#430 - FTC Sends 97 Warning Letters to Car Dealers — Are You Next? | Patrick O'Brien
The Independent Dealer Podcast
#430 - FTC Sends 97 Warning Letters to Car Dealers — Are You Next? | Patrick O'Brien
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Term
Repair Act
The Repair Act is a proposed law discussed in the episode. The goal is to make it easier for independent repair shops to get the information and tools they need to diagnose and fix cars.
Term
OEMs
OEMs are the original car makers—the companies that build the vehicles in the first place. The bill being discussed would require them to share certain repair information and tools.
Term
diagnostic data
Diagnostic data is the car’s “troubleshooting information,” like what system is failing and what the sensors are seeing. The point here is that independent repair shops should be able to access it too, not just dealership technicians.
Term
aftermarket part industry
The aftermarket part industry makes replacement parts and related tools that are not produced by the original vehicle manufacturer (OEM). The segment frames the Repair Act as enabling this industry to perform repairs and reconditioning more effectively by getting access to OEM diagnostic information and tools.
Term
franchise dealers
Franchise dealers are the official, authorized dealerships tied to a specific car brand. The concern is that without access to the right repair information, independent shops may have to send work to those dealerships.
Company
NADA
NADA is an organization that represents car dealerships. In this segment, the host says NADA helped dealers prepare by explaining what the FTC actions and warning letters mean.
Company
NIADA
NIADA is an organization for independent car dealers. The speaker says NIADA also helped dealers prepare by explaining compliance expectations tied to the FTC warnings.
Concept
compliance obligations
Compliance obligations are the rules a business has to follow to stay on the right side of the law. The point being made is that dealers should take FTC warning letters seriously because enforcement can follow quickly.
Concept
enforcement hammer
“Enforcement hammer” is a way of saying regulators will start taking real action. The speaker’s message is that a warning letter could be the last step before penalties or other enforcement.
Company
FTC
The FTC is a U.S. government agency that watches over advertising and consumer rules. Here, it’s warning car dealers that their ads may not be clear enough under the law.
Concept
enforcement action
An enforcement action is when a regulator takes formal steps to compel compliance or penalize violations. Here, the host frames the FTC warning letters as a precursor to enforcement action or a lawsuit if the dealer’s advertising issues continue.
Concept
look back
A “look back” refers to regulators reviewing prior conduct—such as earlier ads, complaint history, or past compliance behavior. The host uses it to explain how warning letters can be followed by scrutiny of what the dealer did before the warning.
Concept
audits
In this context, audits are formal reviews of a dealership’s practices—likely including how it advertises and whether it follows consumer-protection laws. The host suggests the FTC may audit dealers after sending warning letters to check for ongoing or new complaints.
Concept
fines become significant
The host emphasizes that penalties can escalate if regulators move from warnings into investigations or enforcement. For dealers, this is a practical reminder that compliance efforts after a warning letter matter because the financial consequences may increase.
Company
Lindsay Auto Group
Lindsay Auto Group is described as a large auto group in the DC area that agreed to a consent agreement related to dealer advertising transparency. The mention is used as an example of how similar issues can lead to regulatory settlements.
Concept
consent agreement
A consent agreement is a legal settlement where a party agrees to certain terms without necessarily admitting wrongdoing. In dealer enforcement contexts, it often resolves allegations about advertising or consumer-protection violations and can include compliance requirements.
Company
NPC
NPC is referenced as the agency involved in a consent agreement with the Lindsay Auto Group. The context suggests it’s a regulatory/enforcement body tied to dealer advertising or consumer-protection compliance, but the transcript doesn’t spell out what NPC stands for.
Term
franchise guys
This is talking about dealerships that sell a specific car brand under that brand’s franchise agreement. The people running those stores can be pushed by incentives to sell extra stuff.
Term
FNI guys
At many dealerships, there’s a finance-and-insurance desk. Those staff members often try to sell extra coverage and add-ons after you pick the car.
Concept
sell back-end product
“Sell back-end product” means focusing on profit from finance-and-insurance add-ons after the vehicle sale, rather than on the car’s base price. In dealership practice, this often includes warranties/service contracts and other upsells tied to commissions.
Term
warranty
They’re talking about extra coverage sold by the dealership. The issue is that some salespeople may pressure you to buy it or act like you must take it, even if you don’t.
Term
optional piece
They mean add-ons that you can usually choose to decline. The concern is that some dealers may make it sound like you have no choice.
Term
full-sum disclosure
It means the price you see in the ad should be the real total you’ll pay, not a smaller number that later turns into a bigger bill. If important charges are left out, it can get the dealer in trouble.
Term
file price
“File price” is the price the dealer has on record for the vehicle. The discussion is about making sure the ad price and the recorded disclosed price line up.
Term
window sticker addendum
Sometimes the car’s window sticker has extra pages or notes that list dealer-added items. The issue here is that ads may show a lower price while the addendum shows extra charges.
Term
P.
