FTC AMA or ATA... ask Tom Kline anything about the FTC

[Balboa Bill]

Bill, the pricing must be consistent throughout. It will take some time for you to iron this out. Consider mystery shopping yourself so you can look at it from a customer's perspective.

65% of the 97 dealerships who had received the letter have between 1-5 dealerships. This is an issue for all dealers, big and small.

Some dealers are dragging their feet here. You will hear more from the FTC on this, I promise.

Thanks for the reply. Frankly, I am on board with consistency. How many dealers offer a low price, then show the fine print stating the price includes $3000 cash or trade?

My general question is, why would we post the fee separately on a banner that isn't referencing a total price? I don't see any other dealer website looking like this. I'm trying to confirm my disagreement with the way it's laid out in the original image posted.

 

[Alex Snyder]

I'm thankful this is all that's being required by this administration.

Ultimately, I think this is what the majority of dealers wished would be the case all along. Everyone was just gun shy about being the first in their market to make their cars look like $500 worse deals than every other dealer. This helps level the playing field and eliminates the minority of unscrupulous dealers tarnishing everyone else's reputation.

When we brought our illumiQUOTE product to market (automated payments on dealers' websites and quotes in the CRM), we earned business from a few stores in the DC market. Even though I grew up in the Southern Virginia market, it was an eye-opener to see how some stores in Northern Virginia and Maryland handled price quoting.

At that time, we were asked (demanded) to build a way to remove freight and discount a vehicle using most available incentives, regardless of whether the customer qualified. There was also a "trade rebate" that was applied to lower the price with a heavy stipulation on how the market value was set at the time of appraisal - this trade rebate was at one dealership, and the only dealership we ever fired... for other reasons. $60,000 domestic trucks were showing $250/mo loan payments that nobody could get, for example.

My theory:

The FTC and political staffs primarily live in the NOVA/MD market. It is one of the most aggressive and competitive markets in the country. Dealers are fighting hard! When these staff members go car shopping, they encounter a wide range of advertising tactics and in-store processes. It is possible that a few of these people have developed a dislike for that car-shopping experience. Of course, this could have happened anywhere in the US, but this particular market is rougher than most I have seen.

It makes me wonder whether the combination of an administration that wants to change this and a bureaucratic staff that has developed a grudge is making the FTC more heavy-handed

 

[Tallcool1]

I really don't understand what the confusion is and why this is being dissected so many different directions.

@tomkline , you and I sat together at the Independent Auto Dealers Convention in Vegas a couple years ago when the FTC had a representative there that did a talk and open Q & A. You addressed your concern directly to the FTC in that you agreed with the CARS Rule with the exception of Doc Fee. You plead the case that dealers needed to be able to slip the doc fee to the customer after that fact. She appreciated your comments and DIRECTLY replied..."the doc fee gets added to the price, period".

The FTC stance is crystal clear but dealers are ignoring the FTC on this. Well we are posting a banner. We are disclosing it on the VDP. We tell the customer up front. People don't complain about it. This list goes on and on. I have seen this issue argued in various Social Media groups. Lots of dealers are respecting the warning shot. Others are convincing themselves that their particular method of ignoring the warning shot will be just fine.

My interpretation of this rule goes like this: Each car gets 1 price. That price is a number that ANYONE can drive that car away for. The End. There are no "adds" after the price. Simple. If there are any potential reductions from that number, fine! Disclose THAT. Put THAT on a banner. If you want to give a discount if the customer finances with you then fine. Disclose it. If you want to discount if the customer buys a $4500 VSC then fine, Disclose that.

Here is the reality. We as dealers have created this problem. We made the choice to ignore laws that have been on the books for over 100 years. This stuff isn't new. We all knew we were doing things that were not compliant. We did it because our competitor did it. We did it because we were greedy. We did it because we wanted to raise our Commission Pack without raising our Commission Pack. Now it is time to face the consequences of our actions.

