Chances are you never bought a new car without a Monroney Label. You may not even recognize the name “Monroney”, and think of the label that appears on all new cars as simply the “sticker or the “window sticker”. Only if you bought a car before 1958 would you not have had this federally mandated window sticker attached to your new car. Senator Mike Monroney was the driving force behind this Federal law, Chapter 28, Sections 1231-1233, and Title 15 of the United States Code. This law requires that all car manufacturers affix a manufacturer’s suggested retail price, MSRP, on every new car and truck they sell in the form of a window sticker. This MSRP is the same for all cars of the same make, model, year, and accessories. This Federally mandated window sticker can only be removed by the buyer of the car and failure to adhere to this law is punishable by up a $10,000 fine and one year in jail per offense.
The reason that this law was passed in 1958 is that car dealers were resorting to deceptive advertising and sales practices to inflate the price of cars and prevent accurate price comparisons by car buyers. Car dealers were adding on extra charges, over-allowing on trade-in allowances, and offering artificial discounts. Because there was no standard price on any car, the dealer could quote any price he wanted as the retail price of the car. If a car buyer shopped at three different Ford dealers for a specific Ford model with the same accessories, he would be quoted three different retail prices. The discount he was offered was just a function of how high the dealer wanted to make the retail price. The trade in allowance could be as high as the customer wanted just by marking up the new car higher.
Well you guessed it, today in 2012, fifty-four years later, car dealers are “adding on extra charges, over-allowing on trade-in allowances, and offering artificial discounts” to deceive their customers just like they did prior to 1958. The main deceptive device that the dealers invented to accomplish this was the “addendum label or sticker”. It is also referred to occasionally as a supplemental sticker. I’ve written about this before and I used the name “phony Monroney”. I call the addendum label this because most dealers design their own stickers, addendum labels, to look identical to the federal Monroney labels. They use the same colors, logos, size, and right down to the same font size and style. This is clearly an attempt to deceive the car buyer into believing that the total price is the official manufacturer’s suggested retail price. Sadly, it doesn’t have to be a very good counterfeit because many car buyers never even look at the Monroney sticker on the car they buy.
Almost all car dealers add an addendum sticker next to the Monroney sticker. The addendum stickers usually list dealer added accessories that have very low cost to the dealer but very high markups to the car buyer. Common accessories are paint sealant or polish, fabric coat like Scotch Guard, stripes, Nitrogen in tires, and cheap theft deterrents like window etch. A package of these accessories will typically cost the dealer less than $100 but will carry a retail asking price of $995 to $2,995 or higher. In addition to dealer accessories there is commonly an additional markup to the MSRP carrying an innocuous, indecipherable label like ADM, MAA, or RMV. These letters stand for Additional Dealer Markup, Market Adjustment Addendum, and Regional Market Value. The amount varies from dealer to dealer and is simply a function of how much chutzpah the dealer has and how gullible he thinks his customers are.
Currently there’s a dealer in South Florida, West Palm Beach Kia, that marks up every one of their new cars by $6,998 over the Monroney label, the MSRP! This comes from a virtually worthless $2,500 “appearance and protection package” and a $4498 Regional Market Value”. You might ask yourself, “Who could possibly fall for advertising a big discount when the dealer first marks the cars up $7,000 over MSRP?” You will be surprised to learn that this dealer is one of the highest volume sellers of any make in Florida. As you know, Kia is not one of the more popular selling cars, so what other than this advertising can you attribute to their success?
Deceptive advertising and sales practices work and that’s why Congress passed a law fifty-four years ago to stop exactly this practice. I don’t pretend to be an attorney, but it seems to me that what dealers are now doing is flaunting a federal law. What Senator Mike Monroney envisioned and the law he introduced was to protect car buyers from exactly what West Palm Beach Kia is doing so successfully today. Senator Monroney wanted all car buyers to be able to compare a discount offered by one Kia dealer with other Kia dealers on the same year, model and equipped Kia. Adding a $7,000 markup to the MSRP so that larger discounts can be advertised and larger trade-in allowances can be offered is flaunting the intent of Chapter 28, Sections 1231-1233, and Title 15 of the United States Code. If it isn’t a direct violation, it absolutely is a circumvention of its purpose and intent.