The Federal Trade Commission (FTC) unveiled a new rule targeting car dealership scams that hurt shoppers

The Federal Trade Commission announced a new rule Tuesday aimed at preventing car dealers from using hidden fees and bait-and-switch pricing tactics on buyers.

The agency says these fees and tactics cost Americans $3.4 billion annually and add 72 million hours to the time they spend shopping for a car.

The FTC calls the new regulation the “Automotive Retail Anti-Fraud Rule.”

Read more about this story at And watch “NBC Nightly News with Lester Holt” tonight at 6:30pm ET/5:30pm Central.

The agency says the rule prohibits misrepresentations about price, cost and other basic information. It also requires dealers to provide the actual price any consumer must pay for a vehicle, requires them to disclose that additional items such as extended warranties are not mandatory, and requires them to state upfront the full monthly payment that consumers will accept.

Stacy Lobo, of Winter Haven, Florida, told NBC News that she and her son fell victim to these types of sales tactics when she bought him a car from a Toyota dealer in 2021. They were offered an extended warranty and they declined, but Lobo was concerned about the way he behaved. Then the finance manager.

She said she later reviewed the lease paperwork and found a charge from an extended warranty company.

“The total amount my son would finance was different on the printed sheet than what we signed on the computer. Suddenly it was almost $4,000 more,” she said.

Lobo also asserted that her daughter, who had purchased an almost identical vehicle the week before and had not dealt with that finance manager, was paying less than her son.

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“This rule put in place by the FTC will really help ensure a fairer and more honest marketplace so Americans can buy cars without worrying about being scammed or scammed,” FTC Chairwoman Lina Khan said in an interview with NBC News.

“Every year for the past four years, we’ve received more than 100,000 complaints from consumers who have gone out to buy a car, one of the most expensive purchases Americans make, and in the process we’ve found that they’re being burdened with all kinds of unnecessary products or services that have been snuck in. One way or another to the papers they had to sign.”

The FTC says the rule also prohibits add-on items that the agency described as providing no value to consumers, such as duplicate warranties and software and audio subscriptions for cars that can’t support those services, or service contracts for oil changes on electric cars that don’t need motor oil.

Another provision prohibits dealers from attempting to deceive military personnel by falsely suggesting that agents are affiliated with the military.

“It’s been an issue for a very long time, but it’s gotten significantly worse during the pandemic, hence the push for this rule,” said Sean Tucker, senior editor at automotive research firm Kelley Blue Book. “It became a bigger problem when everyone had to pay more than the MSRP for their car.”

Tucker added that some of the fees charged by car dealerships are legitimate, but others are scams.

“My absolute favorite is the nitrogen in the tires,” he said. “They ran tests and determined that it contains the same amount of nitrogen as ambient air. “It’s completely fake,” he said, comparing nitrogen-filled tires to tires inflated with regular air.

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In November, the Consumer Financial Protection Bureau charged Toyota’s credit division with deceptive conduct and ordered it to pay $60 million. This included a $12 million fine, plus refunds to consumers.

After several phone calls, Lobo said she was able to cancel the extended warranty on her son’s car, but it took a lot of work. Her son is stuck paying higher monthly payments for the duration of the lease.

“I sold my car a while ago, and I still haven’t bought a new one because I’m scared to death of going to a dealership because I’m being taken advantage of. It’s a terrible feeling,” she said.

More tonight on NBC Nightly News with Lester Holt at 6:30pm ET/5:30pm Central.

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