prices 

In the NPRM, the proposed rule would have required all dealers to disclose an 

itemized menu of all optional add-on products and services along with prices, or price 

ranges, on all dealer-operated websites, online services, and mobile applications as well 

as at all dealership locations. Various commenters expressed concern that the add-on list 

requirement would have been too complex and potentially confusing, as discussed in the 

paragraph-by-paragraph analysis in SBP III.D.2(b). As a result, the Commission has 

determined not to finalize § 463.4(b) of the proposed rule. While the preliminary analysis 

estimated compliance costs between approximately $42 million and $43 million for the 

disclosure of add-on lists and associated prices, those costs are not included in the final 

analysis. 

332 
 

4. Required Disclosure of Total of Payments for Financing/Leasing 

Transactions 

The Rule requires all dealers to disclose, when representing a monthly payment, 

the total of payments for the financing or leasing contract. In addition, in any comparison 

of two payment options with different monthly payments, the dealer is required to 

disclose that the option with the lower monthly payment features a higher total of 

payments (if true). 

The Commission’s preliminary analysis presented two cost scenarios, 

corresponding to different methods by which dealers may choose to comply with the 

Rule. In the first scenario, we assumed that dealers would incur a one-time, upfront cost 

of both designing the required disclosures and informing associates of their obligations to 

provide the disclosures. Importantly, ongoing costs on a per transaction basis were 

assumed to be negligible, reflecting a compliance regime where dealers already generate 

the required information during the normal course of business and must only convey it to 

consumers at an appropriate point in the transaction. In the second scenario, we assumed 

that dealers incur an additional ongoing cost per financed or leased transaction in order to 

communicate the required disclosures to consumers in writing, reflecting a compliance 

regime where dealers find it necessary to maintain a documentary record of compliance 

with the Rule.570 

The upfront costs (and total costs under Scenario 1) of complying with this 

provision as estimated by the preliminary analysis were limited to 8 hours spent by a 

570 While disclosures of this nature are already required to be present in the financing contract by the Truth 

in Lending Act (TILA), the Rule would change the timing of a subset of those disclosures. As a result, the 

dealer may have to develop and deliver a separate document in the event that the standard TILA disclosure 

has not yet been generated at the point where disclosure is required under the Rule. 

333 
 

compliance manager (at a rate of $26.83) on the creation of a template disclosure script 

that contains the required information and informing sales staff of their obligations to 

deliver the disclosure at an appropriate time during the transaction. This cost was 

estimated at $10 million. 

The preliminary estimates of additional ongoing costs—as in Scenario 2— 

included 2 minutes of sales associate time per financed/leased transaction (at a rate of 

$21.84) spent on the process of populating and delivering a printed version of the 

disclosure, with $0.15 per disclosure spent on printing costs. The total additional cost 

under this scenario is estimated at $213.4 to $249.5 million. 

Comments from industry groups asserted that the preliminary analysis 

underestimated training costs and that it would be difficult to determine the total of 

payments for financing prior to knowing the details of the transaction. One comment 

contended that “these mandates . . . necessarily would involve significant annual training 

requirements for new employees given that . . . the average dealer experiences an annual 

sales consultant turnover rate of 67%.”571 The comment further asserted that dealers 

cannot determine the total cost of a financing or leasing agreement without knowing the 

terms for which consumers qualify and what terms they want. The comment argued that 

as a result, only the scenario with costs incurred on a per transaction basis should be 

considered. Finally, the comment argued that the per-transaction costs in Scenario 2 are 

too low, both because the Commission underestimates the time required to deliver, 

discuss, and review disclosures and because multiple disclosures would have to be made 

per transaction (as terms are changed). 

571 Comment of Nat’l Auto Dealers Ass’n, Doc. No. FTC-2022-0046-8368 at 301. 

334 
These comments misunderstand the Commission’s analysis with respect to the 

costs of complying with this provision. Scenario 1 does not anticipate that the dealer 

presents a consumer with the total of payments for a financing or leasing contract at the 

outset of the transaction. It requires only that, at the point where the dealer engages in 

discussions regarding different monthly payments for financing or leasing arrangements, 

the information that must be disclosed (i.e., the total of payments and a comparison of 

these totals across differing monthly payments) is already available to the dealer under 

the status quo. The only additional cost incurred per transaction would be the delivery of 

this information to the consumer (the determination of which is contemplated in the costs 

estimated under Scenario 1). 

With respect to the comment regarding insufficient allowance for training costs in 

light of employee churn in the industry, the Commission has determined this to be a valid 

critique of the preliminary analysis. As a result, the final regulatory analysis includes an 

additional ongoing cost for both Scenarios. This ongoing cost includes training for sales 

staff and budgets 1 hour of training for each of the 417,110 sales and related employees 

across the industry, at an (average) cost of $29.43 per hour. The resulting additional 

ongoing costs in both scenarios amounts to $12.3 million per year. Further, as discussed 

in a previous section, the final analysis excludes private party, fleet, and wholesale 

transactions.572 The remainder of the Commission’s preliminary estimates remain 

unchanged (with the exception of updates to more recent data where available). Concerns 

572 Without cross-tabulations of fleet sales and sales involving financing, we assume that these are 

independent such that the fraction of covered transactions involving financing is equal to the fraction of 

covered transaction times the fraction of financed transactions. 

335 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

about underestimates of the time required to review disclosures on a per-transaction basis 

are addressed by the Commission’s sensitivity analyses conducted in the Appendix. 

Table 3.4—Estimated Compliance Costs for Financing Costs 

2024 only 2024-2033 

Scenario 1—Creation of disclosure and 

training only

 Upfront costs

 Number of dealers 47,271 

 Compliance manager hours per dealer 

 Cost per hour of disclosure creation 

8 

$31.21 

Subtotal $ 11,802,623

 Ongoing costs

 Number of sales and related employeesa

 Training hours per employee 

Cost per hour of training 

417,110 

1 

$29.43 

Subtotal

 3% discount rate 

7% discount rate 

$ 

$ 

104,712,908

86,218,307 

Scenario 1—Total Cost 

3% discount rate 

7% discount rate 

$ 

$ 

116,515,532 

98,020,931 

Scenario 2—Disclosures per transaction

 Covered new vehicle sales per yearb

 % New vehicle sales involving financingc

10,343,319 

81% 

Covered used vehicle sales per year

 % Used vehicle sales involving financing 

21,219,640 

35% 

Covered new vehicle leases per year

 Total transactions involving monthly 

payments/financing

 Disclosure minutes per transaction 

Cost per hour of disclosure 

Printing cost per disclosure 

3,423,294 

19,228,256 

2 

$28.41 

$ 0.15 

Subtotal 3% discount rate $ 179,930,957 

336 
 

 

 

 