“P.” sounds like a shorthand for an extra charge the dealer will add later. The point is that the advertised number may not be the final total you end up paying.
Concept
no dock fee situation
A “no dock fee” means the dealer isn’t adding a separate charge for getting the car delivered to them. Sometimes the dealer just builds that cost into the car’s price instead.
Concept
unnegotiated price
An “unnegotiated price” is the sticker price the dealer starts from before you try to bargain. The point here is that extra fees can change what you actually end up paying.
Concept
list price
A “list price” is the number the dealer puts out as the starting price. If rules require fees to be included in that number, it can affect how the dealer sets pricing.
Term
compliant
“Compliant” here refers to meeting regulatory requirements for how dealers must disclose pricing and fees. The speaker suggests the dealer must list the car at a specific price (including required fee treatment) to avoid violating those rules.
Concept
advertised price
The advertised price is what the dealer says the car costs in ads or online listings. They’re discussing whether the dock fee is considered part of that advertised price—because that affects whether the dealer can add it later during negotiation.
Concept
Section 5
“Section 5” is a reference to a specific legal rule the hosts are using to decide what dealers can do with pricing. They’re saying the advertised price sets the limit, and the dealer can negotiate the base price down as long as they’re not misleading customers.
LIVE
They're a warning shot.
They're essentially a prelude to a potential enforcement
action or a lawsuit.
One, an only opportunity to crowd support them,
because I'm sure that they will do a look back,
make sure that there are no subsequent complaints,
or they may do some audits, they may do some investigations
to pick up on how bad those complaints were.
And if they do do that, that's when the clients
become significant.
Let's get up again.
Hello and welcome to the independent dealer podcast.
Luke, we have got some stuff going on, on a scary,
like, I'm going to find you into the Stone Age type
situation here with the federal government, yeah?
Yeah.
And I'm okay with it if somebody's doing what some
of these franchise dealers have been doing, so.
And I'll set it up, is that, Joe?
Ah, I see, I see, okay, so we're going to find out.
Luke's okay.
We've got Patrick O'Brien here with us.
He is with NIADA, our National Association.
Patrick, introduce yourself to the podcast community.
Thanks.
Well, first and foremost, it's a real pleasure to be
on this show.
This is a hallmark of my career.
I was waiting for an occasion and it finally landed.
Thank goodness for that.
But I'm Patrick O'Brien.
I'm the director of government relations and compliance at NIADA.
So I am your man in Washington.
Well, we appreciate you being there because I don't want to
step foot in Washington.
I'm good.
I mean, you know, card dealers are labeled as liars and cheaters,
but what the people you have to deal with every day are the
liars and the cheaters.
And you don't have to answer that.
I'm just saying they are.
Sounds personal.
I'll take a declarative statement on a topic like that.
Seven days a week.
Yeah, yeah, yeah, yeah.
You're in it.
And what we appreciate is you're in it for dealers, right?
We need to have a voice in Washington, the used car
association.
We are, I mean, how would you compare us on scale to the
new car association?
Well, from a membership perspective, it's just a
difference of a few thousand.
We note that we have 13,000 members.
NADA notes that they have about 16,000 members.
So on balance, there isn't much of a difference, but they are
much, much better resource because a lot of their members
are multi-store.
So it starts to add up on your back.
When they make an altar call, it fills up quite fast.
True.
But I work with them regularly.
The best, you know, it's their source of numbers in
Washington.
So I meet with them regularly.
We find areas of commonality.
And when we're aligned on a policy level, we move out in
force.
We're doing that with respect to some pretty draconian
safety recall legislation working collectively to keep
that from finding its way into a must pass piece of
legislation.
We're working with them on Caled and Converter legislation
to areas where there's zero daylight between the two of
us.
So I want to be clear that, you know, we do work well
together, but when we disagree, we just agree to
disagree in a professional way.
Sure.
Yeah.
Yeah, it's definitely one of those situations where you can
be allies 99% of the time and every so often you'll have
a disagreement or you'll see things differently.
Unfortunately, the used car association, we just kind of
say, okay, well, I guess you guys are going to have it your
way.
Yeah.
We have to ride their coaxial, I think, on most things.
Not on everything.
I certainly do not sit idly by when we have significant
material differences on policy matters.
It was at a conference two weeks ago in Los Angeles and it
was a room full of compliance attorneys and professionals.
The franchise dealer association, their head of public
policy was up there giving a public policy update and made
it a point to raise when it came to write your repair
legislation that this is an area where NADA and NIADA do not
agree.
And I thought that that was very dignified of him to say that
as it happens to be true and you don't want to leave these
compliance books with all suppression that there's
alignment on a topic when there is.
What legislation was that, Patrick?
So this is a bill.
The acronym is the Repair Act.
And essentially what this would do is it would compel the OEMs
to share the diagnostic data and the tools and make all that
available to the aftermarket part industry just to make
reconditioning efforts and repair efforts that much more
seamless rather than having to rely on the franchise dealers.
Yeah, I understand.
I understand their position.
I understand our position there.
Yes, I see how we could.
