When the Federal Trade Commission (FTC) sent letters of warning to 97 auto dealers back in March, many in the RV industry took notice.
The letters were letting dealers know they might be in violation of rules regarding price transparency.
These rules stipulate, for example, that an advertised price must include all fees that are added on to what is charged to the consumer. Things like transport cost, rebates that aren’t available to all customers, conditioning the price upon use of dealer financing – even advertising vehicles that are not available – fall under the rules.
RV dealers largely have been self-policing in these areas over the year, so it is difficult to know for certain whether everybody is playing by the same rules. But when Ben Hirsch of Campers Inn RV broached the topic during a panel discussion about industry challenges at the RV Industry Power Breakfast back in May, it became apparent the topic was on the mind of at least some RV dealers.
“That does impact all of us because our industry will probably be looked at at some point,” Hirsch said at the time. “Customers want transparency, so for us as an industry we have to figure out how to we provide fair and transparent pricing. It is the Wild West and the customers are screaming for this. We’re hearing it every day on the sales floor and this one of the things we have to get ahead of as an industry, otherwise we’re going to be regulated upon.”
In the wake of the event, other dealers have spoken up, the RV Dealers Association (RVDA) has sent out information to educate its dealers, and RVDA partner KPA, a safety training and compliance provider, hosted a webinar to help dealers make sure they are compliant with regulations.
Not to put too fine of a point on it, but during the KPA webinar, Adam Crowell, chief legal and strategies officer for KPA, said everything except tax, title and registration must be included in any advertised price if a dealer wants to avoid drawing the FTC’s attention.
That being said, Crowell did note that nowhere in any of its documentation did the FTC say that it was giving an exhaustive list of what is included in price transparency.
The FTC has threatened penalties from 2020 through 2024, and during that period issued nine actions, four of which have been settled. Most of the actions were run in conjunction with state attorneys general.
“This is something we really need to take seriously,” Crowell said. “In one case, you have the FTC and the state demanding $116 million. Clearly the FTC isn’t messing around and the states aren’t messing around either.”
RVDA President Phil Ingrassia said that although the FTC letters should arouse concern among RV dealers, there is nothing in them that should catch anybody by surprise.
“These aren’t new regulations the FTC is taking an aggressive enforcement position on. These are rules that have been in effect for a number of years,” he said. “What the FTC has done in those letters is clarify what they consider unacceptable add-on fees in an advertised price.”
Ingrassia said if a dealer is advertising a price – for example $24,999 – that has to include all costs except taxes and registration fees and other government-mandated fees.
Other fees – destination charges for example – have to be included in the fully advertised price and can’t be added after the fact.
A crucial point along those lines, Crowell said, is for dealers to make sure their prices are listed the same on all platforms.
Whether it’s a web listing or an advertisement on TV or any other ad, they must be the same.
“What they want you to do is to give the advertised price to the consumer,” he said. “Since you don’t know all of the different advertisements they have seen you really need to have the same price every single time. You should have one price for that vehicle and it should include all mandatory fees with the exception of mandatory government fees.”
Dealers need to be aware of the FTC’s new guidance in order to maintain compliance.
Ingrassia said one of the big questions dealers have is regarding those destination fees, and the FTC is indicating those need to be included in the advertised price.
He said that with this being clarified, dealers don’t just need to be concerned about the FTC.
“The FTC is not only doing its own enforcement reviews of a dealer advertising, but they have opened the door for basically dealers to turn in other dealers if the dealers don’t feel like their competitors are following the guidance,” Ingrassia said. “It isn’t necessarily, ‘The FTC is looking at my ads.’ It could be, ‘My competitor is looking at my ads, and they’re going to make a complaint because they say these ads aren’t compliant.’”
An example that might bring about a competitor complaint is if one dealership isn’t listing dock fees and their neighbor is.
Crowell said there are always dealers who will comply to avoid the FTC taking notice and those who will wait for somebody else to take action.
“Understand that as more and more dealers are starting to make these changes, it’s going to make you even more obvious to regulators,” Crowell said. “These issues are not hard to find. You need to decide how you are going to handle that. One of the things you can do is reach out to your association and ask them to have a conversation with the offending dealer. ‘This is really impacting us because we’re making the changes and they aren’t making the changes.’”
Consumers also can be a source of complaints.
With three levels of potential complaints – agency initiated, dealer initiated and consumer initiated – dealers are well advised to maintain compliance.
Dealers also need to educate their ad agencies or sales people and their digital marketing people on how to do things the correct way, because ultimately the buck stops at the dealer’s desk,
Jonathan Martin, owner of two Recreation USA dealerships in South Carolina, said he welcomes the added scrutiny and hopes other dealers can come into compliance to even the playing field.
“This is something that is coming down on our industry,” he said. “Recreation USA has never charged all the bogus fees at all. In South Carolina, we’re allowed to do a doc fee and we did a small doc fee and we ended up getting rid of that. But things like freight and prep, we’ve never charged that. The dealers that are still doing it need to conform and start treating the customers correctly.”
Martin said that fees that are being charged incorrectly or without transparency are damaging the industry as well as the dealers’ reputation.
Martin said he hears about the fees from customers who have visited some of the larger dealerships in his area.
“We have customers who come in and you know people like to shop and we’re not the high pressure dealership.,” he said. “We’re family oriented still. People coming to our dealership after they went out during their shopping and we educate our clients whether they buy from us or they don’t buy from us. We educate them on what the deceptive pricing is.”
He said dealers know what a camper will cost when it gets to their dealership. They know costs such as prep, batteries, propane, orientation and cleaning.
With that knowledge, Martin said Recreation USA has put everything in its pricing and acknowledges that up front without adding other fees.
Other disagreements he has with competitors come with customers who want to pay cash. He said he has had customers come back from shopping other dealers who were going to charge an extra $3,000 because they were paying cash.
But with the FTC putting a finer point on existing regulation and providing additional guidance, dealerships should be moving into a more consistent pricing policy in ads and online.
And according to Ingrassia, it’s unlikely that enforcement will stop even with just the RV dealers.
“It’s obvious they’re going after and targeting auto dealers because that’s a higher volume,” he said. “But it goes down to anybody selling motor vehicles, and that would include marine and powersports – anything with a license.”