Table 3.4—Estimated Compliance Costs for Financing Costs 

7% discount rate $ 148,151,196 

Total Cost 

3% discount rate 

7% discount rate 

$ 

$ 

296,446,489 

246,172,126 

Note: In scenarios with ongoing expenses, costs have been discounted to the present at both 3% and 7% rates. 

a Bureau of Labor Statistics Industry-Specific Occupational Employment and Wage Estimates for NAICS Code 

441100 - Automobile Dealers, May 2021 

b For total volume, National Transportation Statistics Table 1-17. For retail/non-fleet fraction, Edmunds 

Automotive Industry Trends 2020 (for new vehicle) and Cox Automotive via Automotive News (for used 

vehicles). 

c Melinda Zabritski, Experian Info. Sols. Inc., “State of the Automotive Finance Market Q4 2020” 

5. Prohibition on Charging for Add-ons that Provide No Benefit 

The Rule prohibits dealers from charging for add-on products or services from 

which the targeted consumer would not benefit. Compliance with this provision will 

require dealers to develop policies and transaction-level rules about when consumers can 

be charged for add-on products and services. The Rule as proposed in the NPRM also 

would have included additional provisions relating to add-ons that have not been 

finalized. These included a prohibition on charging for optional add-on products or 

services unless dealership employees made a number of disclosures at various points 

before finalizing a transaction. This provision would have required each dealer to design 

form disclosures, create a system for populating these forms, train their sales staff on the 

disclosure requirements, and provide the disclosures in writing, with the appropriate 

information filled in, to each consumer prior to completing the transaction. 

The Commission’s preliminary analysis relating to the cost of complying with 

these disclosure requirements budgeted for 8 hours of compliance manager time (at a cost 

of $26.83 per hour) and 4 hours of sales manager time (at a cost of $63.93 per hour) to 

design disclosure forms, and an additional 8 hours of programmer time (at a cost of 

$28.90) to create a system to populate these forms. The preliminary analysis also 

337 
budgeted for 2 minutes of sales associate time (at a rate of $21.84 per hour) and $0.11 in 

printing/electronic delivery costs per disclosure, with the number of disclosures 

determined by the fraction of transactions involving optional add-ons and/or financing. 

In response to numerous comments, the Commission has determined not to 

finalize the proposal in § 463.5(b), which would have required the delivery of written 

disclosures and acknowledgement via signature of those disclosures by consumers. 

Various commenters were concerned that the add-on disclosures would add documents 

and time to the transaction. In response to these comments, the Commission has 

determined to omit what would have been the only provision affirmatively requiring the 

dealer and consumer to review additional documentation during a transaction. As a result, 

while the preliminary analysis estimated compliance costs between approximately $883 

million and $1 billion for the disclosure of total costs for cash and financed transactions 

with optional add-on products, the cost estimate in the final analysis is on the order of 

one-tenth to one-half of the preliminary estimate (depending on the scenario). 

As a result, the Commission has substantially revised the cost analysis in this 

section. First, the Commission assumes that each dealer will employ 8 hours of 

compliance manager time (at a rate of $31.21) and 8 hours of sales manager time (at a 

rate of $80.19) in the first year under the Rule, to cull add-ons with no value from their 

offerings and develop policies regarding when certain add-ons may or may not be sold. 

Second, the Commission budgets for 1 hour of training per year for each of the 417,110 

sales and related employees across the industry, to apprise them of these policies and 

their obligations under the Rule. Finally, the Commission includes a second cost scenario 

in which dealers will choose to deliver one itemized disclosure to each customer before 

338 
 

 

 

 

 

 

 

 

 

 

the finalization of each transaction. Although this is not required under the Final Rule, 

dealers may wish to have documentation of compliance with the provisions of the Rule. 

As in the preliminary analysis, the Commission assumes that each dealer will employ 8 

hours of compliance manager time and 4 hours of sales manager time creating this 

disclosure and 8 hours of programmer time creating a system to populate these forms 

when provided inputs by sales staff. The same occupational wage data have been used, 

but the rates have been updated to match the most recent data available. We further 

assume, as in the preliminary analysis, that sales staff will spend 2 minutes per disclosure 

(at a rate of $28.41 per hour) updating, printing, and delivering these forms to consumers 

and that the physical costs of delivering the disclosure are roughly $.11 per disclosure.573 

Finally, as discussed in a previous section, the final analysis excludes private party, fleet, 

and wholesale transactions. 

Table 3.5—Estimated Compliance Costs for Prohibition on Certain Add-ons 

2024 only 2024-2033 

Scenario 1— Policies and Training 

Only

 Upfront costs

 Number of dealers 47,271 

 Compliance manager hours per dealer 

Cost per hour of compliance manager 

Sales manager hours per dealer 

Cost per hour of sales manager 

8 

$31.21 

8 

$80.19 

Subtotal $ 42,127,915 

573 The physical costs are $.15 per paper disclosure and $.02 per electronic disclosure, assuming that 27% 

are made electronically. This assumption is informed by a consumer survey that indicates 73% of 

consumers with motor vehicles prefer to receive registration renewal notices by mail as opposed to 

electronically. See Consumer Action, “Your opinion wanted: Paper vs. electronic bills, statements and other 

communications” 4 (2018-2019), https://www.consumeraction.org/downloads/Consumer_Action_Paper_v_electronic_survey.pdf (showing that 1800 of 2456 

respondents who owned and needed to periodically register a motor vehicle preferred mail notices). 

339 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 3.5—Estimated Compliance Costs for Prohibition on Certain Add-ons 

Ongoing costs

 Number of sales and related 417,110 

employees 

Training hours per employee 1 

Cost per hour of training $29.43 

Scenario 1—Subtotal 

3% discount rate $ 146,840,824 

7% discount rate $ 128,346,223 

Scenario 2—Disclosure creation and 

delivery

 Number of dealers 47,271 

 Compliance manager hours per dealer 

Cost per hour of compliance manager 

Sales manager hours per dealer 

Cost per hour of sales manager 

Programmer hours per dealer 

Cost per hour of programmer 

8 

$31.21 

4 

$80.19 

8 

$40.24 

Subtotal $ 42,182,750 

Disclosure delivery (per transaction)

 New vehicle sales per year

 Used vehicle sales per year

 Minutes per disclosure 

Cost per hour of disclosure 

Physical costs per disclosure 

10,343,319 

21,219,640 

2 

$28.41 

$ 0.11 

Subtotal 

3% discount rate 

7% discount rate 

$ 

$ 

285,904,302

235,407,319 

Scenario 2—Total Cost 

3% discount rate 

7% discount rate 

$ 

$ 

474,927,875 

405,936,291 

Note: In scenarios with ongoing expenses, costs have been discounted to the present at both 3% and 7% rates. 