On the FTC thing though, I would assume we align pretty well
there, right?
I have certainly talked to them about this.
I don't think anybody is going to advocate for an unfair playing
field.
And I give NADA credit for getting out ahead of this the same
way NIADA got out ahead of this to do everything that we could
to educate our members about their compliance obligations
under law, what these letters mean, the strong likelihood that
this is your first, last and only warning before the enforcement
hammer was to fall.
And that's exactly what we should be doing is trade
associations.
And if you look at what NADA has done and what NIADA has done,
it's essentially the same thing, which is ask thoughtful
questions, offer to be a resource to the FTC as they determine
what the next steps will be in terms of clarifying guidance
and FAQs and offering to provide granular practitioner
perspectives that will feed in an important process.
They're doing it, we're doing it, an effort to get to a place
where dealers will look at those FAQs and there should be,
at least in the perfect world, no questions, no confusion,
just clarity about what those expectations are.
Yeah, Patrick, we would just rewind for a second.
For dealers that don't know that might be living under a rock
or whatever it might be, give us the plain English situation
we're dealing with here, the fines that have come out for
certain dealers, the warning letters that went out.
What is the issue?
Sure, well, let's kind of start from the one yard line,
if you will, and that would be the cars rule that was
promulgated on the previous administration and due to a
procedural misstep on the part of the FTC, and I could get
pedantic with you and explain what that was,
but I'll give you the layman's answer.
Due to that procedural misstep, the Fifth Circuit Court
of Appeals vacated the rule, and therefore it's invalid,
and the likelihood of the FTC promulgating a new cars rule
is quite unlikely, particularly in this administration
where they have issued an executive order that says,
for every rule you draft, you need to rescind five,
and that's a real tough choice for any agency to make.
So that brings us to where we are today.
What is the difference between what was contemplated
in the cars rule versus what has existed for 114 years
through Section 5 of the FTC Act?
There is very few differences between the provisions
in the cars act and what's already law under Section 5.
So what the FTC did on March 13th was issue 97 letters
to dealerships that have not been disclosed.
I think in due course we're likely to see the names
of those dealerships.
I have it under the authority that a number of entities
have submitted freedom of information requests to the FTC.
I asked the FTC if these were protected under an exemption,
and they said no, and that the FOIA request were to be submitted,
it would be appropriately managed.
So I do think those names will come out.
But the letters are grounded in what can only be described
as significant back patterns of complaints
that have been submitted to the FTC's sensible database.
I'm not talking about one person who had a bad experience
in submitting it.
This is swaths of complaints that rose to the level of the FTC
saying, okay, there's tens of thousands of car dealers,
but these 97 dealerships have so many complaints
that have been filed on them that we need to warn them
that it's clear that they're advertising not as transparent
as it should be under the law.
So those letters were issued on the 13th,
and they're a warning shot.
They're essentially a prelude to an offense
to a potential enforcement action or a lawsuit.
It's your one and only opportunity to get your house in order,
because I'm sure that they will do a look back
and make sure that there's no subsequent complaints
or they may do some audits.
They may do some investigations depending on just how bad
those complaints were.
And if they do do that, that's when the fines become significant.
Now, you asked about previous fines.
I think the timing here is pretty interesting.
The Lindsay Auto Group, which is a pretty large auto group here
in the DC area where I reside,
just agreed to a consent agreement with the NPC
for essentially the exact same thing,
misleading their customers,
not being transparent with their pricing,
putting add-ons without disclosing that add-ons are optional.
And this was something that originally goes back to 2024.
And if you look at what Lindsay said in 2024
versus what they said in 2026,
it's the difference between night and day,
which would suggest to me that that conduct continued
with the hopes that nobody would catch them.
And I think what the FTC is doing,
absent the car's rule,
is saying car's rule would have been nice.
It was an additive measure.
It wasn't a must-have measure for us to properly police market conduct
to make sure that dealers are following what's required on them.
That's...
Have we seen one of these letters?
Yes, so there's a template that's on the FTC's website.
It enumerates the various examples of potential violations of Section 5.
It's the typical things.
You're not disclosing that add-ons are optional.
The true price does not include optional fees.
It should be clear that that fee is all-inclusive
with the exception of mandatory fees.
I like to make sure that required in mandatory
that people understand the difference.
And maybe require dealership,
but it's not mandatory.
If a dealer out there that's listening,
do we know if we have been reported to the FTC?
Is there any way for us as dealers to know if that's ever happened or not?
That's a good question.
I think the answer is no.
I don't believe that the general public has plenary access to the database.
You can certainly submit a complaint.
And on that point, if I may just feed it for a moment,
one question that we asked the FTC last week during our webinar
was if our members see this type of violations of law happening in their community,
may they report that?
And they said, absolutely.
We are all four tips.
If you are identifying this type of bad acting,
we want to know about it so we can follow up on it appropriately.
But back to your original question.
I don't believe so.
Certainly if you see a poor review on Yelp or Google,
chances are that person may have filed a complaint on you as well.