Lurking in the shadows are a very large group of car dealers that are welcoming this enforcement. They have been lobbying for years. They are the ones that respected and followed those 100 year old laws and they have figured out how to be profitable without after the fact price additions. This group is at a tremendous advantage right now. They have never had these fees and have built a successful business without them. This group is dangerous. They have a chip on their shoulder and they will be the ones that report everyone that is not doing it the right way. This will be the most efficient rule enforcement in the history of the FTC. The FTC is getting ready to bat 1.000.

So my question @tomkline , what do you tell your dealers when they argue with you about why they want to ignore the rules? Do you believe the enforcement of the rules is a net positive for the consumer? Do you feel this is needed or warranted enforcement? Do you think us dealers went too far? I value your opinion more than you likely understand. I want to know what your feelings are about this, not your interpretation of the enforcement.

Thank you.

 

[tomkline]

Why do we always have to punish the majority for what the minority does? I'm sure that's not the kind of question you were asking for...

Bill, thank you. The FTC isn't picking on the auto business. As the Republican party has become more populist, they have demanded more pricing transparency. For example, they fined Stubhub $10 million. (Who doesn't love a "convenience fee," right?) The FTC has also fined pharma. They are trying to eliminate bait and switch advertising.

 

[tomkline]

Thanks for the reply. Frankly, I am on board with consistency. How many dealers offer a low price, then show the fine print stating the price includes $3000 cash or trade?

My general question is, why would we post the fee separately on a banner that isn't referencing a total price? I don't see any other dealer website looking like this. I'm trying to confirm my disagreement with the way it's laid out in the original image posted.

Every website provider is different. In addition, I think you will see dealers starting to absorb the processing fee and just state their "All In Price." Ultimately, it does not matter if it is actually the processing fee or just a part of the price.

 

[tomkline]

When we brought our illumiQUOTE product to market (automated payments on dealers' websites and quotes in the CRM), we earned business from a few stores in the DC market. Even though I grew up in the Southern Virginia market, it was an eye-opener to see how some stores in Northern Virginia and Maryland handled price quoting.

At that time, we were asked (demanded) to build a way to remove freight and discount a vehicle using most available incentives, regardless of whether the customer qualified. There was also a "trade rebate" that was applied to lower the price with a heavy stipulation on how the market value was set at the time of appraisal - this trade rebate was at one dealership, and the only dealership we ever fired... for other reasons. $60,000 domestic trucks were showing $250/mo loan payments that nobody could get, for example.

My theory:

The FTC and political staffs primarily live in the NOVA/MD market. It is one of the most aggressive and competitive markets in the country. Dealers are fighting hard! When these staff members go car shopping, they encounter a wide range of advertising tactics and in-store processes. It is possible that a few of these people have developed a dislike for that car-shopping experience. Of course, this could have happened anywhere in the US, but this particular market is rougher than most I have seen.

It makes me wonder whether the combination of an administration that wants to change this and a bureaucratic staff that has developed a grudge is making the FTC more heavy-handed

Alex, one dealer in Alaska got in trouble because a state regulator came in to buy a car for an advertised price (for himself and not in his official capacity.) When he arrived, the sales agent said to him (and I am paraphrasing), "We don't actually sell the vehicles for those prices. Those are just meant to get people in here."

 

[tomkline]

I really don't understand what the confusion is and why this is being dissected so many different directions.

@tomkline , you and I sat together at the Independent Auto Dealers Convention in Vegas a couple years ago when the FTC had a representative there that did a talk and open Q & A. You addressed your concern directly to the FTC in that you agreed with the CARS Rule with the exception of Doc Fee. You plead the case that dealers needed to be able to slip the doc fee to the customer after that fact. She appreciated your comments and DIRECTLY replied..."the doc fee gets added to the price, period".

The FTC stance is crystal clear but dealers are ignoring the FTC on this. Well we are posting a banner. We are disclosing it on the VDP. We tell the customer up front. People don't complain about it. This list goes on and on. I have seen this issue argued in various Social Media groups. Lots of dealers are respecting the warning shot. Others are convincing themselves that their particular method of ignoring the warning shot will be just fine.

