March 17, 2026
Background
On March 13, the Federal Trade Commission announced that it sent 97 dealerships warning letters about advertising and sales practices. In its letter, the FTC states that advertisements are deceptive and in violation of the FTC Act if the price of a vehicle is not the “offering price” from the CARS Rule. To comply with the FTC Act, the advertised price of a vehicle should be the total price the consumer is expected to pay, which shall include all fees and charges (i.e., processing fee and freight) and only excludes governmental fees (i.e, tags, title and taxes).
Today, we look at the pitfalls of add-ons.
One of the FTC's most likely targets: Dealer add-ons.
In the past, FTC enforcement activity on this issue has focused on:
- Misrepresenting prices to consumers, often because of pre-installed add-ons
- Charging consumers for costly add-ons that they did not agree to or were falsely told were required as part of their purchase
- Targeting protected-class consumers (Black and Latino consumers) for unwanted and higher-priced add-ons than those charged by non-Latino White consumers
Take steps to protect your dealership. Here's how.
- Make sure customers are not misled about add-ons. They are optional and not required to complete the purchase or to obtain financing. Dealers should reconsider pre-installing add-ons to vehicles prior to purchase.
- Consumers should know what products are being purchased and at what cost. Dealers should use menus for voluntary protection products (VPPs) and add-ons with customers signing the menus and choosing the products with proper disclosures.
NADA offers a full model dealership policy on VPPs. Click to download.
- Dealers should be using the NADA’s VPP and fair lending policies, training on the policies, and enforcing the policies. Those policies include certification forms for deviations for differential pricing for VPPs and lending for non-discriminatory reasons.
- Dealers need to ensure their staff are properly trained on add-ons as well as are adhering to the sales processes that you have in your dealership on add-ons. The dealer and senior managers of the dealership must emphasize their commitment to legal and ethical conduct and inform dealer personnel how they wish for them to carry out the functions of their jobs.
- Adopt a process to regularly audit the dealership’s practices and transactions to ensure that its practices don’t run afoul of state and federal laws.