Yeah, Luke, are you worried you got turned in?
No.
I try to do it right.
But I feel like that would be a good thing to know.
If I was a dealer that I thought I did things right,
and all of a sudden, I get a letter from the FTC,
and I never got one before.
I'd like to know if I was ever on their radar for doing something.
You know what I mean?
But going back to what I said earlier,
the people who receive these letters,
it's because there is a ponderance of evidence through the complaint data
and not one-off, serial examples of lack of transparency in the pricing space.
So, unless you are going out of your way to mislead your consumers,
I think that you would know if you were in that data.
Hey, sorry to break in real quick,
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I think it's just been great, Jeff.
It's absolutely been a great way for me to build wealth, put away some money.
So, if you are a buy here, pay here, lease
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And I figured as much.
You know, because...
Who knows?
Years ago, a friend of mine, the show,
got rated one afternoon by the FTC.
And he's not that large of a dealer,
but they walk in this probably 20 years ago, 15 years ago,
something to that effect.
And all of a sudden, FTC rolls into his office, right?
And it was because of an advertising situation
that every franchise dealer in the country was doing it in time
and it was, we'll pay off your trade no matter what you owe.
I think that was the phrasing that ended up becoming illegal at some point.
But, you know, if the FTC would have reached out to this dealer,
in my opinion, prior to that situation, he would have probably stopped.
So, I just hate to think that a dealer out there
thinks that they're doing something right and all of a sudden,
because he's doing what everybody else is doing,
then all of a sudden you get...
Well...
Okay, okay.
Let me just give you my two cents, Luke.
The phrase, I'm doing what everyone else is doing,
that's a big problem.
That's a big problem because how this all perpetrates throughout the system
is Mr. Used Car Manager works from...
He leaves one franchise group, comes to the next franchise group,
and says, guess what we were doing over there?
We were adding a $1,500 destination fee and a $500 detail fee
and a $1,000 friggin' whatever fee.
100% agree because these fees are outrageous.
I highly doubt this is going to come up and snag you in the butt.
A, B, it's not the guys listening to this podcast.
So, unfortunately, we can't provide you any value, Mr. Listener,
because you guys are not the ones that are egregiously being offensive
and manipulative with your pricing,
and then try to drop it down into the disclosure that says,
oh, price does not include destination shipping,
and you have to have a qualifying trade-in to get this price.
That was the big, big thing back in the EV tax credit era.
So, we would have these EV tax credits,
and everyone tried to get it to the $25,000,
so they would say, sure, I'll sell it to you for $25,000.
If you give me your trade-in, it's worth $10,000,
and I can give you $4,000 for it, right?
So, it was all this takeaway with the disclaimer
that said qualifying trade-in,
and there's two large groups here in Utah
that were just notorious for that.
And so, I know, Patrick, you can't say that,
but the other issue we've had in Utah
is the new car, the franchise guys,
the managers, the FNI guys are so incentivized by money
to sell back-end product that they don't care.
They will say and do anything in the office
to get that customer to buy a warranty
or think that an optional piece is not optional.
It's already on the car, you have to take it.
They will do anything to make money.
They don't care if in five years
the FTC comes down on their franchise group,
because they're just going to be gone and bounce somewhere else.
Yeah, you see that a lot in other industries as well.
Until recently, you saw a lot in the securities industry
where somebody could sell bad investment products,
and then they would just jump on the carousel
and go to the next broker dealer
and pick right up where they left off.
Thankfully, the FTC has gotten better about that,
but your point is valid.
There are still industries where that continues to happen.
It's not as though that's still a lingering problem
in the automotive space as well.
Do any of these fines name FNI guys?
Do any of the managers get named in these
or is it just the dealer group?
So with Lindsay, if I recall correctly,
it was the dealer principals.
They did name the executive officers,
because they had been sure opposed
and other investigative tools had been brought forth.
So they were included, their names were included
in the consent agreement.
The FNI manager could have been as well.
I just don't remember.
It's been a couple of weeks since I read it,
and a lot of development since then
that have overtaken my attention.
One last point I just want to make,
Luke, since you had asked,
maybe I'm in that database,
and it's possible because consumers are free
to submit whatever they want on FTC,
but one thing that we stress at NIEDA,
we do it with FTC,
and most recently with CFPB,
which is you really need to separate the week from the chat.
There's a material difference
between a bad customer experience
and a violation of the law.
And if somebody has a bad customer experience,
the free market prevails.
The free market is out there.
There's plenty of online reviews
that they can air their grievances,
but you should not put a bad customer experience
in the FTC's complaint database or CFPB's complaint database.
Why?
Because there are newer MOUs
that have been signed with state agencies,
whether it's attorney generals
or state regulators across the country
that have access to that information.
We don't need false positives,
and we want to make sure that whatever algorithm is looking at,
it's looking at real potential violations law
rather than somebody that just didn't like the way that they retreat.
That's not a good way to run the business,
but it's not illegal.
