Dealers Behaving Badly: FTC Seeks to Crack Down on F&I

Matthew Guy
by Matthew Guy
dealers behaving badly ftc seeks to crack down on f i

We would wager our combined annual salaries – a sum roughly equal to the value of a half dozen donuts from Krispy Kreme – that every single soul reading this website has a story or three about being blitzed with products in a dealer’s F&I office. Vehicle etching, useless warranties (sorry – this paper only covers mechanical fuel pumps), and p-packs up the wazoo are the bane of most shoppers’ existence when trying to buy a car.

Make no wonder some people call it the “Effin’ Eye” office.

This environment may change if the Federal Trade Commission gets its way. According to a report by Automotive News, a new proposal by the FTC would ban finance/insurance coverage and physical vehicle add-ons “that provide no benefit” while also requiring expanded disclosure on such items.

The commission’s notice of these proposed regulations was approved by a 4-1 vote earlier this week, said AN. An accompanying news release described some physical additions and F&I products as unfair add-ons, though the quartet of commissioners who voted in favor of these proposed regs did acknowledge that “not all add-ons provide no value.” Some of the items which rankled their feathers included misleading motor vehicle advertising, financing paperwork falsification, and so-called yo-yo financing practices.

“As auto prices surge, the commission is taking comprehensive action to prohibit junk fees, bait-and-switch advertising and other practices that hit consumers’ pocketbooks,” FTC Bureau of Consumer Protection Director Samuel Levine said in a statement. “Our proposed rule would save consumers time and money and help ensure a level playing field for honest dealers.”

Stated on page seven in the document linked above is a statement that the National Auto Dealers Association (NADA) suggests dealers averaged a profit of $2,444 per vehicle in pre-pandemic times, with more than half that profit coming from the F&I office. Today’s figures are surely skewed differently, what with obscene dealer markups on retail units being the norm rather than the exception. Your author has personally viewed deals with over $20,000 gross when counting both the front and back ends. And that was on a fairly pedestrian vehicle, not a bazillion-dollar hypercar. Gross, indeed.

A former colleague of this writer used to intentionally refer to the Business Manager at our store as the Finance Clerk, a term guaranteed to make the man’s blood pressure rise since he saw himself as a cornerstone of moneymaking operations at the place. While he did sell his share of WearCare and nitrogen-filled valve stem caps (seriously), there was always the overarching argument that his high-pressure tactics ‘in the box’ routinely scuppered scores the shopper would give on the brand’s follow-up survey, tanking any hope of a quarterly bonus even though the customer had little issue with the salesman himself.

How about you? Any horror stories from the Effin’ Eye office? Sound off in the comments below.

[Image: Murilee Martin]

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  • Carlson Fan Carlson Fan on Jul 01, 2022

    When the F&I guy tried to sell me an extended warranty on my used Volt I just told him all the money I save not purchasing warranties I use to fix things when they break.....LOL The warranty only covered the car to up to a 100K miles and I knew no way in hell I'd spend over $2K in repairs before it rolled a 100K miles. And I was right, 0$ in repairs for the little Chevy.. .

  • Dothetime Dothetime on Jul 07, 2022

    of course since I'm here I'm a car savvy guy, an 85 year old lady neighbor asked me to accompany her to buy her Honda CRV off the lease she had. The F & I guy tried to scare the shit out of her by telling her that she needed to buy the extended warranty. He informed us that due to the chip shortage, if any of the chips in her car went bad it could cost her $2500-$5000 for repairs and if she needed a headlight housing it would be $2000.After I stopped laughing he tried to charge her $500 for her title transfer instead of the $250 previously agreed upon. We left with the proper charges and no extended warranty.

  • FreedMike Can the final last call edition be the Secretary Special, with a V6 and a vinyl roof?
  • FreedMike I’ve never heard of this so I’ll have no problem not attending.
  • ToolGuy As I understand it, the Toyota Prius basically lasts forever because the engine gets a gentle duty cycle and the battery gets babied. This seems like the opposite of that.[Impressive tech, not for me, but then neither is the Prius.]
  • Dusterdude Excellent work ! Your stories are always linguistically interesting . Even if you weren’t writing about a quirky car on a long and adventuresome journey - I know your write up would still be interesting ! ( I also have a Soft spot for large cars - as my daily driver is a 2000 Chrysler Concorde )
  • MaintenanceCosts There have always been just two reasons to buy AMG cars: the menacing, hard-edged V8 warble, and the styling with subtle shapes but perfectly aggressive details. This is missing both of those things: the styling has gotten cartoonishly aggressive, and the engine will sound like a fart-can Civic. I don't understand why I should want it.
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