Bait, Switch, and the Fine Print in Between: The FTC Releases Its Long-Awaited Price Advertising FAQs

Brooke Conkle (0:10)

Welcome to Moving the Metal, the premier legally focused podcast for the auto finance industry. I'm Brooke Conkle, a partner in Troutman Pepper Locke's Consumer Financial Services Practice Group.

Chris Capurso (0:20)

And I'm Chris Capurso of Council in Troutman Pepper Locke's Consumer Financial Services Practice Group.

Brooke Conkle (0:24)

Today, we'll be discussing the recent FAQs published by the FTC about price transparency. But before we jump in, let me remind you to please visit and subscribe to our blogs. We have two great ones that may be of interest to you.

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Here we are close to the end of the year, and that's where we're back.

Chris Capurso (2:11)

Yeah. They really like to kick off the seasons with some reference to price advertising because we got the Notorious 97 letters in March, and now this was released September 15th, just in time for the PSLs out there to the fall season get into the spirit, and nothing gets you into the spirit quite like FTC guidance. So here we are.

Brooke Conkle (2:31)

That's exactly right. We've got 14 pricing transparency FAQs. Let's go through them question by question. Chris, start us off with the first one.

Chris Capurso (2:39)

Sure. Right from the top. Number one, why is the FTC focused on price transparency? So, I mean, that's a good starting point, and it really reiterates, honestly, what they said in the letter that the FTC, a priority has been price advertising, and generally across industries, they've put their money where their mouth is because they have really been looking at price transparency in every industry. Auto is not an outlier by any stretch. Auto just happens to be one of the biggest purchases we all make, right? So it's one of the areas that they're keying in on. But it's the same types of things that they're seeing complaints about advertising, that they are concerned that consumers see one price and will have to pay another. And as they put it, that's where the entire shopping experience breaks down.

Some pretty heavy words there on that. And basically just all the types of things that they've been saying, consumers can't make informed decisions if they don't know what they're actually getting into.

So it kind of sets the stage for what we're going to see in the other 13 FAQs. But generally, this just kind of reiterates the position that this is something the FTC gets complaints about. It's something that they're very consistent with across industries, and it's something that they're really trying to ensure that price advertising is transparent.

Brooke Conkle (3:57)

Which leads us to question two, what needs to be included in the advertised price and what can be left out? And Chris, this probably is the most straightforward answer in the FAQs, and the FTC's response is that the advertised price must reflect everything a consumer is required to pay to drive away with the vehicle. And the only carve out from that price is charges the government requires the consumer to pay taxes, title and licensing. So any mandatory dealer fee, even if it's in a long-standing industry practice, that has to be in this headline number now. And that, of course, Chris, as we've discussed, that includes standard doc fees unless state law allows them to be treated differently. So again, here is our Brightline rule. Everything's got to be in there except taxes, title and licensing.