Earlier this week the U.S. Federal Trade Commission (FTC) announced new rules to protect vehicle buyers from vehicle sales scams. The FTC calls its new rule the CARS Rule, for “Combating Auto Retail Scams.” The agency says it will prevent buyers from thinking they’re buying a rig for one price, and then finding out it costs a lot more. Why more? Because dealers often inflate the final tab with “add-ons” customers never asked for. The RV industry dodged those rules after complaining to the FTC that if it were included, RV buyers would be “negatively impacted.”
New rule expected to save $3.4B per year
The CARS Rule is designed to help with two common types of illegal tactics consumers face when buying a vehicle. These are bait-and-switch tactics and hidden junk fees. The FTC says it expects the new rule to save consumers more than $3.4 billion when shopping for vehicles.
Do RV sales scams look like this?
“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.”
The CARS Rule prohibits dealers from using bait-and-switch claims to lure vehicle buyers to the lot. These claims include the cost of a car or the terms of financing. They also include the availability of any discounts or rebates, and the actual availability of the vehicles being advertised. It also tackles hidden junk fees. These are charges buried in lengthy contracts that consumers never agreed to pay. In some cases, these fees are for services or products that provide no benefit to consumers.
What the CARS Rule Requires:
- No Misrepresentations: The rule prohibits misrepresentations about key information, like price and cost.
- Offering Price, Total Payment, and Add-Ons Optional. Dealers have to provide the offering price—the actual price any consumer can pay for the vehicle; tell consumers that optional add-ons (like extended warranties) are not required; and give information about the total payment when discussing monthly payments.
- No Bogus Add-Ons: The rule prohibits dealers from charging for any add-on that does not provide a benefit to consumers. Examples of such add-ons include: warranty programs that duplicate a manufacturer’s warranty, service contracts for oil changes on an electric vehicle, GAP agreements that do not actually cover the car or neighborhood in which it is housed. It also includes software or audio subscription services on a vehicle that cannot support the software or subscription.
- Get Consumers’ Consent: The rule requires dealers to get consumers’ express, informed consent for any charges that they pay as part of a vehicle purchase.
RV industry gets an exemption
All of these protections under the CARS Rule sound pretty straightforward. For consumers, it almost seems a windfall. It really shouldn’t. After all, fair should be fair. But when it comes to buying an RV, motorized or otherwise, none of these protections are in place because the RV industry dodged the CARS Rule.
On December 13, RVDA—the business interest group for RV dealers—published a news release called, “RVDA Regulatory Alert: RV Dealers Exempt from FTC’s CARS Rule.” The alert let RV dealers across the nation know that RVDA had managed to convince the FTC that RV dealers needed to be exempted from the new rule.
The alert says, “RVDA filed comments with the FTC saying the rule would negatively impact RV consumers due to additional equipment sold by RV dealers, such as towing systems and leveling devices, that can be essential for the safe operation of the RV.”
RV consumers “will become frustrated”
Here are two paragraphs from the RVDA’s letter to the FTC, explaining how “RV consumers would be negatively impacted.”
“RVDA believes this proposal is well intended, trying to make the motor vehicle sales process more transparent. However, it is our belief that the NPRM [Notice of Proposed Rulemaking] will complicate the RV buying process and will make it much more confusing for the customer due to the number or optional and required Add-ons in the RV industry, there will need to be documented consent for RV Add-ons that could range in the dozens or more for a high-end RV.
“Customers will become frustrated since they will ask the price for a specific RV. To be cost competitive, RV dealers across the nation will be forced to compete with low cost, low service dealers and quote an Offering Price that does not include items needed to prepare the RV. The customer will arrive at the dealership and be upset that the RV hitch may cost an additional $3,000, a lithium RV battery may cost another $2,000, a second roof A/C unit will cost an additional $1,500.”
What’s more frustrating? Getting information on what you’re buying, or being the victim of an RV sales scam?
Are we that ignorant?
The way we see it, customers shopping for a car or pickup have plenty of “options” they can buy into. True, the number of options for an RV can certainly exceed that of a car or pickup. But it shouldn’t be too difficult for the salesman to spell them out. Could it be that some RV dealers just can’t stomach the thought of having to be “forced to compete with low cost, low service dealers”?
The entire RVDA response to the proposed CARS Rule ran 13-pages in length. Readers may find it revealing to get a look into the industry’s “reasoning” on how it should be exempted. And, indeed, dodged the new rules. Click here to read it.
The FTC is watching. Let them know if you’ve been ripped off
Interestingly, the RVDA sent a not-so-subtle message to some of its members. RV sales scams shouldn’t be the order of the day. The concluding paragraph of the RVDA release on the subject reads this way: “The FTC did comment that the agency would ‘continue to monitor [RV, boat, and motorcycle dealers] for unfair and deceptive practices to determine whether further action is warranted to protect consumers, through law enforcement, a future rulemaking, or other measures. The Commission notes that no dealer may misrepresent material terms; deceive customers about prices, add-ons, or payments; charge for products that provide no benefit; or charge consumers without express, informed consent. To the extent that dealers engage in such conduct, they are in violation of the FTC Act.”
The bottom line for RV buyers should be this. If you feel like you’ve been victimized by an RV sales scam, speak up. If you pay a whole lot more for an RV than you were told you’d pay, let the FTC know. Don’t limit your unhappiness to a close circle of friends or a social media post. You can report fraud to the FTC via the internet at ftc.gov/complaint or click here.