Yeah, that's definitely something that, unfortunately,
I don't think sometimes customers can parse, right?
That, hey, I feel like I got treated unfairly for some reason, right?
I don't know what it was like.
Well, I paid too much for the car.
I found out later.
Well, you may have paid too much for the car,
but everything was disclosed exactly like it was supposed to be.
So now I'm going to report it to the FTC,
which I'm sure that happens, right?
Yeah, I can't.
I mean, it's a game of numbers,
and the numbers are in the table of that happening, sure.
And that's exactly the example that I'm saying to,
which is that may not have been good for the customer.
The customer probably wasn't as shrewd of a consumer
as they should have been,
but the dealer, based on everything that you just described to me,
did not violate the law.
Yeah.
I think sometimes dealers,
and we see it all the time in the groups, right?
Luke, where people are like,
this customer put a deposit and I'm going to keep their car
and keep their deposit and all this stuff.
And it's like, dude, you knew this customer was unhappy.
You chose to try to stick it to them.
And guess what?
Now they have the year of your state attorney general.
And unfortunately,
now they're going to run you through the ringer.
So just do the right thing up front, squash the issue,
reach out when you have a bad Google review
or whatever rating system,
and try to squash it before it gets beyond that.
Yeah.
Sometimes you can't, unfortunately.
And I don't mean squash it
like you're going to show up to their house
and knock their kneecaps off or anything.
Take care of the customer.
Yeah, take care of the customer.
Yes, yes, yes, yes.
Give them a free like a Starbucks gift card or something.
No, don't bribe them.
Don't bribe them.
What's the word for this, Patrick?
What do we need to do?
Mediate.
Encentivize them and show them that you are actually a good
on a stroke, but do not bribe them.
No, do not threaten nor bribe.
That is not the word I was thinking of.
Luke, I want to ask you a question.
Okay.
So I'm looking through the local listing of our,
you know, whatever auto trader type thing.
I see dealers still violating it.
It is, here's the price.
This price does not include a 999 dock fee.
But right now it is illegal.
It's always been illegal.
It's being enforced.
The FTC wants me to turn this guy in.
Would you do that as a fellow dealer?
Is it a franchise store?
It is.
Of course it's a franchise store.
Then I would turn him in immediately.
Right now.
Patrick, what was your conversation with the FTC when you said,
I know that came up about what, what did dealers do?
Do we self-police?
Do we wait for them to find it?
Where's that?
Hold on.
Before we move to that, I'm going to read a new car dealer in our,
in our state who does the same thing, Jeff.
All prices.
This is current.
It's current.
Own their website.
All prices exclude tax, tax, registration fees.
Destination is excluded.
This is a used car.
Destinations excluded.
Detailing is excluded and a $735 closing fee is excluded from the price.
Patrick, is it, is it legal to do these two things?
Is it legal to have an advertised price on your website and then say these fees are
excluded and list the fees or, or not?
Or is it supposed to be in that, in that price?
Well, first and foremost, let me make a global statement that none of you listeners should
construe anything that I'm saying is legal advice.
Questions about your compliance concerns.
You should consult the lawyer or complain.
You should call Steve Levy.
But the FTC has been very clear that the out the door price needs to be out the door
price.
And I have seen as early as today, some dealers forwarding me some examples of the third party
platforms that they use.
There are already starting to add additional fidelity to the ways which cars are listed.
And that is a clear reaction to what the FTC is saying.
The matter of advertising came up when NADA spoke to them.
The matter of advertising came up when I spoke to them and they said it's a matter of control.
If you control, if you pull those levers, if you have the authority over what is being
advertised on those platforms, the ability to list and to pull down, then you have a
responsibility to update that information.
What you just described to me doesn't sound like a full-sum disclosure of everything that
needs to be included in the file price.
Yeah, and it goes on to say, which I think is just fantastic, the prices advertised,
excluded options added by the dealer and displayed on the vehicle's window sticker
addendum.
So probably when I get there, I'm going to get hit with another $3,000 in P.
And this person, this is a big group.
I mean, they know better.
You would think, right, Jeff?
Hey guys, real quick to interrupt the episode and make sure you know about a great sponsor
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Blitz, I love it, Jeff.
That is kind of like, goes from the Facebook to just Facebook.
You're going to reuse that joke, aren't you?
It was funny.
You all will get that reference in a future episode.
But Blitz has changed their name a little bit because they're launching more products.
You know, they're not just a payment platform, not just a processor, but they're also a
collections platform, an analytics platform, and who knows what else Robin and the team
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But they've got the technology.
They've got the know-how to help dealers in a lot of aspects of their business.
Yeah, data's hard to process from just everyday dealers, but Blitz is going to harness that.
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So if you need a payment processor, you need a friend in the industry or a partner, Blitz
is the only company I would recommend.
Moving past this, Patrick.
Go ahead, Jeff, if you had something.
No, no, you still haven't answered the question.
So you would turn in a franchise store.
You would not turn in a small dealer to dealer, but you send them an email and say, hey, buddy.
