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On March 13, 2026, the Federal Trade Commission (“FTC”) sent warning letters to 97 dealerships nationwide concerning their advertising practices. These letters result from the FTC’s new interpretation of Section 5 of the FTC Act. This article addresses the practical implications of the FTC’s stance on dealer advertising and what dealers need to know to remain in compliance.
Section 5 of the FTC Act
Section 5 of the FTC Act (15 U.S.C. § 45) prohibits “unfair or deceptive acts or practices” and “unfair methods of competition” in or affecting commerce. A deceptive practice could be one that misleads consumers, and an unfair practice could be one that results in charges to a consumer without authorization. Section 5 is enforceable by the FTC and applies to most businesses, including dealerships. In 2022, the FTC clarified that it would use Section 5 to target unfair methods of competition beyond traditional antitrust laws, and its new interpretation as of 2026 advances that goal.
Dealer advertising falls within the scope of Section 5 of the FTC Act. Historically, for a violation to be found, a plaintiff would need to prove that a material representation was likely to mislead a reasonable consumer under the circumstances. However, the FTC’s new crackdown on dealers aimed at achieving price transparency in motor vehicle transactions could make it easier for violations to be found.
What Dealers Need to Know
The FTC explained in webinars following the March 13th warning letters that examples of illegal advertising practices include, but are not limited to: (1) advertising a price that does not reflect all required fees; (2) advertising a price that reflects certain rebates or discounts not available to all consumers; or (3) advertising a price that fails to take into account a required down payment amount.
In Illinois, this means dealers must include the Illinois Doc Fee and the Electronic Registration and Titling Fee (“ERT Fee”) in the advertised price of a vehicle, but can exclude tax, license, and title fees. Although the Illinois Attorney General’s Motor Vehicle Advertising Rules permit dealers to exclude the Doc Fee from the advertised price, the FTC’s authority under the FTC Act preempts Illinois rules. The Doc Fee must also be included in the retail installment contract, and the ERT Fee must also be included in the Bill of Sale or similar sale document. Additionally, if a dealer advertises the MSRP, it must make sure the most prominent price in the advertisement also includes the amount of the Doc Fee and ERT Fee.
Even if a dealer did not receive one of the FTC’s warning letters on March 13th, they should review their advertising practices to make sure they comply with the FTC’s new interpretation of Section 5 of the FTC Act.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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