Buying a vehicle is usually the type of purchase Americans make less frequently than often, however, the process is usually complicated by confusing bills, unexpected costs, and hard-sell techniques. Many car dealerships are generally honest, but misleading ads and dishonest billing practices have contributed to numerous consumer complaints over the years. However, the problem is coming to an end as government agencies begin to step in to ensure that car dealers are honest and transparent in their dealings with customers.

The Federal and State Governments are now cracking down on the automotive industry to ensure ethical dealings with the consumers, which includes not only the car dealers but also the manufacturers, privacy policies, and safety regulations. Agencies are now stepping in to ensure that advertised prices are an accurate representation of what the customer will have to pay for and that dishonest business practices have negative consequences for the companies employing them. As a result, numerous investigations, lawsuits, and settlements have occurred in recent months, targeting businesses ranging from small local dealerships to major corporations.

1. Federal Regulators Take Action Against Auto Dealerships

The Federal Trade Commission has been taking steps to stop auto dealerships from engaging in deceptive practices. To begin, warning letters have been sent to 97 different dealership groups across the country, including some of the biggest names in the automobile retail business. As a result of these steps, it has been made clear that car dealerships of all sizes must follow specific regulations. In addition, the FTC is encouraging car dealerships to voluntarily change their ways to avoid further legal action.

Key Regulatory Actions:

• FTC sent out warning letters.
• Dealerships of all sizes involved.
• Focus of regulation: advertised prices.
• Consumer protection encouraged.
• Transparent advertising promoted.

FTC representatives have stated that they are particularly concerned with dealerships advertising attractive prices, only for customers to be subjected to surprise charges at the point of sale, with the total amount due being significantly higher than the advertised price. The FTC believes that advertised prices should be an accurate reflection of what the consumer can expect to pay. As a result, car dealerships are being reminded of their legal obligations in regards to honest pricing and advertising.

2. Sales Practices Investigated

The warning letters sent by the FTC highlight several sales practices that may be considered misleading or deceptive. Firstly, the FTC is concerned with dealerships advertising prices that do not include mandatory charges, such as various add-ons. While some of these charges may be optional, others are mandatory and drastically increase the final price the consumer is responsible for paying.

Irresponsible Sales Tactics:

• Mandatory add-ons.
• Excluded financing terms.
• Inflated advertised prices.
• Unnecessary rebates.
• Hidden mandatory fees.

The FTC is also concerned with advertised rebates and financing options, particularly those that require specific criteria to be met by the buyer. In many cases, such financing options or rebates are no longer available upon arrival at the car dealership, leaving the consumer with fewer options than he or she was led to believe. The FTC is also investigating the issue of unnecessary add-ons, such as service plans and other various vehicle accessories, as many businesses fail to disclose their mandatory nature.

3. Enforcement Continues Despite Legal Challenges

Even though the FTC lost the court case regarding the CARS rule in early 2025, federal enforcers continue to investigate and penalize car dealerships that engage in deceptive practices. The FTC is continuing its work with the state attorneys general to investigate similar issues across the country. Although the CARS Rule had been proposed to enact stricter federal regulations in regards to auto dealership deception, the FTC continues to investigate and penalize in accordance with the existing consumer protection laws.

Focus of FTC Investigation:

• Various auto dealership complaints.
• State collaboration.
• Consumer protection.
• Hidden fees targeted.
• Continued FTC investigations.

In fact, the FTC has reiterated its commitment to protecting car buyers from being misled by unscrupulous dealerships. As a result, a wave of investigations into auto dealerships has begun. The FTC has stated that even without the CARS Rule, investigations into deceptive car dealerships would continue, with significant financial penalties continuing to be enforced against unethical businesses. In particular, investigators have warned that deceptive dealerships will suffer significantly if investigations find sufficient evidence of repeat issues.

4. Big Auto Dealerships Facing Multiple Lawsuits

Numerous investigations against big auto dealerships have resulted in significant penalties and settlement fines that have had a major impact on the businesses involved. For example, the FTC is investigating Leader Automotive Group after learning of numerous consumer complaints regarding additional fees and mandatory add-ons. The FTC has also warned that the company regularly misled customers with regards to online advertising, resulting in consumers having to pay significantly more than what was initially expected.