I would give them a call and say, hey, if I knew the person, give them a call and say,
hey, this is the way you need to be doing it.
If you're not doing it that way, you're probably going to get in trouble.
Well, and they probably won't get in trouble because they're a small guy, but they're probably
going to get in trouble and try to help them with their pricing on their website.
So Robin, try that thing.
What's interesting I'm seeing here.
So like our local classified, it's prominent in the States called KSL.
What they've now done is they will have when you know how you do a search and you pull up
all of X amount of cars that are, you know, a Ford Focus, it has them all.
You can sort them by price lowest to high.
That price is the price that comes over from the dealer's website.
When you click into the ad, it then adds the dealer's dock fee and then gives you that
total advertised price.
So it's not on the vehicle search page.
So I'm still going to come up high in the search because my dock fee is not added yet.
But when I click on the actual vehicle display page, it now adds the dock fee after the fact.
Is that how we're going to parse when the car guru's game of I need to be a great deal
upfront.
And so I show up high in the search results, but then once they click on the vehicle display
page, all my dock fees and everything else are added in.
And now my displayed advertised price is actually my displayed advertised price.
But you can't list two different prices on the internet.
Can you?
Apparently you can.
I think you could.
Well, hopefully this is something that will be contemplated in the forthcoming FAQs.
It sounds like the end result is compliance.
But if I were a car dealer, I would want to be transparent from the from the get go because
the last thing that I would want is a foreign consumer that was misled.
Even if it's just two more clicks to get to the actual outdoor price.
People don't like buying cars.
They find it to be an uncomfortable process.
And that's why they're doing this online to find out what the price is before they start
that transaction.
And if you're already feeling a bit misad, that's not a good start to a transaction,
a consequential transaction where tens of thousands of dollars.
But but but there's been a you're right.
People I'm going to take those two different ways.
People do not like the transaction of buying a car for one is expensive and is arduous.
Right.
And so I feel like franchise dealers make it make it cumbersome and long-winded to wear
the customer down.
So they just finally an end go.
I'll just pay those fees and be done with it.
Right.
I think it's part of the game.
You spent you already spent an hour talking an hour tonight.
And then all of a sudden these fees are there.
You're like, well, then you just tired and you're ready to go home and you buy the car
anyway.
And then you feel bad.
I think I think it's part of the game.
Unfortunately, where we're reading some stuff about that in the aftermath of the letters
and some of the trade crap along the lines of what you just described is that I don't
use the term wearing the customer down.
But let's just say that some of the stuff that I've read is they've invested so much
of their, let's say weekend in this particular car.
They don't want to start all over again.
And they may just concede the point because it's just better to have the rest of your
Saturday and start all over again.
That's right.
That's probably happening.
You know, so then I'm going to take this a different way because this is I feel as car
dealers, we are we have to be overly compliant.
And maybe it's just because I've been a car dealer for 30 plus years and we're always
being talked to about compliance and all this.
But when we talk about the medical field, I can't get a price on anything.
If I wanted to go in and get an ankle surgery because I broke my ankle, I'm not, I'm going
to have no idea what it costs, even if I'm paying cash, writing shirts or whatever.
If I go to CVS to get my prescription filled and I've had this happen to me because I don't
have traditional insurance, I will, I will go to get it.
And they'll be like, it's a thousand dollars.
And I go, well, I'm not, I don't, I'm not paying a thousand dollars for this.
And they're like, well, do you have insurance?
And I'm like, well, no, but I have this, this RX thing.
And they go, well, well, I'm sorry, it's $20.
Like, why are car dealers held to such a standard when I feel like no one else is?
Well, they're not to take this in a non germane direction, but I will just put a capstone on this.
They, the issue that you just described is actually a big issue in Washington and it's
largely driven by things like pharmacy bath and managers where you have too many conduits
that are attempting to manage the same underlying problem, which is a person's managed care.
And when you have so many different coders and so many different managers of this aspect
of the, of the life cycle of the transactions, it just starts to get bogged down.
And, but it's, it's a problem.
And, and, and the fact that health insurance is not regulated at the level, it doesn't help
because you have 50 different frameworks, a large measure happening across the country.
So depending on where you get injured, it's going to dictate what the outcome is of your
mental care experience.
But that's that.
But back to your other point, yes, car dealers are certainly well regulated.
And to that point, one thing that I get a lot of comfort is the feedback that we have received
here at NIADA since those letters were issued has been overwhelmingly positive.
Independent dealers have embraced this.
They've said this is exactly what we need.
There have been too many car dealers with the resources that have chosen to just spend the rules
and roll the dice and hope they don't get caught.
And when they do get caught, they're fine because they can just pay the fine and move on.
Whereas the independent dealers that we represent have said, we need a level playing field in
order to be competitive.
Everybody needs to respect the rule of law and comply with the rule.
And that's very validating for me as your representative in Washington because I'm able to go
and talk to lawmakers.
I'm able to talk to regulators and say that and have the back of it being true.