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I applaud the efforts of the RVDA in pointing out the multitude of reasons why the FTC is wrong in applying the CARS Act to RVs. I’m disappointed in the author’s criticisms and simply blowing off the ludicrous requirements that the “act” would impose on the RV industry. I encourage all readers to actually read the RVDA’s response to the FTC. The response in itself makes for outstanding journalism.
The RVDA is truly the most worthless outfit in the RV industry! If any industry should fall under the CARS new rules, it is the RV industry. They have proven over and over again they are not to be trusted and cannot self regulate themselves!
Yet another reason why our current RV will be our last.
I have walked out of two RV purchase closings due to a plethora of previously undisclosed 3rd party fees that were unjustifiable and the finance manager could only describe in circular logic terms. My counter to handle those same functions outside the sale and prior to release of the RV were summarily rejected. Why? Because the actual cost of those 3rd party fees was nearly a $1,000 less. What those dealers didn’t know was I was a retired banker who knew exactly what the real cost was for tax, title & plate and an overnight mailer.
The legitimate dealer from whom I purchased had all the dealership’s fees listed on a sheet and sales could defend any of them.
Key points I noted were A. Hey, we don’t want to be honest and 2. We don’t want to compete with cheaper prices at “other dealers”. Given the preponderance of warranty and “routine” maintenance nightmares by (theoretically) “highly revered/honest” dealers and manufacturers it seems blatantly obvious some better more comprehensive oversight is indicated. One need not be a rocket surgeon “engineer” to see it. Quality and honesty sadly are not “guaranteed” as evidenced by multiple reports of problems . On the other hand, do we really need another (govt) law to accomplish this…. As RV buyers maybe we just need to talk with our feet. 😉
I asked for a out the door price from RV Leaders in Pa. They added things like PDI, full detail, battery installation, LP and fuel, Cert delivery and walk thru, Units Pa inspection, Welcome kit and winterization. For an additional price of $2,151. which I wasn’t added to my last TT. Winterizing was probably done at the factory before shipping. I ended up by a new travel trailer in the state of Washington. It was about $11,000. cheaper.
I think its a move in the right direction for the FTC to monitor the RV sales process and telling that the RVDA thought it prudent to send out a warning to its membership of that fact.
If there are “must have”, previously unrecognized add-ons in a sale that the customer and management disagree on, the sale should be voided. Both parties move on. Buyers should beware of this potential tactic and prepared to address it.
A similar situation like why RV manufacturers will never be held to the same standards the auto industry is held too. RV’s are recreational vehicles unlike cars and trucks that are considered necessary for everyday life. Just like dealers of the same make of RV don’t all have to honor warranties, just the selling dealer so if you’re on a trip 500 miles from where you bought it good luck! Enough money is kept in politician’s pockets that represent where the RV industry lies to prevent legislation to regulate the industry from reaching the floor for a vote.
Spot on Bob!
While it’s fine to have protective laws, the consumer needs to also take responsibility for asking lots of questions, understanding all aspects of the transaction, including all costs, and as Jim’s response indicates, just walking away from scammer dealers.
I’m sure sales and/or finance people at dealerships hate me as I sit there and read every word of whatever they are asking me to sign. Tough if they don’t like it or don’t have the time scheduled in their day. I’m not paying tens or hundreds of thousands for cars or RVs without fully understanding and agreeing to every penny of cost.
Thank you, Russ and Tina! It is unfortunate that the RV dealers’ lobbyists are this good. However, I am glad that the FTC is informed enough to continue monitoring the industry and sales practices. Possibly the best thing that RV owners and potential buyers can do is cozy-up to every FTC employee that can be found, take them camping, and have them sit around a campfire while owners recount their many misdealings with RV dealerships. The more people, including bureaucrats, who become informed, the better we’ll all be.
Great comment Neal, and one I readily agree with !
The biggest “bogus add on” in the RV industry is “extended warranties”. Dealerships need to be taken to task for pretending to sell “only the best warranty in the business” as a several thousand dollar add on that essentially covers nothing. Add to that that a “five year warranty” on items that already have one or two year, or longer, warranty from the manufacturer isn’t really a five year warranty at all. “Extended warranties” are the biggest scam in the RV industry.
“Looks like a Duck, walks like a Duck and quacks like a Duck- probably is a Duck” Looks like a fraud, works like a fraud and sounds like a fraud- dam sure it is a fraud; except in the RV industry.
Part of the issue is that the consumer doesn’t get to see the paperwork that the dealer sends to the bank/cu to get the loan. The dealer can add options like Jacks, Satellite to raise value for the loan approval but the consumer never gets those items. And doesn’t find out until too late to do much.
“The customer will have to pay $xxx for a hitch…”. This is EXACTLY what consumers NEED to know…. And “low service dealers”, isn’t that what I read about ALL the time anyway?
I was given one interest rate without an extended warranty and another interest rate for buying an extended warranty. The lower interest rate included a $12000 extended warranty. The dealer said it was like getting extended warranty for free. Whatever you both agree to the dealer will write up a purchase contract completely different to what you both agree to verbally. The dealer is hoping you don’t catch the changes in their favor in the finance dept. If you do catch the add-ons they just say it was just a simple mistake. RV dealers are the worst scammers, they have so much more than a car dealership to screw you on.