340 
6. Requirement to Obtain Express, Informed Consent Before Any 

Charges 

The Rule requires dealers to obtain express, informed consent before charging any 

consumer for any product or service in association with the sale, financing, or lease of a 

vehicle. Because we presume that all dealers who are complying with the law currently 

have policies in place to prevent charges without consent, we assume that there will be no 

additional costs imposed by this provision. 

7. Recordkeeping 

The Final Rule requires dealers to retain records of all documents pertaining to 

Rule compliance. These recordkeeping requirements include: 

 Copies of all materially different marketing materials, sales scripts, and training 

materials that discuss sales prices and financing or lease terms. 

 Records demonstrating that all add-ons charged for meet the requirements stated 

in the Rule, including calculations of loan-to-value ratios in contracts including 

GAP agreements. 

 Copies of all purchase orders, financing and lease contracts signed by the 

consumer (whether or not final approval is received), and all written 

communications with any consumer who signs a purchase order or financing or 

lease contract. 

 Copies of all written consumer complaints, inquiries related to add-ons, and 

inquiries and responses about individual vehicles. 

Most of these documents are already produced in the normal course of business 

under the status quo, or the costs of creating them have already been accounted for in 

previous sections. In its preliminary analysis, the Commission assumed that each dealer 

would incur an upfront cost, employing 8 hours of programmer time, 5 hours of clerical 

time, 1 hour of sales manager time, and 1 hour of compliance officer time, at hourly rates 

of $28.90, $18.37, $63.93, and $26.83, respectively, in order to upgrade their systems and 

341 
 

 

 

create the templates necessary to accommodate retention of all relevant materials. The 

Commission also assumed that each dealer would employ 1 additional minute of sales 

staff time per transaction to populate forms and store relevant materials. 

One industry commenter contended that the proposed rule would impose 

substantial and costly recordkeeping mandates, citing primarily the various channels 

through which dealers would be required to capture and retain communications. The 

Commission believes the recordkeeping requirements strike an appropriate balance, 

requiring the retention of materials needed to allow effective enforcement while being 

mindful of dealer burden. In addition, the recordkeeping requirements are similar to 

analogous requirements in other Commission disclosure rules, as tailored to individual 

industries and markets.574 

As such, the Commission’s final analysis retains its preliminary estimates— 

appropriately updated where more recent data were available—with a few changes. First, 

we made adjustments to the cost estimates associated with the required loan-to-value 

calculations for all transactions with GAP agreements. Based on a comment from one 

industry group, we revised down the share of covered new and used vehicle sales with a 

GAP agreement to 17%.575 As in the preliminary analysis, for these transactions sales 

staff will spend an additional minute to generate and store the relevant calculations. As 

discussed in a previous section, the final analysis excludes private party, fleet, and 

wholesale transactions. In addition, the expansion of the volume of records that dealers 

574 16 CFR 310.5 (Telemarketing Sales Rule); 16 CFR 437.7 (Business Opportunity Rule); 16 CFR 453.6 

(Funeral Industry Practices Rule); 16 CFR 301.41 (Fur Products Labeling). 

575 Comment of Nat’l Auto. Dealers Ass’n, Doc. No. FTC-2022-0046-8368 at 12 n.43 (indicating 15.3% 

(18.2%) for new (used) vehicles). These rates were weighted by transactions counts to calculate an overall 

rate of 17%. 

342 
 

 

 

 

are required to retain and manage will likely require investment in additional IT systems 

and hardware, which was left unquantified in the preliminary analysis. After additional 

research, the Commission estimates that each dealer will need to spend approximately 

$300 per year on storage (either on premises or in the cloud) to house the records that the 

Rule requires them to maintain. Based on a review of the transaction records we have 

received from dealers through investigations, this amount is likely to be more than 

sufficient for compliance.576 

576 Our review of dealer transaction records suggests that a typical transaction generates 3.4 MB of data 

under the status quo. Given the average number of transactions per dealer, this suggests that storing all 

these records would require dedicated space of roughly 4.2 GB per year. With a two-year retention 

window, this corresponds to 8.4 GB of storage at any given time. We estimate that the (annual) amount 

budgeted here should be sufficient to maintain at least 1 TB of storage—either on premises or through a 

cloud storage vendor—which is sufficient for more than 100 times the data storage capacity necessary to 

retain all transaction files generated by a typical dealership in a year under the status quo. The Commission 

anticipates that this amount of data storage capacity will be more than sufficient to also allow for dealers to 

keep any necessary records of correspondence with consumers who ultimately do not complete transactions 

at the dealership. 

343 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 3.6—Estimated Compliance Costs for Recordkeeping 

2024 only 2024-2033 

Updating systems

 Number of dealers 47,271 

Programming hours per dealer 8 

Cost per hour of programming $40.24 

Clerical hours per dealer 5 

Cost per hour of clerical work $20.16 

Sales manager hours per dealer 1 

Cost per hour of sales manager $80.19 

review

 Compliance manager hours per 1 

dealer

 Cost per hour of compliance $31.21 

review

 Subtotal $ 25,248,387 

Hardware and Storage (per year)

 Number of dealers 47,271 

Cost of hardware/storage $300 

Recordkeeping (per transaction)

 Number of covered motor vehicle 31,562,959 

sales 

% of sales with GAP agreementa 17% 

Number of motor vehicle sales 5,444,502 

with GAP agreement 

 Sales staff minutes per transaction 1 

Cost per hour of recordkeeping $28.41 

Subtotal 3% discount rate $ 270,444,391

 Subtotal 7% discount rate $ 222,677,967 

Total Cost 3% discount rate $ 295,692,777 

Total Cost 7% discount rate $ 247,926,354 

Note: In scenarios with ongoing expenses, costs have been discounted to the present at both 3% and 7% 

rates. 

a Comment of Nat’l Auto. Dealers Ass’n, Doc. No. FTC-2022-0046-8368 at 12 n.43. 

344 
 

D. Other Impacts of Final Rule 

As the status quo in this industry features consumer search frictions, shrouded 

prices, deception, and obfuscation, dealers likely charge higher prices for a number of 

products and services than could be supported once the Rule is in effect. SBP VII.B 

discussed the Commission’s expectation that prices are likely to adjust in response to the 

transparency facilitated by the Rule, and quantified the benefits that result when vehicle 

quantities increase in response to a more transparent and less deceptive equilibrium. The 

price changes in the new vehicle market discussed in SBP VII.B will also have the effect 

of transferring $3.4 billion per year from dealers whose conduct under the status quo 

would not have complied with the Rule to consumers. In addition, other prices may be 

impacted by the Rule, such as used vehicle prices and add-on prices. As we have 

insufficient data to predict these price effects, neither the transfers associated with these 

potential price changes nor the resulting quantity adjustments and deadweight loss 

reductions are quantified in the current analysis. Finally, it may be the case that enhanced 

transparency of the Rule leads to fewer of certain types of transactions relative to the 

status quo. Recent evidence suggests that price shrouding of the kind that is prevalent in 

the motor vehicle market results in consumers spending more than they would 

otherwise.577 We expect that this phenomenon may extend especially to the motor vehicle 

add-on market, where the Commission has compiled substantial evidence that individuals 

frequently inadvertently purchase add-ons that they did not want and ultimately will not 

577 See Tom Blake et al., “Price Salience and Product Choice,” 40 Mktg. Sci. 619-36 (2021), 

https://doi.org/10.1287/mksc.2020.1261. 