My interpretation of this rule goes like this: Each car gets 1 price. That price is a number that ANYONE can drive that car away for. The End. There are no "adds" after the price. Simple. If there are any potential reductions from that number, fine! Disclose THAT. Put THAT on a banner. If you want to give a discount if the customer finances with you then fine. Disclose it. If you want to discount if the customer buys a $4500 VSC then fine, Disclose that.

Here is the reality. We as dealers have created this problem. We made the choice to ignore laws that have been on the books for over 100 years. This stuff isn't new. We all knew we were doing things that were not compliant. We did it because our competitor did it. We did it because we were greedy. We did it because we wanted to raise our Commission Pack without raising our Commission Pack. Now it is time to face the consequences of our actions.

Lurking in the shadows are a very large group of car dealers that are welcoming this enforcement. They have been lobbying for years. They are the ones that respected and followed those 100 year old laws and they have figured out how to be profitable without after the fact price additions. This group is at a tremendous advantage right now. They have never had these fees and have built a successful business without them. This group is dangerous. They have a chip on their shoulder and they will be the ones that report everyone that is not doing it the right way. This will be the most efficient rule enforcement in the history of the FTC. The FTC is getting ready to bat 1.000.

So my question @tomkline , what do you tell your dealers when they argue with you about why they want to ignore the rules? Do you believe the enforcement of the rules is a net positive for the consumer? Do you feel this is needed or warranted enforcement? Do you think us dealers went too far? I value your opinion more than you likely understand. I want to know what your feelings are about this, not your interpretation of the enforcement.

Thank you.

Thanks. I do not remember the exact interaction with the FTC. At that time, what you stated that I said would have been the regulations/guidance at that time. Now things have changed.

Here is an article about what I am seeing and hearing: Auto Dealer FTC Compliance - Better Vantage Point

Hope that answers your question.

If not, let me know and I will be happy to address it.

Here are two (2) other FTC articles which I've written: FTC Compliance for Auto Dealerships - Better Vantage Point

New FTC Compliance Regulations: Small Dealers Are Targets, Too - Better Vantage Point

Auto Dealership Compliance In Today’s Regulatory Environment Can we [...]

bettervantagepoint.com

 

[Alex Snyder]

Alex, one dealer in Alaska got in trouble because a state regulator came in to buy a car for an advertised price (for himself and not in his official capacity.) When he arrived, the sales agent said to him (and I am paraphrasing), "We don't actually sell the vehicles for those prices. Those are just meant to get people in here."

I have experienced this myself as a customer. "That's the internet department, we do things differently here on the floor"

 

[tomkline]

I have experienced this myself as a customer. "That's the internet department, we do things differently here on the floor"

We all have. It's unfortunate. And with dynamic pricing, the consumer is going to get taken advantage of in different ways. More of that coming.

 

[Tallcool1]

Thanks. I do not remember the exact interaction with the FTC. At that time, what you stated that I said would have been the regulations/guidance at that time. Now things have changed.

Here is an article about what I am seeing and hearing: Auto Dealer FTC Compliance - Better Vantage Point

Hope that answers your question.

If not, let me know and I will be happy to address it.

Here are two (2) other FTC articles which I've written: FTC Compliance for Auto Dealerships - Better Vantage Point

New FTC Compliance Regulations: Small Dealers Are Targets, Too - Better Vantage Point

Auto Dealership Compliance In Today’s Regulatory Environment Can we [...]

bettervantagepoint.com

I guess you really didn't answer any of my questions. I am not trying to put you on the spot here (although it may seem as if I am).

I want to know what your opinions are. I understand in your profession you don't really get paid for your opinion. That doesn't mean you don't have opinions. You know more about this than anyone I know.

So my question @tomkline , what do you tell your dealers when they argue with you about why they want to ignore the rules? Do you believe the enforcement of the rules is a net positive for the consumer? Do you feel this is needed or warranted enforcement? Do you think us dealers went too far? I value your opinion more than you likely understand. I want to know what your feelings are about this, not your interpretation of the enforcement.