April 30, 2026
The Federal Trade Commission (“FTC”) has issued 97 Warning Letters to dealership groups across the country regarding claims of improper pricing and advertising for vehicles being offered for sale. After discussing the matter with several representatives of the FTC, it appears that the primary concern is that the price advertised for a vehicle must include all amounts a consumer must pay, aside from government charges, such as taxes. This has left California dealers in a difficult position given the detailed and specific advertising laws in place at the state level. Given the FTC’s position, it appears that it is asserting that all conflicting state laws must be disregarded in favor of federal law (which is not nearly as specific in its application) pursuant to the Supremacy Clause of the U.S. Constitution which requires the adherence to federal law over conflicting state law. (U.S. Const. Art. VI.)
California dealers are generally governed by the California Vehicle Code and California Civil Code with regard to pricing, advertising, and disclosures for vehicle sales. Vehicle Code Section 11713.16 specifies prohibited activities as it relates to advertising for vehicles. Per California law, a dealership may advertise the price of an automobile exclusive of additional and customary charges. Cal. Veh. Code § 11713.1(c)(2) provides model language which must be included in advertisements for vehicles as it relates to those additional and customary charges not provided for in the advertised price. In advertising a price for a vehicle, California allows the price of the vehicle to be advertised so long as it is accompanied by language “that is worded in substantially the following form: ‘Plus government fees and taxes, any finance charges, any dealer document processing charge, any electronic filing charge, and any emission testing charge.’” (Id.) The idea being that the advertised price would match the “cash price” as that term is used in the Automobile Sales Finance Act, noting the exclusion of additional charges contemplated by the Code. (Cal. Civ. Code § 2982(a)(1)(A).
The FTC has taken issue with California’s statutorily authorized advertising rules. One area of concern appears to be the “Doc Fee” authorized by Cal. Veh. Code § 4456.5, which allows dealerships to charge a document processing charge of either $85 or $70 to the purchaser depending on whether the dealership has a contractual agreement with the Department of Motor Vehicles. This Doc Fee is noted in the model language found in Section 11713.1(c)(2) as a “document processing charge.” However, the FTC has indicated that it believes that the failure to include the Doc Fee in the advertised price may be deceptive such that it should be included in the advertised price. This creates a conflict with California law through the use of the model language from Section 11713.1(c)(2). Specifically, if the model language is used, the dealership has indicated to the consumer that the Doc Fee is not included in the advertised price, a false statement. If the Doc Fee is then reduced from the advertised price for the purposes of the sale or lease, as required by the Automobile Sales Finance Act and Vehicle Leasing Act (Cal. Civ. Code §§ 2982(a)(1)(A) and (B) and 2958.8(c)(5)), that likely runs afoul of California law given the representation in the disclaimer (using the statutorily approved language) that the price does not include the Doc Fee. In order to comply with federal law, dealerships may have to disregard California law and include the Doc Fee, or any other non-governmental fee, in the advertised price despite the disclaimer noting the contrary. In short, the FTC has created a conflict in how California dealers are to advertise such that they are unable to comply with both California and federal law.
The hope is that the FTC will issue further guidance on this conflict, but in the meantime, dealerships would be well served to include all non-governmental fees within the advertised price.