Major Investigation Findings:

• Hidden dealership fees.
• Mandatory product add-ons.
• Misleading online advertising.
• Consumer refund settlements.
• Significant financial penalties.

According to the FTC, numerous consumers who responded to the dealerships online advertising have been subjected to thousands of dollars in unauthorized fees and products add-ons in addition to mandatory charges. Additionally, the investigation includes various allegations concerning unauthorized products and services, online reviews manipulation, and the concealment of business practices from regulators. As a result of the allegations, a $20 million settlement for consumer refunds will have to be made by the company in addition to numerous other penalties.

Another major dealer group, Lindsay Automotive Group, has also come under the FTC’s scrutiny. The FTC has accused the dealer group of deceptive marketing practices, including mandatory financing terms or rebates that were not disclosed in the online advertising. Additionally, the FTC has accused the company of numerous unauthorized add-ons, including service plans and other various products, and has requested that numerous consumer refunds are issued.

5. Dealing with Discriminatory Lending Practices of Car Dealerships

Furthermore, several car dealerships have been accused of operating unfairly towards members of protected classes, particularly with regards to vehicle financing terms. For example, the FTC has accused Coulter Motor Company of engaging in discriminatory financing practices. According to the FTC, various unauthorized fees have been implemented by the car dealership as well as questionable interest rates that have been applied to certain customer groups. The FTC has also accused the company of violating federal safety regulations, as well as failing to report the issue to regulators.

Focus of Investigation:

• Equal financing terms.
• Unauthorized fees.
• Vehicle safety.
• Consumer protection.
• Discriminatory lending terms.

According to the FTC, Latino applicants were subjected to significantly higher finance charges and related fees than non-Latino whites, despite having comparable credit histories. As a result, the FTC has filed a proposed settlement requiring financial compensation for the affected consumers, as well as the creation of a national fair lending compliance program. Similar issues have also been reported in other car dealerships, with unauthorized fees, financing add-ons, discriminatory rates, and payment packing affecting a large number of consumers. In particular, regulators have accused several auto dealerships of discriminatory lending practices that have been systematically disadvantaging minority groups in favor of non-Latino whites.

6. Automakers Face Growing Legal and Regulatory Challenges

Numerous car manufacturers are also being investigated by regulatory agencies for a variety of issues. From consumer privacy to vehicle safety, major car manufacturers are held to the same standard of consumer protection as car dealerships. In the case of General Motors, regulators are investigating the company for consumer privacy violations, as well as product defect litigation and safety recalls. As a result, GM has had to settle several class-action lawsuits and several other issues in addition to ongoing litigations concerning the company’s transmission systems.

Key Industry Challenges:

• Consumer privacy concerns.
• Vehicle reliability issues.
• Safety investigations increase.
• Product defect lawsuits.
• Regulatory oversight expands.

GM has been accused of OnStar location tracking without the consumer’s consent, with the data allegedly being used in other capacities by GM. The company has also had to settle several class-action litigations concerning product defects and safety recalls, including battery fires and engine defects. At the same time, GM has been accused of numerous safety-related violations concerning the company’s automated driving system, with the National Highway Traffic Safety Administration ordering the company to improve the technology or face significant financial penalties.

7. Safety Enforcement Reaches Major Manufacturers

As the automotive industry begins to adopt more automated vehicle features, regulators are closely watching to ensure the companies follow all the required safety protocols. As a result, numerous manufacturers have been forced to conduct vehicle recalls, especially in the case of serious safety violations. In addition, several car manufacturers have faced significant financial penalties for inaccurate reporting and delaying the recall process, with companies such as Ford being fined $165 million for the repeated offenses.

Safety Enforcement Focus:

• Timely recall actions.
• Accurate safety reporting.
• Federal compliance required.
• Stronger oversight measures.
• Consumer safety prioritized.

