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Overview
The Federal Trade Commission’s letters to 97 dealer groups earlier this year put dealers on notice about price advertising, and while the letters gave clear direction in some respects, they also raised several important unanswered questions for dealers. The FTC has now issued its long-awaited “Frequently Asked Questions” document that it promised would address those open issues for dealers, and further clarify what the FTC wants from dealers in their advertisements.
The bottom line remains that the FTC is laser-focused on dealer advertising, and dealers must ensure that price advertising is clear, complete, and not misleading, and that your ads (in whatever medium they appear) are consistent and meet all other federal and state requirements as well.
The FAQs provide some further clarification on several open questions but unfortunately leave several key questions unanswered, and in some ways, add new questions that dealers need to address.
The key issues addressed in the FAQs are outlined below.
Clarification #1 – All Non-Mandated Government or Quasi-Governmental Fees Must Be Included In the Price
The FAQs clarify that government-required charges such as state tax, may be excluded from the advertised price. The key in determining if a required amount may be excluded is whether a federal, state, or local government agency requires the consumer to pay that amount directly to the government.
That means that any other fee the dealer requires must be included in the advertised price. This expressly includes dealer-required fees that (a) governments authorize but do not mandate and (b) those that the government requires the dealer to pay but that the dealer passes on to the consumer.
The bottom line is that this means that certain non-tax-related fees paid to the state or quasi-governmental charges—such as electronic titling fees, smog & emissions fees, etc. (depending on the specific state requirements)—may NOT be excluded from the advertised price. Note that we will be issuing another document soon that will address the status of these specific charges in greater detail on a state-by-state basis.
Clarification #2 – The Rules Apply to Ads in Any Medium: (Including Phone Calls and Text Messages w/ a Price)
It has been clear for some time that the FTC applies the same rules to any advertisement regardless of where or how that advertisement appears. Advertisements that appear in a dealership or third-party website, on social media, in print advertising, or even on a roadside sign must comply with all of the advertising requirements under state and federal law.
The FTC notes for internet advertising specifically, any webpage that states an amount a consumer may pay—including inventory-search pages and individual-vehicle-listing pages—must display the actual price as the most prominent amount.
Notably, the FTC states in the FAQ that even phone calls and text messages from dealership staff are considered to be advertisements. That means that dealers must ensure that if these communications include a price, that price must be truthful and transparent. This was not a prominent focus of the FAQs but it represents a potentially new and important compliance focus for dealerships.1
Clarification #3 – MSRP Can Be Displayed or Referenced.
The FAQs clarify that dealers may reference the MSRP or advertise discounts and rebates, but only if the actual price remains the most prominently displayed amount and consumers understand what they would need to pay.
Prominence is not merely a function of font size, placement matters too. A larger (in font size) actual price can still lose prominence if a smaller MSRP is positioned where it is more likely to draw the eye, and confusing juxtapositions of labels near both numbers can undermine an otherwise compliant ad. A conditional discount—say, $1,000 off for first responders, or $2,000 off for using dealer financing—is permissible so long as the full price that any consumer could pay is displayed most prominently and the terms of the discount are clear.
Clarification #4 – Fee Disclosures Apply to Lease Ads
The 97 letters did not address lease advertisements directly. The FAQs clarify that the prohibition on deception applies equally to sales, financing, and leasing. Specifically, any required processing fees (which presumably includes other required dealer fees such as doc fees) due upfront in a lease must be included in a lease advertisement stating the total amount due at signing.
The FAQs also remind dealers that its requirements do not alter dealers’ separate obligations under the Consumer Leasing Act (Regulation M), the Truth in Lending Act (Regulation Z), or other federal laws.
Clarification #5 – In Transit Vehicles May be Advertised If Clearly Disclosed
The FAQs note that it is not inherently deceptive to advertise a vehicle that is not physically on the lot—in transit from the manufacturer, stored offsite, or available through inventory sharing—but the ad must plainly state that the vehicle is not on the lot.
Moreover, vehicles advertised as in transit must actually be available for purchase after arrival and not already allocated to another buyer’s paid order. Advertising a vehicle that has already been sold and delivered, in order to lure consumers in and steer them toward higher-priced options, is a prohibited bait-and-switch tactic.
The FAQs do not specifically address whether “in production” vehicles may be advertised, but it implies that could be problematic, stating that “the car must actually be in transit.” While not clearly prohibited, caution should be exercised when advertising an “in production” vehicle for sale, especially if that vehicle is not likely to be available for some time.
Clarification #6 – Vehicle Photos Must Not Be Deceptive
A representative (stock) photo may be used in a vehicle ad only if it truly represents the vehicle offered. In other words it must be identical in make, model, condition, and other material characteristics, and a reasonable consumer must understand the image to be illustrative. This is more common for new vehicles and cars in transit, where units are largely interchangeable. For used cars, which rarely match one another in condition, consumers reasonably expect the photo to depict the exact vehicle for sale.
Clarification #7 – OEMs Share Accountability For Violations
The FTC assigns responsibility to everyone with control over the advertising. Dealers must ensure the pricing they advertise is accurate, provide third parties with the correct price, take all steps within their control to ensure it is displayed most prominently, and avoid giving contradictory internal instructions. Third-party advertisers must ensure the accurate price appears most prominently wherever any amount is stated. OEMs must ensure their own policies and practices do not conflict with these requirements. In short, accountability is shared across the advertising chain.
That said, this does not indicate in any way that a dealer will not be responsible for advertising, even if an OEM or other third party has control over that advertisement. Dealers must ensure that all ads appearing in any medium under their name are compliant, and should not expect to be “off the hook” if an ad originated from the OEM.
Practical Takeaways
- Advertise the true, all-in price any consumer can pay; exclude only charges the government requires the consumer to pay directly.
- Make the actual price the single most prominent number—accounting for placement, not just font size—across every medium, including listing and search pages.
- Fold mandatory document, processing, and similar dealer-required fees into the advertised figure, using the highest mandatory amount any consumer might owe.
- Treat state-law disclosures as additive to, not a substitute for, the federal prominence requirement.
- Clearly disclose when a vehicle is not physically on the lot, and use stock photos only where genuinely representative.
- Recognize that dealers, third-party advertisers, and OEMs each bear responsibility for compliant price advertising – but dealers will still be responsible for all ads appearing under their name.
ComplyAuto Guardian Can Help
The FAQs are consistent with the guidance that ComplyAuto has been providing to dealers, and we are more than ready to ensure that you can meet the FTC’s requirements. ComplyAuto’s Guardian is the industry’s only software tool that can ensure that your ads meet all federal and state advertising requirements—regardless of the medium in which they appear—even emails or text messages.
Contact ComplyAuto today to learn more about how Guardian can help you.
- And it is consistent with the proposed requirements of the FTC CARS Rule, as well as the California CARS Act, which goes into effect October 1, 2026. ↩︎