And it's good because it allows us to be the adults in the room, if you will, when it comes to this type of enforcement.
They're really, really great products.
I've used them before.
They're wonderful.
They don't break if you install them right, right?
All that good stuff.
But like you said, a big sponsor of the industry with Buy Here, Pay Here, Unite It, and they're at every conference, Jeff.
So make sure you're using the best possible GPS on the market and that's it.
Yep.
Give them a call.
Go to our website for more information.
Luke, I want to ask you a philosophical question then.
If you have to include the dock fee in the listed price and you're a retail dealer now,
so you're competing on price on all the major listing, third-party listing sites,
does it make any sense to even have a dock fee?
That's a super, super interesting question.
And when I'm going back and forth with for years, for years we didn't have one.
Then what we have done is we go to the state max.
Our state sets a max on what you can have without.
It is $225.
I mean, it's really a nothing fee.
But we've gone to the state max.
You can request to go over the state max if you want to.
You can justify it.
Then you have to justify it.
And every franchise dealer does this and they tend to try to justify it and you can look at them there anywhere from $500 to $12.95.
One thing I've never figured out because our Department of Consumer Affairs,
which is a great department in South Carolina, just wonderful folks,
if I go and ask them, well, what can I justify to up my dock fee?
They'll go, we don't know.
And so I don't want to play with fire.
$225 is plenty and I'm just going to leave it at that.
So from a philosophical standpoint in the state of South Carolina,
it makes sense to say $225 because that's the state mandated.
Every other dealer is going to have that.
You're almost on a level playing field.
So if you're in a state like mine where it's really just that you pull it out of your butt,
I think you got to justify it from maybe a Steve Levine Ignite Consulting standpoint.
But you're all over the place.
So if I just decide tomorrow, Luke, to go to a no dock fee situation,
I'm giving up $15,000 a month in revenue that I'm making right now
after my unnegotiated price or a list price, right?
Say I have a $20,000 car.
Sure, I'll pay you 20 grand for it.
They come in the door.
Great.
$20,000 plus tax title license.
Oh, and our $299 dock fee.
Oh, yeah, a dock fee.
No worries.
Most people go, you just accept it.
Yeah, I think, and I think, so what I'm saying is,
I think it's okay if it's reasonable dock fees are when they become unreasonable when
they're not.
But now that it has to be listed in the price, I'm saying it makes sense.
It doesn't compute with me to say, well, I'm going to give up $15,000 in profit just to
say I have no dock fee.
My car still listed at 20 grand instead of $20,300, which is what I need to list it at
today to make sure I'm compliant, right?
So, where does that work out?
Where I'm just literally going to say, okay, now do I just raise my prices by $300 and
say I have no dock fee?
It's essentially what you're doing anyway, if you're including it.
Yeah.
So, here's what I've come to actually.
I was going to go not no dock fee tomorrow, well, the 1st of May.
What I have decided is I am going to keep my dock fee because it is a fee that is after
the negotiated price.
And again, not asking for legal advice here, not saying this is 100% legal.
Well, I know it's legal, but because my dock fees advertised, right?
Now, my list price, it's in the sales price.
And so, all my descriptions say, hey, at $20,000, this includes my $300 dock fee.
Now, if you call me and you say, I don't want to pay you $20,000 for it.
I want to pay you $18,000 for it.
I say, okay, our new negotiated price is $18,000.
Great, come on in.
$18,000 plus my $300 dock fee.
My negotiated price doesn't have to include the dock fee.
I don't think that legally says anywhere that the negotiated price has to include a dock
fee, just my advertised price.
So, now that we're having a negotiation.
The NAFTC was clear that Section 5 sets the ceiling not to include it.
You can negotiate the price downward.
But if you advertise the car for $20,500, you can charge $20,501.
If you're hiding something in there, you can charge $20,000 because that's below the
advertised price.
So, I'm going to make a wild thing here.
So, nobody plays retail.
Nobody, okay?
I'm just going to let you know that right now.
Like, if you have a car on your website for $20,000, the chance is that somebody is going
to come in and give you $20,000.
Even if you're a no-haggle, one-price dealer?
Yeah, that's right.
Everybody wants something.
Everybody wants something.
So, understood.
That's the ceiling.
Okay.
So, I'm going to say $20,000.
That's the ceiling.
Everybody's going to negotiate.
So, if somebody walks in at 19.5, I'm going to say it's 19.5 plus 225.
And I'm good then if the ceiling listed was $20,000 is what I'm hearing.
Am I wrong there, Patrick?
Well, I can't answer.
I just want to be clear.
I'm going to end this particular part of the question and answer by saying, the FTC
was clear, the DoC fee needs to be disclosed and the advertised price.
So, if you negotiate downward from there, I would strongly recommend that whatever you're
negotiating downward fully disclosed or so that includes the $20,000 DoC fee, then you
had to go from there.
So, the customer has not left the false impression that that add-on was not included in the price
that originally encouraged them to engage on a potential purchase.
Yep.
And I 100% agree with this rule.
