TrueCar, dealers, respond to new FTC compliance demands

David Boice, co-founder and CEO at Team Velocity, whose automotive marketing company works with approximately 3,000 dealer clients, talked with the AIM Group about two different compliance issues that have come to the fore recently. The first, Google Advertising compliance, requires that vehicle prices advertised on Google match the price at the dealership, under penalty of account suspension from Google (with the exception of organic search results) rather than financial fines. Still, this is no small thing, as Boice told us that about 95% of car dealers advertise on Google.

The second, imposed by the U.S. Federal Trade Commission (FTC), is far more detailed, complicated and severe in its punishment for non-compliance.

The FTC requires that all dealers disclose in their advertising all fees that the consumer must pay when purchasing a vehicle. These fees must be “clear and conspicuous” rather than buried in the fine print. The penalty for non-compliance is financial, and can amount to hundreds of millions of dollars. So far, the FTC has issued warning letters to nearly 100 dealer groups that are not in compliance.

The FTC compliance issue is also a potential financial stumbling block for automotive marketplaces that work with dealers to offer inventory on their marketplace. So far, we have seen only one marketplace — TrueCar — address the issue with any new feature or process changes.

“The vast majority of car dealers in the U.S. would prefer just to sell the vehicles at the manufacturers’ suggested retail price (MSRP), and have some reasonable fees that their store charges…and call it a day. But the market isn’t quite that way,” Boice told us. “The market is so competitive that they’re always trying to be the lowest price advertiser, and then deal with it in the showroom when all the customers arrive.”

Boice doesn’t believe that the FTC has ever issued warning letters to dealers before, as it did this March. “Which I think is good,” he said. “A healthy way to do it versus litigating. They’re giving a signal to the industry that you need to, in this particular area, kind of clean up your act. And if not, you may be held liable and we would hate to see that happen… I think it’s got the industry’s attention for sure.”

He also stressed that some dealerships are unintentionally non-compliant. “They just don’t know,” he said. “They have so many people involved…the general sales managers, the BDC (business development / call center) and the internet managers. And a lot of people are touching their advertising that are not lawyers and maybe not qualified to make the right disclosures.”

He said dealers are starting to realize that this compliance is very important to their business, and exposes them to some liability. They’re being more proactive about not having so many people involved in the compliance decisions. “Not so many hands in the pot, if you will.”

TrueCar, the automotive marketplace, whose core proposition is to provide pricing transparency by advising what other consumers pay for vehicles, just announced a series of product and policy updates designed to not only meet but to exceed the new FTC Truth in Advertising standards along with various state requirements for vehicle pricing transparency.

“TrueCar has always been built on price transparency; it is our founding principle,” said Scott Painter, founder and CEO of TrueCar, in a news release. “The FTC’s current enforcement validates that approach. Our commitment to dealers and customers is that every vehicle listing on TrueCar complies with, and in many cases exceeds, what federal and state authorities require. Most recently, we updated our dealer agreement to ensure our platform remains a transparent and compliant marketplace.”

TrueCar will implement sitewide changes to ensure that the vehicle prices advertised are not only FTC compliant, but also clear and consistent. Mandatory dealer fees and add-ons such as dealer prep fees are included in the advertised price. TrueCar will go further in disclosure than FTC compliance, by explicitly identifying those fees within the total price that consumers see.

“Regulators are making it clear that ambiguous pricing is no longer acceptable,” said Painter. “We are moving early to establish a standard that is not only compliant but clear and consistent for consumers and dealers alike.”

The updates respond to enforcement priorities outlined by the FTC, including prohibitions on incomplete pricing, misleading discounts and unavailable inventory. They also respond to federal enforcement reinforced in several states. According to the announcement,

“California’s proposed CARS Act mirrors the FTC’s requirements, while Connecticut has already enacted advertising rules mandating that all fees and add-on costs be included in the advertised price. Additional states are expected to follow, signaling a broader shift toward consistent, fully transparent pricing across the automotive retail market.”

TrueCar, a leading digital automotive services founded in 2005 in Santa Monica, California, uses technology to help car-buyers shop, with its nationwide network of certified dealers. It powers auto-buying programs for over 250 leading brands, including Sam’s Club, AAA, and more than 100 credit unions.

Team Velocity, based in Herndon Virginia, and also founded in 2005, is an automotive marketing technology provider that digitizes dealership operations through its AI-powered Apollo. It currently works with more than 20 OEMs (original equipment manufacturers) and approximately 3,000 dealerships nationwide.

Scott Painter took time out of his busy AutosBuzz schedule to update us on launch timeframe.

“TrueCar has already begun rolling out these enhanced compliance features platform-wide,” he said. “TrueCar expects full implementation of the changes by the end of Q2 as we work closely with dealer groups to ensure seamless integration of dealer information into the platform.”

Source: AIM Group