345 
 

 

 

 

 

use.578 While much of this effect may ultimately be transfers, we reiterate that to the 

extent they represent transfers from dishonest dealers to consumers, this may be 

considered a benefit of the Rule. 

In addition, deceptive practices by dishonest dealers lead consumers to engage 

with those dealers instead of honest dealerships. Once the Rule is in effect, some business 

that would otherwise have gone to dealers using bait-and-switch tactics or deceptive door 

opening advertisements will now go to honest dealerships. Again, assuming that the costs 

of the firms are similar, any one-for-one diversion of sales from one set of businesses to 

another is generally characterized as a transfer under OMB guidelines. However, in this 

case, it would represent a transfer from the set of dishonest dealers to honest dealers, 

which may weigh differently if profits from law violations are not counted towards social 

welfare in the regulatory analysis. 

578 See Nat’l Consumer Law Ctr., “Auto Add-ons Add Up: How Dealer Discretion Drives Excessive, 

Inconsistent, and Discriminatory Pricing” (Oct. 1, 2017), https://www.nclc.org/images/pdf/car_sales/reportauto-add-on.pdf; Consumers for Auto Reliability and Safety, Comment Letter on Motor Vehicle 

Roundtables, Project No. P104811 at 2-3 (Apr. 1, 2012), 

https://www.ftc.gov/sites/default/files/documents/public_comments/public-roundtables-protectingconsumers-sale-and-leasing-motor-vehicles-project-no.p104811-00108/00108-82875.pdf (citing a U.S. 

Department of Defense data call summary that found that the vast majority of military counselors have 

clients with auto financing problems and cited “loan packing” and yo-yo financing as the most frequent 

auto lending abuses affecting servicemembers); Adam J. Levitin, “The Fast and the Usurious: Putting the 

Brakes on Auto Lending Abuses,” 108 Geo. L.J. 1257, 1265-66 (2020), 

https://www.law.georgetown.edu/georgetown-law-journal/wpcontent/uploads/sites/26/2020/05/Levitin_The-Fast-and-the-Usurious-Putting-the-Brakes-on-AutoLending-Abuses.pdf (discussing “loan packing” as the sale of add-on products that are falsely represented 

as being required in order to obtain financing.); Complaint ¶¶ 12-19, Fed. Trade Comm’n v. Liberty 

Chevrolet, Inc., No. 1:20-cv-03945 (S.D.N.Y. May 21, 2020) (alleging deceptive and unauthorized add-on 

charges in consumers’ transactions); Complaint ¶¶ 59-64, Fed. Trade. Comm’n v. Universal City Nissan, 

No. 2:16-cv-07329 (C.D. Cal. Sept. 29, 2016) (alleging deceptive and unauthorized add-on charges in 

consumers’ transactions); Complaint ¶¶ 6, 9, TT of Longwood, Inc., No. C-4531 (F.T.C. July 2, 2015) 

(alleging misrepresentations regarding prices for added features); see also Auto Buyer Study, supra note 

25, at 14 (“Several participants who thought that they had not purchased add-ons, or that the add-ons were 

included at no additional charge, were surprised to learn, when going through the paperwork, that they had 

in fact paid extra for add-ons. This is consistent with consumers’ experiencing fatigue during the buying 

process or confusion with a financially complex transaction, but would also be consistent with dealer 

misrepresentations.”). 

346 
 E. Conclusion 

The Commission has attempted to catalog and quantify the incremental benefits 

and costs of the provisions included in the Final Rule. Extrapolating these benefits over 

the 10-year assessment period and discounting to the present provides an estimate of the 

present value for total benefits and costs of the Rule, with the difference—net benefits— 

providing one measure of the value of regulation. 

Using our base case estimates, the present value of quantified benefits for 

consumers from the Rule’s requirements over a 10-year period using a 7% discount rate 

is estimated at $13.4 billion. The present value of quantified costs for covered motor 

vehicle dealers of complying with the Rule’s requirements over a 10-year period using a 

7% discount rate is estimated at $1.1 billion. This generates an estimate of the present 

value of quantified net benefits equal to $12.3 billion using a discount rate of 7%. Using 

the best (or worst) case assumptions discussed in the preceding analysis results in net 

benefits of $21.2 billion (or $5.5 billion) using a discount rate of 7%. 

Given that we expect unquantified benefits to outweigh unquantified costs for this 

Rule, this regulatory analysis indicates that adoption of the Rule would result in benefits 

to the public that outweigh the costs. 

347 
 

 

 

 

 

Present Value of Net Benefits (in millions), 2024-2033 

Low Estimate Base Case High Estimate 

3% 

Discount 

Rate 

7% 

Discount 

Rate 

3% 

Discount 

Rate 

7% 

Discount 

Rate 

3% 

Discount 

Rate 

7% 

Discount 

Rate 

Benefits

 Time Savings $7,463 $6,145 $14,926 $12,290 $24,036 $19,790 

Deadweight 

Loss Reduction 

$568 $468 $1,298 $1,069 $2,307 $1,899 

Total Benefits $8,031 $6,613 $16,224 $13,359 $26,343 $21,690 

Costs

 Finance/Lease 

Total of Payments 

Disclosure 

$296 $246 $296 $246 $117 $98 

Offering Price 

Disclosure 

$46 $46 $46 $46 $0 $0 

Prohibition Re 

Certain Add-ons 

& Express, 

Informed Consent 

$475 $406 $475 $406 $147 $128 

Prohibition on 

Misrepresentation 

s 

$157 $130 $157 $130 $0 $0 

Recordkeeping $296 $248 $296 $248 $296 $248 

Total Costs $1,270 $1,075 $1,270 $1,075 $559 $474 

Net Benefits $6,761 $5,538 $14,954 $12,284 $25,784 $21,216 

Note: “Low Estimate” reflects all lowest benefit estimates and high cost scenarios and “High 

Estimate” reflects all highest benefit estimates and low cost scenarios. “Base Case” reflects 

base case benefit estimates and high cost scenarios. Not all impacts can be quantified; 

estimates only reflect quantified costs and benefits. 