Ford has been accused of deliberately delaying the recall of several car models equipped with defective rearview cameras. In addition, the National Highway Traffic Safety Administration has accused the company of being repeatedly unresponsive to the agency’s requests for information concerning the issue. However, as a result of the FTC settlement, Ford must now enforce stricter safety measures in regards to vehicle recalls and testing. The settlement requires that Ford establish stronger internal safety procedures, such that the company can be better prepared to respond to any future safety concerns.

8. Advanced Driver-assistance Features Under Regulatory Scrutiny

As car manufacturers introduce more automated features to their vehicles, regulators are working to ensure that the companies follow proper consumer disclosure practices. As a result, the FTC has accused Tesla of inadequate disclosure concerning the limitations of the company’s Autopilot features. In addition, a federal jury ruled that Tesla is partially responsible for a fatal crash that occurred as a result of driver error, thus holding the company accountable for designing a product with inadequate consumer warnings.

Technology Under Review:

• Driver-assistance systems examined.
• Software safety evaluated.
• Clear consumer communication.
• Product testing strengthened.
• Regulatory oversight continues.

The court ruling determined that Tesla’s Autopilot system was not designed to be fully automated, and that the driver was entirely responsible for the crash. However, since the consumer was not adequately informed of the limitations of the Autopilot system, Tesla was held partially liable for the accident. The court’s ruling will be vital in regards to future litigation concerning advanced driver-assistance systems and automated features in general.

9. Industry-Wide Challenges Extend Beyond Traditional Vehicles

Many major automakers are also under regulatory and legal scrutiny, with concerns ranging from product defects to cybersecurity breaches. For example, Hyundai and Kia have been accused of numerous product liability issues, while Stellantis and Nissan have been accused of several vehicle safety recalls. Additionally, several of the automotive companies have been required to provide extended vehicle warranties in the case of extensive mechanical failure.

Industry Challenges Continue:

• Engine defect lawsuits.
• Vehicle fire concerns.
• Transmission-related claims.
• Cybersecurity threats increase.
• Digital sales monitored.

Meanwhile, cybersecurity threats have also become a major concern for numerous auto manufacturers. For example, CDK Global, a major car-dealer software provider, was accused of a ransomware cyberattack that resulted in the encryption of numerous data servers across the North American region. The attack not only impacted the operations of the car dealership software provider, but also created operational difficulties for many car dealerships that rely on the program for car sales, vehicle financing, and service appointments. As a result, CDK Global has had to pay numerous legal penalties in addition to numerous other penalties.

The Federal Trade Commission is also beginning to focus on online auto dealers, which will require them to follow the same consumer protection standards as traditional auto dealers. As the automotive industry begins to rely more on digital technology and online retail, cybersecurity and consumer privacy will be the main focus of federal investigations. At the same time, online auto dealers are being penalized for not following the same consumer protection laws as traditional auto dealers.

10. What the FTC Crackdown Means for Consumers

The investigations, settlements, and penalties that have occurred in the automotive industry in recent months are a result of federal regulators cracking down on unethical car dealerships. In particular, car dealers are being held accountable for deceptive pricing, financing, and advertising practices. In addition, car manufacturers are also being held to the same consumer protection standards as car dealerships.

Tips for Consumers:

• Compare advertised prices.
• Review financing carefully.
• Check recall notices.
• Confirm optional products.
• Protect personal information.

While many changes have been made in regards to the automobile industry, car buyers should still be aware of what they are getting themselves into when purchasing a new vehicle. Firstly, comparing advertised prices can assist in finding better deals, such as lower prices, additional incentives, and various benefits. At the same time, car consumers should carefully review financing options and consider their personal financial situation in regards to purchasing a vehicle. In addition, car consumers should ensure that any optional add-ons are necessary and authorized before purchasing them. Finally, buyers should regularly follow up on any vehicle recall procedures that may affect the car they have purchased.

In addition to traditional consumer concerns, auto dealers and manufacturers will also be held accountable for privacy issues and cybersecurity threats. In regards to online auto dealers, the FTC will ensure that they follow the same consumer protection laws as traditional auto dealers. In addition, the FTC will continue to enforce strict consumer safety regulations in regards to vehicle safety. Lastly, as car buyers are increasingly relying on online car-buying platforms, consumer privacy will continue to be a major focus for federal regulators.