Technology Can Hide a Car Dealer’s Tricks—or Expose Them

For most of my 50 years as a Toyota dealer, the automobile business has relied on confusion to increase profits. Today, technology gives dealers more power than ever before—but that power can be used either to deceive customers or to protect them.

A recent Federal Trade Commission case provides a perfect example of the first choice.

The FTC has accused three dealerships owned by Asbury Automotive Group of using a practice called “payment packing.” The case has not been decided, and Asbury has not been found guilty. On August 27, however, FTC attorneys and Asbury jointly asked to pause the administrative proceedings for 60 days while they discuss a possible resolution.

Payment packing is an old car-dealer trick dressed up in modern financing software.

Imagine that you negotiate a price and the resulting car payment should be $640 per month. The salesperson has already learned that you can afford—or are willing to pay—$700. Instead of telling you that your real payment is $640, the dealership fills the $60 difference with an extended warranty, maintenance plan, paint protection, GAP coverage or some other product.

You agreed to a payment, but you did not knowingly agree to everything hidden inside it.

Over a 72-month loan, that seemingly small $60 difference totals $4,320, before considering interest. The dealer may then produce a stack of documents requiring electronic signatures in several places. By the time customers realize what happened—if they ever do—the dealer can point to those signatures and say, “You agreed to it.”

A signature does not transform deception into honesty.

The FTC alleges that Asbury dealerships also told some customers that optional products were required. This is another common tactic. A finance manager may imply that the bank requires an extended warranty, GAP insurance or some protection package before it will approve the loan.

Unless the lender truly imposes that condition—and that can be verified—the dealer is lying.

The safest approach for consumers is to negotiate and examine four separate numbers: the vehicle price, trade-in value, amount owed on the trade and amount financed. Then ask for the interest rate, loan term and monthly payment without optional products. Only after seeing those figures should you consider extras individually.

Technology can make payment packing faster and harder to detect. Fortunately, another dealership is demonstrating how the same technology can make car buying more honest.

Mark Miller Subaru in Utah recently launched an online purchasing system called “Promise Path.” It allows customers to select a vehicle, see the price, obtain a trade offer, arrange financing and schedule delivery online. A customer can request human assistance at any point, but a traditional salesperson is not required.

What caught my attention was the dealership’s willingness to make specific promises.

It says customers see one out-the-door number, with every charge displayed before signing. It offers financing at the lender’s actual approved rate without adding extra interest for dealer profit. Its trade offer remains valid even if the customer does not buy another vehicle. It offers a 48-hour return period.

Most interestingly, Mark Miller Subaru invites customers to have an artificial-intelligence assistant examine the transaction for junk fees.

I like that challenge.

Mark Miller still charges a $445 documentation fee, which it includes in its displayed price. Earl Stewart Toyota charges no dealer fee of any kind, and we offer a seven-day unconditional money-back guarantee. Nevertheless, Mark Miller’s approach proves that a franchised dealership can combine online convenience with upfront pricing, home delivery and access to local service.

This is where automobile retailing is headed. Customers will increasingly use AI to compare written offers, identify hidden charges, calculate loan costs and determine whether the final contract matches the advertised price.

An honest dealer should welcome that scrutiny.

Unfortunately, AI also creates a new opportunity for deception: secret “personalized pricing.”

The FTC is presently considering a policy addressing businesses that use personal information to estimate how much a particular customer is willing to pay. The information could include browsing history, previous purchases, ZIP code, location, type of device or other behavioral data.

Imagine two people looking at the same vehicle identification number at the same moment. One sees a price of $36,000. The other sees $37,500 because an algorithm believes that person is wealthier, less price-sensitive or more anxious to buy.

Neither customer knows that the other received a different price.

Personalized discounts that are openly explained are not necessarily deceptive. Credit-based lending is also different because legitimate financing decisions consider a borrower’s creditworthiness. The danger is secretly changing the advertised vehicle price according to what a computer thinks it can extract from an individual shopper.

The FTC is accepting public comments on this proposal through September 18. I intend to continue urging regulators, manufacturers and dealers to adopt one basic principle: The advertised price should be the price at which every customer can actually buy the car, excluding only government taxes and registration costs.

A dealer should not advertise one price, demand another price at the dealership and then hide the difference inside a monthly payment or fine print. Nor should software quietly charge different customers different prices for the same vehicle.

Technology itself is neither honest nor dishonest. It reflects the intentions of the people using it.

A dealer can use technology to learn how much additional profit can be concealed inside your payment. Or a dealer can use it to show every number, preserve your choices and invite anyone—including artificial intelligence—to verify the transaction.