348 
 F. Appendix: Derivation of Deadweight Loss Reduction 

The derivation of the formula for the reduction in deadweight loss from the Rule 

follows from “Sufficient Statistics Revisited” by Henrik Kleven.579 In the source article, 

the wedge between costs and prices is tax rates, but here we consider producer markups; 

the fundamental principles are unchanged. We have a mass of consumers i with utility 

function u௜

൫x଴

௜ , xே௜ , x௎௜ ൯ over new cars, used cars, and the numeraire (good 0) who face 

the following budget constraint: 

෍ሺ1 ൅ τ௝

௜

ሻx௝

௜ ൌ Y௜

௝

given markups τ௝

௜

 for good j and consumer i and income Y௜ for consumer i. Pre-markup 

prices are normalized to one so x௝

௜

 is the cost of consumer i’s purchase of good j. Total 

profits from the consumption of consumer i are T௜ ൌ ∑௝ τ௝

௜ x௝௜

. 

Define a policy to be evaluated as θ. Total welfare is defined as: 

Wሺθሻ ൌනv௜

ሺθሻ di ൅ μ න T௜ሺθሻ di

௜ ௜

Here, v௜ሺθሻ is the indirect utility function for consumer i, so the first term is 

consumer surplus and the second term is producer surplus, while μ is the value of a dollar 

of profit. The change in welfare from policy θ, translated into dollars by dividing by μ, 

is: 

dWሺθሻ/dθ ൌ න dT௜ ௜

μ ௜ dθ െ ∂T∂θ di

579 See Henrik J. Kleven, “Sufficient Statistics Revisited.” 13 Annual Rev. Econ. 515-38. (2021), 

https://doi.org/10.1146/annurev-economics-060220-023547. 

349 

steady-state. Computing this formula requires estimates of seven parameters: two “policy 

price elasticities” that reflect the responsiveness of quantities of new and used vehicles 

sold to a change in prices in the new vehicle market after all adjustments have occurred in 

both markets, two baseline markups that represent the differences between prices and 

marginal costs for new/used vehicles, two quantities that reflect the aggregate cost of all 

new/used vehicles sold under the status quo, and the predicted change in prices due to the 

Rule. Calibration of these parameters is discussed in the main text. 

G. Appendix: Uncertainty Analysis 

While the main text uses alternative assumptions to explore sensitivity to a 

number of discrete scenarios, in this appendix we allow variation in most of the 

assumptions that underlie our model. This Monte Carlo analysis procedure allows us to 

more fully characterize the uncertainty around our central estimate of net benefits, under 

the assumption that our basic model is specified correctly. Most of the assumptions in our 

analysis refer to amounts of time, either amounts of time dealerships employees must 

spend on a compliance task or amounts of time that consumers save on various activities 

related to the automobile shopping process. Deviations for these assumptions are centered 

on the parameters used in the main text. Elsewhere, as with assumptions regarding 

fractions or proportions, our base case is often an extreme case (i.e., 0 or 1). In these 

cases, deviations are typically not centered on the base case and are allowed to vary 

across the whole range as dictated by the parameter. Still, we can expect the average 

results from this sensitivity analysis to be similar to the result in the main text. The object 

of interest here is the distribution of estimates, which indicates the expected variation in 

351 
net benefits if the true parameters deviate from our predictions (with errors of the form 

modeled). 

For most assumptions, we draw from a symmetric, triangular distribution around 

the base case assumption with a specified upper and lower bound. In this distribution, the 

probability of drawing particular parameter value increases linearly from the lower bound 

to the base case assumption before decreasing linearly to the upper bound, such that the 

area inscribed by the triangle is equal to 1. We emphasize this distribution because it is a 

parsimonious way to incorporate variation in parameter values over a finite range and 

incorporates our preferred estimates as the most likely outcome. For a few parameters 

where we think it is appropriate to de-emphasize the main estimate parameter, we draw 

from a uniform distribution. Importantly, all draws are independent; there is no 

correlation between the deviations drawn in any given Monte Carlo trial. An additional 

sensitivity analysis considers a situation where our errors across all labor time parameters 

are correlated; specifically, that all of our estimates of the time required for compliance 

tasks are 1/10th of the true time required. 

To incorporate uncertainty in time savings benefits to consumers, we allow the 

time saved by digital consumers to vary by up to ten minutes more or less than the main 

analysis parameters. The share of these time savings received by non-digital consumers 

under the Rule is modeled as uniformly distributed between zero (no savings) and one 

(savings equivalent to what digital consumers receive in the status quo). 

352 
Table A.1—Alternative Parameters: Benefits of Time Savings for Completed 

Transactions 

Base Case Monte Carlo 

Parameter Modeled Distribution Distribution Parameter Value Distribution Lower Bound Upper Bound 

Price Negotiation 43 Triangular 33 53 Time Savings 

Add-on 

Negotiation Time 33 Triangular 23 43 

Savings 

Paperwork Time 45 Triangular 35 55 Savings 

Trade-In 

Negotiation Time 26 Triangular 16 36 

Savings 

Fraction of Price 

Time Savings 1.0 Uniform 0 1 

Under Rule 

Fraction of Addon Time Savings 0.5 Uniform 0 1 

Under Rule 

Fraction of 

Paperwork Time 0.5 Uniform 0 1 Savings Under 

Rule 

Fraction of TradeIn Time Savings 0.0 Uniform 0 1 

Under Rule 

For the deadweight loss reduction component of benefits, we explore sensitivity 

only to baseline used-vehicle markups, allowing them to vary from 0 to the baseline newvehicle markup of 15%. In the main text, we explore a number of scenarios for 

deadweight loss reduction corresponding to greater and lesser demand elasticities as well. 

353 
 

 

The following tables describe the distributions we model for cost parameters in 

the simulation exercise. All cost parameters are assumed to be drawn from triangular 

distributions. The tables follow the same order as the discussion in the main text. 

Table A.2—Alternative Parameters: Costs of Misrepresentation Prohibition 

Compliance 

Base Case Monte Carlo 

Parameter Modeled Distribution Distribution Parameter Value Distribution Lower Bound Upper Bound 

Document 

Review 5 Triangular 0 10 

Minutes 

Documents 150 Triangular 100 200 Reviewed 

Table A.3—Alternative Parameters: Costs of Offering Price Disclosures 

Base Case Monte Carlo 

Parameter Modeled Distribution Distribution Parameter Value Distribution Lower Bound Upper Bound 

Template 

Creation Sales 8 Triangular 4 12 

Manager Hours 

Template 

Creation Web 8 Triangular 4 12 

Developer Hours 

354 
 

Table A.5—Alternative Parameters: Costs of Financing Disclosures 

Base Case Monte Carlo 

Parameter Modeled Distribution Distribution Parameter Value Distribution Lower Bound Upper Bound 