It drove me insane during the EV tax credit to be trying to compete with these guys that
had silly disclosures and takeaways just to try to get to the $25,000 cap and so much
of this.
And so, while we've had this conversation, I've looked at multiple, multiple dealers and
they're still doing it wrong.
They have their DoC fee as an additional price on top of the price.
So, they haven't even updated their stuff yet.
So, it's still out there, Patrick.
How do we, as dealers, maybe we should have some sort of a convention or conference where
we all get together and educate each other and make sure everyone knows how this goes
into practical application?
Well, it's funny you should say that because we can read the NIADA convention in about
56 days and I will certainly be giving a Washington update as part of the course that I'm teaching.
We also have a number of other compliance professionals that we'll be presenting.
Luke, you mentioned Steve Levine.
Steve will be out there.
We'll also have Hudson Cook and a few other just rock stars in the compliance and legal
world talking about what the federal and state government's expectations are.
And to be sure, this is going to be a topic that is of significant discussion.
Yeah, I'm sure.
I mean, it's probably the biggest thing out there.
Yeah, I'm glad something's being done.
I hope it's done properly.
And I hope that the big offenders are taken down or are fined to death because they deserve
it.
It's hurting the independent.
I think it hurts the independent dealer more than it hurts anybody because we can't compete
with, a lot of times we can't compete with the prices listed at these new car stores.
And the biggest reason is, in my opinion, all the fees aren't there.
And they get there and they take advantage of the customer and nobody wants that, and
that's what the FCC is trying to fix, right?
That's right.
And I do think that there was a lot of false security going back to the car's rule being
vacated, thinking that the car's rule was really the only enforcement tool to keep dealers
honest.
And we're now learning what everyone should have known all along, that 114-year law is
being appropriately enforced when there's things conduct in this space.
Yeah.
And we've been screaming about it for years, so thank goodness it is.
Patrick, I look forward to it.
I know Luke and I, we both booked our flights and our hotel to be in Denver, June 21st through
the 24th.
A great property.
The Gaylord is such a beautiful building.
There will be nothing to do, so we're all going to hang out and talk every night, which
is great.
You can't go anywhere.
So we're all going to be in a tight little lobby, just hanging out and getting to know
each other.
So make sure you get that booked right away.
The early bird's still going on.
Luke will be there.
I will be there.
Patrick will be there.
Patrick, any parting words for the dealer community?
I will just, I want to end by making just an additional plug for the convention since
we're ending on this.
It's going to be, it's going to be great.
We have 48 sessions of education with 72 individual speakers on 17 topics.
I'm not even a car dealer and I'm already putting certain courses on my calendar because
I'm just interested in hearing what these experts said to say.
So if you're serious about being innovative and taking your dealership to the next level,
I would encourage you to register as soon as possible.
Early bird ends later next month.
The hotel is filling up fast and it's just going to be a really good experience.
I'm looking forward to seeing a lot of dealers out there, including the two of you.
Yeah, sounds great.
I'm glad Jeff got me a room.
Thank you, Jeff.
You better not snore.
It will, it will absolutely fill up.
I don't think the property is big enough to hold us all, but so get on that soon.
Like, I guarantee you don't want to be driving in from the Motel 8.
So and go through the NIDA website if you want to get the room block rate, which is a killer
rate.
If you look, it's a way different price, exceptional rate for that time of the year and that area
of the country.
Jump on it while you can.
All right, Patrick.
Thanks so much.
Appreciate your time.
Thank you, buddy.
Thanks for having me.
About this episode
Patrick O'Brien of NIADA joins the hosts to unpack the FTC’s recent warning letters to dealers and what they could mean next. The conversation moves from federal enforcement and complaint data to the finer points of pricing transparency, dock fees, add-ons, and out-the-door advertising. It also touches on the Repair Act, dealer association advocacy in Washington, and how independent dealers are trying to stay competitive while navigating a fast-changing compliance landscape.
Original notes
In this episode of the Independent Dealer Podcast, Jeff Watson and Luke Godwin sit down with Patrick O'Brien, Director of Government Relations and Compliance at NIADA, for a straight-shooting breakdown of the FTC's 97 warning letters to dealerships — what they mean, why they were sent, and what every dealer needs to do right now. From the vacated CARS rule to out-the-door pricing, Patrick pulls back the curtain on what Washington is actually doing to police market conduct in 2026.
What You'll Learn:
Why the FTC issued 97 warning letters to dealerships — and what happens next if they don't clean up their act
How the Lindsay Auto Group consent agreement is a preview of what enforcement actually looks like
What "out-the-door price" really means under Section 5 of the FTC Act — and why doc fees can no longer be hidden
Whether independent dealers can (or should) report franchise stores that are still doing it wrongHow NIADA and NADA are working together — and where they disagree — on right to repair and safety recall legislation
Why the NIADA Convention in Denver (June 21–24) is the place to get compliant and get ahead
If you're an independent or BHPH dealer trying to navigate the FTC's crackdown on deceptive pricing, this episode is required listening.
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