The car dealer decides which kind of technology it will be. The customer should know which kind of dealer he or she is dealing with.Technology Can Hide a Car Dealer’s Tricks—or Expose Them

For most of my 50 years as a Toyota dealer, the automobile business has relied on confusion to increase profits. Today, technology gives dealers more power than ever before—but that power can be used either to deceive customers or to protect them.

A recent Federal Trade Commission case provides a perfect example of the first choice.

The FTC has accused three dealerships owned by Asbury Automotive Group of using a practice called “payment packing.” The case has not been decided, and Asbury has not been found guilty. On August 27, however, FTC attorneys and Asbury jointly asked to pause the administrative proceedings for 60 days while they discuss a possible resolution.

Payment packing is an old car-dealer trick dressed up in modern financing software.

Imagine that you negotiate a price and the resulting car payment should be $640 per month. The salesperson has already learned that you can afford—or are willing to pay—$700. Instead of telling you that your real payment is $640, the dealership fills the $60 difference with an extended warranty, maintenance plan, paint protection, GAP coverage or some other product.

You agreed to a payment, but you did not knowingly agree to everything hidden inside it.

Over a 72-month loan, that seemingly small $60 difference totals $4,320, before considering interest. The dealer may then produce a stack of documents requiring electronic signatures in several places. By the time customers realize what happened—if they ever do—the dealer can point to those signatures and say, “You agreed to it.”

A signature does not transform deception into honesty.

The FTC alleges that Asbury dealerships also told some customers that optional products were required. This is another common tactic. A finance manager may imply that the bank requires an extended warranty, GAP insurance or some protection package before it will approve the loan.

Unless the lender truly imposes that condition—and that can be verified—the dealer is lying.

The safest approach for consumers is to negotiate and examine four separate numbers: the vehicle price, trade-in value, amount owed on the trade and amount financed. Then ask for the interest rate, loan term and monthly payment without optional products. Only after seeing those figures should you consider extras individually.

Technology can make payment packing faster and harder to detect. Fortunately, another dealership is demonstrating how the same technology can make car buying more honest.

Mark Miller Subaru in Utah recently launched an online purchasing system called “Promise Path.” It allows customers to select a vehicle, see the price, obtain a trade offer, arrange financing and schedule delivery online. A customer can request human assistance at any point, but a traditional salesperson is not required.

What caught my attention was the dealership’s willingness to make specific promises.

It says customers see one out-the-door number, with every charge displayed before signing. It offers financing at the lender’s actual approved rate without adding extra interest for dealer profit. Its trade offer remains valid even if the customer does not buy another vehicle. It offers a 48-hour return period.

Most interestingly, Mark Miller Subaru invites customers to have an artificial-intelligence assistant examine the transaction for junk fees.

I like that challenge.

Mark Miller still charges a $445 documentation fee, which it includes in its displayed price. Earl Stewart Toyota charges no dealer fee of any kind, and we offer a seven-day unconditional money-back guarantee. Nevertheless, Mark Miller’s approach proves that a franchised dealership can combine online convenience with upfront pricing, home delivery and access to local service.

This is where automobile retailing is headed. Customers will increasingly use AI to compare written offers, identify hidden charges, calculate loan costs and determine whether the final contract matches the advertised price.

An honest dealer should welcome that scrutiny.

Unfortunately, AI also creates a new opportunity for deception: secret “personalized pricing.”

The FTC is presently considering a policy addressing businesses that use personal information to estimate how much a particular customer is willing to pay. The information could include browsing history, previous purchases, ZIP code, location, type of device or other behavioral data.

Imagine two people looking at the same vehicle identification number at the same moment. One sees a price of $36,000. The other sees $37,500 because an algorithm believes that person is wealthier, less price-sensitive or more anxious to buy.

Neither customer knows that the other received a different price.

Personalized discounts that are openly explained are not necessarily deceptive. Credit-based lending is also different because legitimate financing decisions consider a borrower’s creditworthiness. The danger is secretly changing the advertised vehicle price according to what a computer thinks it can extract from an individual shopper.

The FTC is accepting public comments on this proposal through September 18. I intend to continue urging regulators, manufacturers and dealers to adopt one basic principle: The advertised price should be the price at which every customer can actually buy the car, excluding only government taxes and registration costs.

A dealer should not advertise one price, demand another price at the dealership and then hide the difference inside a monthly payment or fine print. Nor should software quietly charge different customers different prices for the same vehicle.

Technology itself is neither honest nor dishonest. It reflects the intentions of the people using it.

A dealer can use technology to learn how much additional profit can be concealed inside your payment. Or a dealer can use it to show every number, preserve your choices and invite anyone—including artificial intelligence—to verify the transaction.

The car dealer decides which kind of technology it will be. The customer should know which kind of dealer he or she is dealing with.