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On Friday, March 13, 2026, the Federal Trade Commission (FTC) announced it was issuing warning letters to 97 dealer groups across the country concerning allegedly deceptive pricing practices in the automotive industry. The letters identified common illegal pricing practices observed by the FTC in the industry and warned each dealer group that federal regulators are "concerned that your company may be engaging in one or more of these practices." The FTC also emphasized in its letter a number of recent enforcement actions against dealer groups, suggesting the agency will continue to pursue deceptive conduct in the auto industry on a case-by-case basis after the Fifth Circuit vacated a sweeping rule to curb such conduct last year.
FTC Warning Letters Identify "Illegal Pricing Practices"
In the warning letters, The FTC emphasized that transparent pricing is a key enforcement priority; when consumers cannot determine the true price of a product, they cannot comparison shop effectively, honest competitors are placed at a disadvantage, and markets function less efficiently. The letters identified several "illegal pricing practices" observed by the agency in the auto industry, including advertising of prices that do not reflect all required fees; include rebates or discounts not available to all customers; fail to take into account amounts of additional required down payments or use of dealer financing; or for vehicles that are unavailable or nonexistent.
After reciting these common industry practices, the FTC warned it was "concerned that your company may be engaging in one or more of these practices" and encouraged the 97 dealer groups receiving the letter to "review your practices" to ensure "the prices you advertise include all required fees and charges aside from required government charges," and "at a minimum, evaluat[e] your advertised prices and actual prices and confirm[] they match." The letter warned that the FTC would "continue to monitor the marketplace and take additional action as warranted."
Enforcement Actions Continue After Failed Rulemaking Effort
The FTC's letters cited a number of recent enforcement actions the FTC has brought, typically in partnership with state law enforcers, seeking injunctive and monetary relief against dealer groups for allegedly deceptive acts and practices in connection with the sale of new cars to consumers in violation of Section 5 of the FTC Act and state law. The letters also cited an administrative action brought by the FTC against a dealer group in Texas for violation of Section 5 of the FTC Act. The dealer group in that case has challenged the FTC's authority to adjudicate claims before in-house administrative law judges. A federal judge last fall refused to enjoin the enforcement action from proceeding, but the matter remains on hold while the dealer group pursues an appeal.
The FTC has continued to pursue enforcement actions after the Fifth Circuit in January 2025 vacated the FTC's "Combating Auto Retail Scams" or "CARS" rule, which would have prohibited dealers from misrepresenting material information to consumers, particularly with respect to so-called "junk fees" and "add-on" optional features, and would have required disclosure at the outset of a potential purchase transaction of the total price at which a consumer could buy a new car. Following that decision, California in October 2025 enacted the California Combating Auto Retail Scams Act, explicitly prohibiting certain misrepresentations that may affect consumer choices, such as a vehicle's cost, terms, financing options, add-on products, and availability. The FTC's most recent warning letters and continued enforcement actions indicate the agency remains undeterred in its efforts to curb unfair and deceptive practices in the auto industry.
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