Yahoo Finance Buying a Car in 2024? Junk Fees Will Be a Thing of the Past
The Federal Trade Commission (FTC) is cracking down on junk fees. The new rule is expected to save consumers more than $3.4 billion, the FTC said. The FTC’s rule goes into effect on July 30, 2024.
Rachel Cruze: 10 Used Cars Under $10K That Are Worth Buying
Learn: 3 Things You Must Do When Your Savings Reach $50,000
The Combating Auto Retail Scams (CARS) Rule also fights against bait-and-switch tactics, which the FTC said should save consumers an estimated 72 hours each year shopping for vehicles. It also includes clear protections for military members and their families who are often targeted at dealerships.
“When Americans set out to buy a car, they’re routinely hit with unexpected and unnecessary fees that dealers extract just because they can,” said FTC Chair Lina M. Khan. “The CARS Rule will prohibit exploitative junk fees in the car-buying process, saving people time and money and protecting honest dealers.”
According to the FTC, hidden junk fees are typically buried in lengthy contracts that consumers never agreed to pay. In some cases, the fees are for services or products that do not benefit the buyer.
The CARS Rule prohibits misrepresentations about price, and dealers must provide the offering price and tell consumers that optional and “bogus” add-ons — like warranty programs or service contracts for oil changes on an electric vehicle — are not required. Dealers must also give consumers information about the total payment when discussing monthly payments, and consumers must give informed consent for any charges they pay as part of the vehicle purchase.
Discover: 5 Used Cars You Should Stay Away From
The new rule received criticism from the National Automobile Dealers Association (NADA) and the Alliance for Automotive Innovation, which represents General Motors, Toyota Motor, Volkswagen and other major automakers, Reuters reported.
NADA President and CEO Mike Stanton said the rule was “heavy-handed bureaucratic overreach” and would only lengthen the car sales process with additional disclosures and complexity. The Alliance for Automotive Innovation also warned of “excessive regulation” during the car sale experience.
The FTC didn’t name companies in its release, but Reuters said that some auto dealers in question could include AutoNation, Penske, Lithia Motors, CarMax, Group 1 Automotive and Sonic Automotive.
CarMax, in a statement to GOBankingRates, said they are reviewing the ruling and support the FTC in its efforts to crack down on junk fees.
“CarMax supports the FTC’s efforts to address deceptive and unfair conduct by motor vehicle dealers. Our business was founded on integrity and transparency, so ensuring customers can make informed decisions regarding vehicle purchases is very important to us. We are reviewing the Final Rule and its extensive documentation.”
More From GOBankingRates
Daily Profits With ChatGPT: Strategies To Make Up To $1,000 a Day
7 Money Secrets All Wealthy People Know -- And How You Can Use Them, Too
This article originally appeared on GOBankingRates.com: Buying a Car in 2024? Junk Fees Will Be a Thing of the Past
