FTC Warns 97 Auto Dealers on Hidden Fees Despite Deregulation Hopes

Published: March 25th, 2026

The Federal Trade Commission sent warning letters to 97 auto dealer groups nationwide last week, making clear that advertised vehicle prices must include all mandatory fees—a signal that the Trump-Vance administration’s FTC remains focused on auto industry pricing practices despite expectations of a lighter regulatory touch.

The March 13 letters don’t accuse any specific dealer of breaking the law. But they lay out six pricing practices the agency considers illegal, from hiding mandatory fees in advertised prices to requiring customers to buy unwanted add-ons. The move comes roughly a year after a federal court struck down the FTC’s broader Combating Auto Retail Scams rule, which would have banned junk fees across the industry.

What dealers can’t do

The letters spell out practices the FTC says violate federal law: advertising prices that don’t reflect all required fees, showing discounts that aren’t available to everyone, failing to account for mandatory down payments, conditioning advertised prices on dealer financing, requiring purchases of additional items not included in the price, and advertising vehicles that don’t exist or aren’t actually available.

“The Trump-Vance FTC is committed to preventing auto dealers from misleading consumers with low advertised prices and then adding on mandatory fees at the end of the purchasing process,” said Christopher Mufarrige, director of the FTC’s Bureau of Consumer Protection. “The FTC will remain focused on monitoring auto dealerships to ensure that the market functions efficiently and competitors are transparently competing on price.”

The only charges dealers can exclude from advertised prices are government-imposed taxes and registration fees. Everything else—delivery costs, dealer prep, add-on products or services—must be included in the advertised number.

Three lawsuits already underway

The letters reference three active federal lawsuits the FTC has filed against dealerships for deceptive pricing and related claims: cases against Lindsay Chevrolet, Leader Automotive Group, and Asbury Automotive Group. The agency often partners with state attorneys general on these actions, seeking court orders to stop the practices and monetary penalties.

Those cases show the FTC isn’t just issuing warnings. The agency is pursuing enforcement actions in court, even after the Fifth Circuit Court of Appeals invalidated its broader CARS rule in 2025. That proposed regulation would have established industry-wide requirements for price transparency and banned common junk fees, but the court struck it down before it took effect.

Instead of sweeping rules, the FTC has shifted to case-by-case enforcement under Section 5 of the FTC Act, which prohibits “unfair or deceptive acts” in commerce. The warning letters fit that strategy—putting the industry on notice that the agency is watching, without requiring a formal rulemaking process.

Industry response

The National Automobile Dealers Association, which represents more than 17,000 U.S. dealerships, said most dealers already follow the rules. “While the overwhelming majority of America’s 17,000+ dealers service their customers in a consumer friendly and compliant manner, NADA takes any potential advertising violations in the marketplace very seriously,” the group said in a statement. “We will continue to work with the FTC to address areas of concern.”

The National Independent Automobile Dealers Association took a more urgent tone. The group, which had discussed deceptive pricing with the FTC before the letters went out, urged members who received warnings to conduct full compliance reviews immediately.

“A warning letter is exactly what it sounds like: a notice from the FTC that a company’s conduct is likely unlawful and that failure to promptly correct the issue could lead to serious legal consequences, including a federal enforcement action,” NIADA said. “The commission has been clear that deceptive pricing practices will not be tolerated.”

Connecticut adds state requirements

Connecticut dealers face additional scrutiny under state law that took effect October 1, 2025. The amendments to Connecticut General Statute Section 14-62a mirror the FTC’s requirements but add specific disclosure rules.

Under the state law, dealers must include federal tax, delivery costs, dealer preparation, and all add-on fees in advertised prices. Advertisements must state in at least 8-point bold type that taxes, registration fees, and the dealer processing fee are excluded. They must also separately list, in the same bold type next to the phrase “Additional Fees, Charges and Costs,” the amount of any add-on product or service fees.

When quoting prices directly to buyers, Connecticut dealers must now include all optional add-on fees, state each amount separately, and disclose that those fees are negotiable. The law also prohibits pre-printing order and invoice forms with optional add-on costs before talking to the customer—a measure designed to stop dealers from presenting extras as mandatory.

Jonathan Kaplan, an attorney at Pullman & Comley who advises Connecticut dealers, said the letters reference the three lawsuits as “a sobering reminder that authorities are pursuing these violations aggressively.” He recommends dealers conduct comprehensive reviews of their advertising practices to ensure they comply with both federal and state requirements.

What dealers should do now

Dealers who received letters are now on the FTC’s radar, which means they face heightened scrutiny going forward. But the guidance applies to all dealers, whether they got a letter or not.

First, audit all advertising—websites, social media, print ads, online listings—to confirm that every advertised price includes all mandatory fees except taxes and registration. Check that any advertised discounts or rebates are actually available to all customers, and make sure no price depends on using dealer financing or buying additional products.

For Connecticut dealers, verify that ads use the required 8-point bold type for disclosures, that price quotes identify add-ons as negotiable, and that order forms aren’t pre-filled with optional fees before customer discussions begin.

The convergence of federal warnings and state law changes means dealers operating in Connecticut face compliance requirements from two directions. Those who bring their practices into line now avoid enforcement risk and can position themselves as transparent competitors in a market where regulators are clearly paying attention.

The FTC’s broader push for price transparency extends beyond auto sales to rental housing, event ticketing, hotels, and grocery delivery. But the auto industry remains a focus, with the agency monitoring dealerships nationwide even as it takes a case-by-case approach rather than imposing sweeping regulations.

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