Disclosure 

Creation 8 Triangular 4 12 Compliance 

Manager Hours 

Disclosure 1 Triangular 0 2 Training Hours 

Disclosure 

Delivery Time 2 Triangular 0 4 

Minutes 

Printing Costs 0.15 Triangular 0.10 0.20 

355 
 

Table A.6—Alternative Parameters: Costs of Itemized Disclosures 

Base Case Monte Carlo 

Parameter 

Electronic 

Disclosure Share 

(Scenario 2 only) 

Upfront Sales 

Manager Hours 

(Scenario 1) 

Upfront Compliance 

Manager Hours 

(Scenario 1) 

Disclosure Training 

Hours (Scenario 1) 

Disclosure Creation 

Sales Manager 

Hours (Scenario 2 

only) 

Disclosure Creation 

Compliance 

Manager Hours 

(Scenario 2 only) 

Disclosure Creation 

Web Developer 

Hours (Scenario 2 

only) 

Disclosure Delivery 

Minutes (Scenario 2 

only) 

Parameter 

Value

 0.27 

8 

8 

1 

4 

8 

8 

2 

Modeled 

Distribution 

Triangular 

Triangular 

Triangular 

Triangular 

Triangular 

Triangular 

Triangular 

Triangular 

Distribution Distribution 

Lower Bound Upper Bound 

0.04 0.50 

4 12 

4 12 

0 2 

2 6 

4 12 

4 12 

0 4 

Printing Costs 0.15 Triangular 0.10 0.20 (Scenario 2 only) 

Electronic 

Disclosure Costs 0.02 Triangular 0 0.04 

(Scenario 2 only) 

356 
 

Table A.7—Alternative Parameters: Recordkeeping Costs 

Base Case Monte Carlo 

Parameter Modeled Distribution Distribution Parameter Value Distribution Lower Bound Upper Bound 

GAP Sales Share 0.17 Triangular 0.07 0.27 

GAP Sale 1 Triangular 0 2 Minutes 

Upfront Web 8 Triangular 4 12 Developer Hours 

Upfront Clerical 5 Triangular 2 8 Hours 

Upfront Sales 1 Triangular 0 2 Manager Hours 

Upfront 

Compliance 1 Triangular 0 2 

Manager Hours 

IT Hardware 300 Triangular 100 500 Costs 

We simulate 1,000 scenarios drawing from these parameter distributions, 

recording the costs and benefits of each potential outcome. The distribution of costs and 

benefits is plotted in the following table for discount rates of 3% and 7%. 

357 
stribution of Benefits and Costs 

Monte Carlo Simulation, n=1000 

25.00 

-7--

I 

I 

20.00 I 

I -,--

I I 

I __ J. __ I I 

I (/) 15.00 I I I C: ~ Benefits C: 

~---- ~ I __ J._ -1 .Q D Costs 

iii I I I I 

f.F3- 10.00 ..... _, __ J i-----~ 

I I 

I '--7--J I 

I I 

I I 

5.00 I I 

__ I _ _ I 

_...J __ 

0.00 

3% discount rate 7% discount rate 

Differencing the costs and benefits from each simulation iteration yields a distribution of 

net benefits under the various parameter draws. We again plot this distribution under 3% 

and 7% discount rates. 

358 
stribution of Net Benefits 

Monte Carlo Simulation, n=1 000 -- ·, I ·, 

, 1 - / \ 

I 

/ 

I 

I 

I 

-C I \ 'iii I \ C 

Q.) ,05 - I \ 0 

I 

I ' 

I ' \ 

/ \ 

\ 

\ 

' ·, 0 - I I I I I I 

0.00 5.00 10.00 15.00 20,00 25,00 

Net Benefit($ Billions) 

3% discount rate - • - • 7% discount rate 

This exercise finds heterogeneity in net benefits under the alternative parameter 

distributions, but the Rule still yields positive net benefits in all simulated outcomes. 

Finally, to examine the sensitivity of the net benefits conclusions to the possibility 

of systematic underestimating of labor costs, we calculate costs and benefits in a scenario 

where all labor costs turn out to be ten times larger than the parameter values in the main 

text. All non-labor hours costs (including benefits hours, wage rates, and prevalence 

counts) are unchanged in this analysis. 

359 
 

 

Table A.8—Present Value of Net Benefits (in millions), Labor Costs X 10, 

2024-2033 

Base Case 

3% Discount 7% Discount 

Rate Rate 

Benefits

 Time Savings $14,926 $12,290 

Deadweight Loss Reduction $1,298 $1,069 

Total Benefits $16,224 $13,359 

Costs

 Prohibition on Misrepresentations $1,573 $1,295 

Offering Price Disclosure $455 $455 

 Finance/Lease Total of Payments Disclosure $2,743 $2,279 

Prohibition re: Certain Add-ons & Express, $4,471 $3,830 

Informed Consent 

Recordkeeping $1,868 $1,583 

Total Costs $11,111 $9,443 

Net Benefits $5,114 $3,916 

Note: “Base Case” reflects base case benefit estimates and high cost scenarios with ten times 

the labor costs as in the main analysis. Not all impacts can be quantified; estimates only reflect 

quantified costs and benefits. 

VIII. Other Matters 

Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), the Office of 

Information and Regulatory Affairs designated this Rule as a “major rule,” as defined by 

5 U.S.C. 804(2). 

LIST OF SUBJECTS for PART 463 

Consumer protection, Motor vehicles, Reporting and recordkeeping requirements, Trade 

practices. 

360 
For the reasons stated in the preamble, the Federal Trade Commission adds part 463 to 

subchapter D of Title 16 of the Code of Federal Regulations as follows: 

PART 463—COMBATING AUTO RETAIL SCAMS TRADE REGULATION 

RULE 

Authority: 15 U.S.C. 41 et seq.; 12 U.S.C. 5519. 

Sec. 

463.1 Authority. 

463.2 Definitions. 

463.3 Prohibited misrepresentations. 

463.4 Disclosure requirements. 

463.5 Dealer charges for Add-ons and other items. 

463.6 Recordkeeping. 

463.7 Waiver not permitted. 

463.8 Severability. 

463.9 Relation to State laws. 

§ 463.1 Authority. 

This part is promulgated pursuant to Section 1029 of the Dodd-Frank Wall Street Reform 

and Consumer Protection Act of 2010, 12 U.S.C. 5519(d). It is an unfair or deceptive act 

or practice within the meaning of Section 5(a)(1) of the Federal Trade Commission Act 

(15 U.S.C. 45(a)(1)) to violate any applicable provision of this part, directly or indirectly, 

including the recordkeeping requirements which are necessary to prevent such unfair or 

deceptive acts or practices and to enforce this part. 

361 
§ 463.2 Definitions. 

(a) “Add-on” or “Add-on Product(s) or Service(s)” means any product(s) or service(s) 

not provided to the consumer or installed on the Vehicle by the Vehicle 

manufacturer and for which the Dealer, directly or indirectly, charges a consumer 

in connection with a Vehicle sale, lease, or financing transaction. 

