Few Americans Experience Deceptive Sales At Dealerships, Most Still Distrust Them

KPA, a provider of compliance solutions for over 15,000 U.S. automotive dealerships, released results of its 2024 KPA Dealership Trust Survey conducted by The Harris Poll that shows about a third of Americans have experienced things like deceptive selling, hidden fees, or dishonest salespeople. Yet over three-quarters - 76% - don’t trust dealerships to be honest about pricing. Americans indicated the following:

About their experience with dealerships:

• 34% have felt pressured to purchase add-ons.
• 30% who agreed on a price and prepared to sign the paperwork found there were hidden fees.
• 28% said they felt the salesperson was trying to ''trick'' them into a deal.
• 29% left one dealership and went to another because they didn't think it was being honest in its pricing.

About their perceptions of dealerships:

• 86% are concerned about hidden fees when buying/leasing a vehicle.
• 76% don't trust car dealerships to be honest about pricing.
• 84% say price transparency is lacking at most car dealerships.

New Regulations Driving Change to Practices

The survey results come on the heels of the announcement of the Federal Trade Commission’s Combating Auto Retail Scams, or CARS Rule, whose stated purpose is to protect consumers from deceptive selling or leasing practices. Over the past year, the FTC added requirements for dealerships around pricing transparency, financing, unnecessary add-ons, and keeping customer information secure. Though the FTC stayed the rule pending litigation, dealerships are advised to prepare for its potential enactment to avoid fines of over $50,000 per violation, which is roughly equal to the cost of an average car on the sales lot. Beyond fines, violations can also make dealers appear less trustworthy to potential customers. 

What Dealerships Should Do

“Buying or leasing a vehicle is a major financial decision for many Americans,” said Chris Fanning, CEO of KPA. “KPA partners with dealerships to help them operate in compliance with current regulations while also building trust with their customers and earning their dollars.”

To work towards compliance and build trust, Fanning recommends car dealerships focus on the following four practices…

• Create a dedicated compliance team: It should include key department stakeholders including marketing, sales, accounting, and finance.
• Establish Key Performance Indicators: Identify goals and timelines for achieving compliance and track progress along the way.
• Review the “Three Ps”: Programs, plans, and policies should be reviewed to identify gaps. Develop new ones that include CARS compliance.
• Conduct training and certification: Employees should be trained on CARS compliance when they are hired and throughout the year.

KPA offers a CARS Rule  compliance solution that includes automatic website scans to find and remediate violations; remote and on-site deal jacket auditing; employee CARS Rule training; CARS policies documentation; sales and marketing materials archive; and more to help dealerships comply.