The automotive industry is facing significant changes with the introduction of the FTC's CARS Rule. One area that could see a substantial impact is the use of addendum stickers. These stickers, traditionally used as a sales tactic, are set to undergo major transformations to comply with the new regulations. In this blog post, we explore how the CARS Rule affects addendum stickers and what dealerships would need to do to stay compliant.
The End of Traditional Addendum Stickers
Addendum stickers have long been a tool for dealerships to increase the front-end gross. However, under the new CARS Rule, this practice is likely to become obsolete. The rule mandates that any additional costs reflected on the addendum sticker must already be included in the advertised price.
Challenges with Addendum Stickers
Dealerships that continue to use addendum stickers as a means to increase prices will find it difficult to navigate these new regulations. For instance, if a dealership is selling a product like Pulse, which reduces rear-end collisions, the cost of this product must be included in the initial advertised price, not added later with an addendum sticker.
Compliant Usage
While the traditional use of addendum stickers may be fading, they can still be used in a legally compliant manner. Dealers can use addendum stickers to describe what is included in the vehicle without using them to increase the price above what was originally advertised.
Avoiding Illegal Practices
Dealerships must avoid illegal practices when using addendum stickers. For example, adding costs for unnecessary or non-existent services, like engraving the VIN on a catalytic converter in an electric vehicle, is both illegal and unethical. Such practices not only violate the CARS Rule but also damage the dealership's reputation and customer trust.
Adapting to the CARS Rule
If the CARS Rule survives litigation in its current form, dealerships will need to adapt their pricing strategies. This includes:
Including All Costs in the Advertised Price: Ensure that any additional costs are part of the initial advertised price to avoid surprises for consumers.
Using Addendum Stickers Transparently: Use these stickers to inform customers about what is included in the vehicle.
Training Staff: Educate sales teams on the new regulations and the importance of compliance to avoid legal repercussions.
Regular Audits: Conduct regular audits of advertising and pricing practices to ensure adherence to the CARS Rule.
Check out the full CARS Rule Keynote:
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