(b) [Reserved] 

(c) [Reserved] 

(d) “Clear(ly) and Conspicuous(ly)” means in a manner that is difficult to miss (i.e., 

easily noticeable) and easily understandable, including in all of the following 

ways: 

(1) In any communication that is solely visual or solely audible, the disclosure 

must be made through the same means through which the communication is 

presented. In any communication made through both visual and audible 

means, such as a television advertisement, the disclosure must be presented 

simultaneously in both the visual and audible portions of the communication 

even if the representation requiring the disclosure is made in only one means. 

(2) A visual disclosure, by its size, contrast, location, the length of time it appears, 

and other characteristics, must stand out from any accompanying text or other 

visual elements so that it is easily noticed, read, and understood. 

(3) An audible disclosure, including by telephone or streaming video, must be 

delivered in a volume, speed, and cadence sufficient for ordinary consumers 

to easily hear and understand it. 

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(4) In any communication using an interactive electronic medium, such as the 

Internet or software, the disclosure must be unavoidable. 

(5) The disclosure must use diction and syntax understandable to ordinary 

consumers and must appear in each language in which the representation that 

requires the disclosure appears. 

(6) The disclosure must comply with these requirements in each medium through 

which it is received. 

(7) The disclosure must not be contradicted or mitigated by, or inconsistent with, 

anything else in the communication. 

(e) “Covered Motor Vehicle” or “Vehicle” means any self-propelled vehicle designed 

for transporting persons or property on a public street, highway, or road. For 

purposes of this part, the term Covered Motor Vehicle does not include the 

following: (1) Recreational boats and marine equipment; (2) Motorcycles, 

scooters, and electric bicycles; (3) Motor homes, recreational vehicle trailers, and 

slide-in campers; or (4) Golf carts. 

(f) “Covered Motor Vehicle Dealer” or “Dealer” means any person, including any 

individual or entity, or resident in the United States, or any territory of the United 

States, that (1) Is licensed by a State, a territory of the United States, or the 

District of Columbia to engage in the sale of Covered Motor Vehicles; (2) Takes 

title to, holds an ownership interest in, or takes physical custody of Covered 

Motor Vehicles; and (3) Is predominantly engaged in the sale and servicing of 

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Covered Motor Vehicles, the leasing and servicing of Covered Motor Vehicles, or 

both. 

(g) “Express, Informed Consent” means an affirmative act communicating 

unambiguous assent to be charged, made after receiving and in close proximity to 

a Clear and Conspicuous disclosure, in writing, and also orally for in-person 

transactions, of the following: (1) What the charge is for; and (2) The amount of 

the charge, including, if the charge is for a product or service, all fees and costs to 

be charged to the consumer over the period of repayment with and without the 

product or service. The following are examples of what does not constitute 

Express, Informed Consent: (i) A signed or initialed document, by itself; (ii) 

Prechecked boxes; or (iii) An agreement obtained through any practice designed 

or manipulated with the substantial effect of subverting or impairing user 

autonomy, decision-making, or choice. 

(h) “GAP Agreement” means an agreement to indemnify a Vehicle purchaser or 

lessee for any of the difference between the actual cash value of the Vehicle in the 

event of an unrecovered theft or total loss and the amount owed on the Vehicle 

pursuant to the terms of a loan, lease agreement, or installment sales contract used 

to purchase or lease the Vehicle, or to waive the unpaid difference between 

money received from the purchaser’s or lessee’s Vehicle insurer and some or all 

of the amount owed on the Vehicle at the time of the unrecovered theft or total 

loss, including products or services otherwise titled “Guaranteed Automobile 

Protection Agreement,” “Guaranteed Asset Protection Agreement,” “GAP 

insurance,” or “GAP Waiver.” 

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(i) “Government Charges” means all fees or charges imposed by a Federal, State, or 

local government agency, unit, or department, including taxes, license and 

registration costs, inspection or certification costs, and any other such fees or 

charges. 

(j) “Material” or “Materially” means likely to affect a person’s choice of, or conduct 

regarding, goods or services. 

(k) “Offering Price” means the full cash price for which a Dealer will sell or finance 

the Vehicle to any consumer, provided that the Dealer may exclude only required 

Government Charges. 

§ 463.3 Prohibited misrepresentations. 

It is a violation of this part and an unfair or deceptive act or practice in violation of 

Section 5 of the Federal Trade Commission Act for any Covered Motor Vehicle Dealer to 

make any misrepresentation, expressly or by implication, regarding Material information 

about the following: 

(a) The costs or terms of purchasing, financing, or leasing a Vehicle. 

(b) Any costs, limitation, benefit, or any other aspect of an Add-on Product or 

Service. 

(c) Whether the terms are, or transaction is, for financing or a lease. 

(d) The availability of any rebates or discounts that are factored into the advertised 

price but not available to all consumers. 

(e) The availability of Vehicles at an advertised price. 

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(f) Whether any consumer has been or will be preapproved or guaranteed for any 

product, service, or term. 

(g) Any information on or about a consumer’s application for financing. 

(h) When the transaction is final or binding on all parties. 

(i) Keeping cash down payments or trade-in Vehicles, charging fees, or initiating 

legal process or any action if a transaction is not finalized or if the consumer does 

not wish to engage in a transaction. 

(j) Whether or when a Dealer will pay off some or all of the financing or lease on a 

consumer’s trade-in Vehicle. 

(k) Whether consumer reviews or ratings are unbiased, independent, or ordinary 

consumer reviews or ratings of the Dealer or the Dealer’s products or services. 

(l) Whether the Dealer or any of the Dealer’s personnel or products or services is or 

was affiliated with, endorsed or approved by, or otherwise associated with the 

United States government or any Federal, State, or local government agency, unit, 

or department, including the United States Department of Defense or its Military 

Departments. 

(m) Whether consumers have won a prize or sweepstakes. 

(n) Whether, or under what circumstances, a Vehicle may be moved, including across 

State lines or out of the country. 

(o) Whether, or under what circumstances, a Vehicle may be repossessed. 

(p) Any of the required disclosures identified in this part. 

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The requirements in this section also are prescribed for the purpose of preventing the 

unfair or deceptive acts or practices defined in this part, including those in §§ 463.4 and 

463.5. 

§ 463.4 Disclosure requirements. 

It is a violation of this part and an unfair or deceptive act or practice in violation of 

Section 5 of the Federal Trade Commission Act for any Covered Motor Vehicle Dealer to 

fail to make any disclosure required by this section, Clearly and Conspicuously. 

