Overcharging car buyers based on how they look? That’s illegal

Charging customers more based on their race, ethnicity or appearance is unfair and illegal. The FTC and State of Wisconsin alleged that three dealerships charged American Indian customers hundreds or thousands of dollars more than non-Latino White customers. Some buyers were also charged for optional products such as GAP coverage and service plans or were falsely told those add-ons were required.

Dealerships should apply consistent pricing, financing markups and add-on practices to every customer and clearly disclose when products are optional. Managers should monitor deal data for disparities, train sales and F&I employees on fair-lending requirements and ensure contracts accurately reflect each customer’s choices. Violations can result in customer reimbursements, enforcement orders, financial penalties and lasting reputational harm.