‪(480) 285-8227 dave@dealercomply360.com

FTC UDAP Rule Compliance Policy

Purpose:
The purpose of this policy is to ensure [Dealership Name] complies with the FTC’s Unfair and Deceptive Acts (UDAP) rule. This policy is expanded to include the more detailed requirements emphasized in the Combating Auto Retail Scams (CARS) Rule. The CARS Rule is designed to promote transparency, prevent deceptive practices, and ensure fairness in motor vehicle transactions.

1. Scope

This policy applies to all employees, contractors, and agents involved in the sale, financing, leasing, or advertising of motor vehicles at [Dealership Name].

2. Policy Statement

[Dealership Name] is committed to providing clear, accurate, and transparent information to customers during vehicle sales and financing transactions. The dealership strictly prohibits deceptive advertising, misrepresentation of costs, and hidden fees in compliance with the FTC CARS Rule.

3. Definitions

  • Key Pricing Terms: Includes advertised prices, total cost of financing, fees, and optional add-ons.
  • Add-ons: Optional products or services such as extended warranties, GAP insurance, or service contracts.
  • Misrepresentation: Any false or misleading statement about the price, terms, or features of a vehicle or financing agreement.

4. Advertising Requirements

[Dealership Name] will ensure that all advertising complies with the following guidelines:

  1. Transparent Pricing:
    • Advertised prices must include all costs the customer must pay, excluding tax, title, and registration fees.
    • Disclose any limitations or restrictions on advertised offers (e.g., “offer applies only to qualified buyers”).
  2. No Hidden Costs:
    • Prohibited from advertising prices that exclude mandatory fees or add-ons that customers must purchase.
  3. Disclosures:
    • Prominently display disclosures about optional add-ons, qualifications for advertised pricing, and terms of financing in all advertisements.

5. Pricing and Add-ons

  1. Full Disclosure of Pricing:
    • Provide customers with an itemized list of all fees, charges, and optional add-ons before they commit to a purchase or financing agreement.
    • Ensure customers understand that optional add-ons are not required to complete the transaction.
  2. Consent for Add-ons:
    • Obtain clear, affirmative consent from customers before adding any optional products or services to their purchase or financing agreement.
    • Maintain records of customer consent for at least 5 years.
  3. Bundled Add-ons:
    • Prohibited from misrepresenting bundled add-ons as “free” or “included” when they are not.

6. Misrepresentation Prohibition

Employees must not:

  • Make false or misleading statements about the price, financing terms, or availability of vehicles.
  • Falsely represent the necessity or benefits of optional add-ons.
  • Offer financing terms or interest rates that are not available to customers.

7. Customer Disclosures

Provide customers with clear, accurate, and timely disclosures of the following:

  1. Final Pricing:
    • The total cost of the vehicle, including all fees and optional add-ons.
  2. Financing Terms:
    • The annual percentage rate (APR), total loan amount, and monthly payment obligations.
  3. Optional Add-ons:
    • A description of each optional product or service, its cost, and its impact on the overall purchase price.

8. Employee Training

All employees involved in sales, advertising, or financing must complete training on the following:

  • FTC CARS Rule requirements.
  • Transparent pricing and disclosure obligations.
  • Proper procedures for obtaining customer consent for add-ons.

9. Monitoring and Auditing

  • Conduct regular audits of advertisements, pricing disclosures, and sales practices to ensure compliance with the FTC CARS Rule.
  • Review customer feedback and complaints to identify potential violations.

10. Recordkeeping

Maintain accurate records for at least 5 years, including:

  • Copies of advertisements.
  • Pricing disclosures provided to customers.
  • Customer consents for optional add-ons.

11. Reporting Violations

Employees must report suspected violations of this policy to the Compliance Officer immediately. Reports will be investigated, and corrective actions taken as necessary.

12. Penalties for Non-Compliance

Failure to comply with this policy may result in:

  • Disciplinary action, up to and including termination.
  • Regulatory fines or penalties imposed by the FTC.
  • Legal or reputational consequences for the dealership.

13. Policy Updates

This policy will be reviewed and updated annually or as changes to the FTC CARS Rule or dealership practices occur.

Acknowledgment
I acknowledge that I have read and understand the FTC CARS Rule Compliance Policy and agree to comply with its provisions.

Employee Signature: ___________________________
Date: ___________________________

Manager Signature: ___________________________
Date: ___________________________

This policy ensures compliance with the FTC CARS Rule, promoting transparency and fairness in dealership operations. Let me know if you need additional details or forms related to this policy!