(a) Offering Price. In connection with the sale or financing of Vehicles, a Vehicle’s 

Offering Price must be disclosed: 

(1) In any advertisement that references, expressly or by implication, a specific 

Vehicle; 

(2) In any advertisement that represents, expressly or by implication, any 

monetary amount or financing term for any Vehicle; and 

(3) In any communication with a consumer that includes a reference, expressly or 

by implication, regarding a specific Vehicle, or any monetary amount or 

financing term for any Vehicle. With respect to such communications: 

(i) The Offering Price for the Vehicle must be disclosed in the Dealer’s first 

response regarding that specific Vehicle to the consumer; and 

(ii) If the communication or response is in writing, the Offering Price must be 

disclosed in writing. 

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The requirements in this paragraph (a) also are prescribed for the purpose of 

preventing the unfair or deceptive acts or practices defined in this part, including 

those in §§ 463.3(a) & (b) and 463.5(c). 

(b) [Reserved] 

(c) Add-ons not required. When making any representation, expressly or by 

implication, directly or indirectly, about an Add-on Product or Service, the Dealer 

must disclose that the Add-on is not required and the consumer can purchase or 

lease the Vehicle without the Add-on, if true. If the representation is in writing, 

the disclosure must be in writing. The requirements in this paragraph (c) also are 

prescribed for the purpose of preventing the unfair or deceptive acts or practices 

defined in this part, including those in §§ 463.3(a) & (b) and 463.5(c). 

(d) Total of payments and consideration for a financed or lease transaction. 

(1) When making any representation, expressly or by implication, directly or 

indirectly, about a monthly payment for any Vehicle, the Dealer must disclose 

the total amount the consumer will pay to purchase or lease the Vehicle at that 

monthly payment after making all payments as scheduled. If the 

representation is in writing, the disclosure must be in writing. 

(2) If the total amount disclosed assumes the consumer will provide consideration 

(for example, in the form of a cash down payment or trade-in valuation), the 

Dealer must disclose the amount of consideration to be provided by the 

consumer. If the representation is in writing, the disclosure must be in writing. 

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The requirements in this paragraph (d) also are prescribed for the purpose of 

preventing the unfair or deceptive acts or practices defined in this part, including 

those in §§ 463.3(a) and 463.5(c). 

(e) Monthly payments comparison. When making any comparison between payment 

options, expressly or by implication, directly or indirectly, that includes 

discussion of a lower monthly payment, the Dealer must disclose that the lower 

monthly payment will increase the total amount the consumer will pay to 

purchase or lease the Vehicle, if true. If the representation is in writing, the 

disclosure must be in writing. The requirements in this paragraph (e) also are 

prescribed for the purpose of preventing the unfair or deceptive acts or practices 

defined in this part, including those in §§ 463.3(a) and 463.5(c). 

§ 463.5 Dealer charges for Add-ons and other items. 

It is a violation of this part and an unfair or deceptive act or practice in violation of 

Section 5 of the Federal Trade Commission Act for any Covered Motor Vehicle Dealer, 

in connection with the sale or financing of Vehicles, to charge for any of the following. 

(a) Add-ons that provide no benefit. A Dealer may not charge for an Add-on Product 

or Service if the consumer would not benefit from such an Add-on Product or 

Service, including: (1) Nitrogen-filled tire-related products or services that 

contain no more nitrogen than naturally exists in the air or (2) Products or services 

that do not provide coverage for the Vehicle, the consumer, or the transaction or 

that are duplicative of warranty coverage for the Vehicle, including a GAP 

Agreement if the consumer’s Vehicle or neighborhood is excluded from coverage 

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or the loan-to-value ratio would result in the consumer not benefiting financially 

from the product or service. 

The requirements in this paragraph (a) also are prescribed for the purpose of 

preventing the unfair or deceptive acts or practices defined in this part, including 

those in §§ 463.3(a) & (b) and 463.5(c). 

(b) [Reserved] 

(c) Any item without Express, Informed Consent. A Dealer may not charge a 

consumer for any item unless the Dealer obtains the Express, Informed Consent 

of the consumer for the charge. The requirements in this paragraph (c) also are 

prescribed for the purpose of preventing the unfair or deceptive acts or practices 

defined in this part, including those in §§ 463.3(a) & (b), 463.4, and 463.5(a). 

§ 463.6 Recordkeeping. 

(a) Any Covered Motor Vehicle Dealer subject to this part must create and retain, for 

a period of twenty-four months from the date the record is created, all records 

necessary to demonstrate compliance with this part, including the following 

records: 

(1) Copies of all Materially different advertisements, sales scripts, training 

materials, and marketing materials regarding the price, financing, or lease of a 

Vehicle, that the Dealer disseminated during the relevant time period; 

Provided that a typical example of a credit or lease advertisement may be 

retained for advertisements that include different Vehicles, or different 

amounts for the same credit or lease terms, where the advertisements are 

otherwise not Materially different; 

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(2) [Reserved] 

(3) Copies of all purchase orders; financing and lease documents with the Dealer 

signed by the consumer, whether or not final approval is received for a 

financing or lease transaction; and all written communications relating to 

sales, financing, or leasing between the Dealer and any consumer who signs a 

purchase order or financing or lease contract with the Dealer; 

(4) Records demonstrating that Add-ons in consumers’ contracts meet the 

requirements of § 463.5, including copies of all service contracts, GAP 

Agreements and calculations of loan-to-value ratios in contracts including 

GAP Agreements; and 

(5) Copies of all written consumer complaints relating to sales, financing, or 

leasing, inquiries related to Add-ons, and inquiries and responses about 

Vehicles referenced in § 463.4. 

(b) Any Dealer subject to this part may keep the records required by paragraph (a) of 

this section in any legible form, and in the same manner, format, or place as they 

may already keep such records in the ordinary course of business. Failure to keep 

all records required under paragraph (a) of this section will be a violation of this 

part. 

§ 463.7 Waiver not permitted. 

It is a violation of this part for any person to obtain, or attempt to obtain, a waiver from 

any consumer of any protection provided by or any right of the consumer under this part. 

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§ 463.8 Severability. 

The provisions of this part are separate and severable from one another. If any provision 

is stayed or determined to be invalid, it is the Commission’s intention that the remaining 

provisions will continue in effect. 

§ 463.9 Relation to State laws. 

(a) In General. This part will not be construed as superseding, altering, or affecting 

any other State statute, regulation, order, or interpretation relating to Covered 

Motor Vehicle Dealer requirements, except to the extent that such statute, 

regulation, order, or interpretation is inconsistent with the provisions of this part, 

and then only to the extent of the inconsistency. 

(b) Greater protection under State law. For purposes of this section, a State statute, 

regulation, order, or interpretation is not inconsistent with the provisions of this 

part if the protection such statute, regulation, order, or interpretation affords any 

consumer is greater than the protection provided under this part. 

By direction of the Commission. 

April J. Tabor, 

Secretary. 

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