FTC and State Disclosure Rules for Dealer Markups Over MSRP in Vehicle Advertising

Executive summary

A dealer generally may charge a markup over MSRP. What the FTC is targeting is not the existence of the markup by itself, but deceptive price advertising that lures consumers with a lower number and then adds mandatory charges or required conditions later. The FTC’s current enforcement position is that the price consumers see in advertising should be the actual price they must pay, aside from required government charges, and that dealers may not advertise a vehicle at one price while requiring undisclosed mandatory fees, add-ons, financing conditions, or other required charges to complete the sale. In March 2026, the FTC warned 97 dealership groups that advertised prices “must be the total price—including all mandatory fees—that consumers will be required to pay,” and its recent auto cases repeatedly challenge dealers that advertised low prices but later imposed mandatory charges, “market adjustments,” certification fees, reconditioning fees, or financing conditions.

For a vehicle such as a Honda Civic Type R sold at $5,000 over MSRP, the safest and strongest reading of current FTC materials is this: if the $5,000 is mandatory to buy that VIN or model from that dealer, it must be reflected in the advertised selling price, not tacked on later in fine print, on the VDP, in the showroom, or during checkout. Showing only MSRP as the headline price and disclosing the markup later would create the same type of mismatch the FTC has been attacking in warning letters and enforcement actions. The FTC’s now-withdrawn CARS Rule is not in force, but it confirms the agency’s recent view that dealers should disclose the real “offering price” and obtain express, informed consent before charging optional items; recent settlements with Leader and Lindsay impose materially similar obligations.

State law makes this even more concrete in several major states. California, Texas, Florida, and Illinois each require advertised vehicle prices to include essentially all dealer-imposed mandatory charges, subject to limited exceptions such as taxes, title, registration, and certain specifically permitted fees. California goes further for above-MSRP sticker situations by specifically requiring a supplemental sticker over MSRP to disclose that it is the dealer’s asking price, disclose MSRP, itemize extra items not in MSRP, and label any remaining difference as “added mark-up.” New York’s Attorney General guidance similarly treats advertised price as the real purchase price, with only taxes and title/registration excluded, and requires adjacent disclosure rather than contradictory footnotes.

The practical compliance answer is straightforward: if you show a price anywhere a consumer can reasonably treat as the selling price—dealer website, inventory card, VDP, Google vehicle feed, Cars.com/Autotrader-style listing, email blast, social ad, display banner, or paid search ad—that price should already include any mandatory dealer markup and any mandatory dealer-installed products or required fees, with only government charges and legally excludable items carved out. Optional products should be disclosed later, clearly, separately, and only after affirmative consumer assent.

The FTC baseline now

What is currently binding and what is not

The FTC’s current operative baseline comes from Section 5 of the FTC Act, case-by-case enforcement, warning letters, and applicable rules such as the Used Car Rule for used vehicles. The FTC’s March 2026 auto warning letter expressly states that the agency is committed to ensuring that “the price consumers see in advertising is the actual price they will pay (aside from required government charges, like taxes),” and it identifies as illegal practices: advertising a price that does not reflect all required fees, conditioning the advertised price on dealer financing, requiring consumers to buy additional items not reflected in the advertised price, and advertising unavailable vehicles.

The FTC’s CARS Rule is important background but is not currently in effect. The FTC finalized it in December 2023, stayed its effective date in January 2024 pending litigation, the Fifth Circuit vacated it on January 27, 2025, and the FTC formally withdrew it in February 2026 to conform to the court decision. That means dealers should not treat the CARS Rule as a live nationwide rule. But it still matters as evidence of the FTC’s recent policy direction, especially because current FTC dealer settlements and warning letters reflect many of the same concepts.

FTC guidance pages that matter most

The FTC’s consumer guidance page Car Dealer Ads and Promotions: Know Before You Go says consumers should obtain the “out-the-door” price in writing before visiting because advertised prices may omit fees and charges, and dealers may try to add add-ons that increase the cost. The same page warns that deceptive low-price claims include offers the dealer will not honor, prices conditioned on hidden restrictions, and ads that bury “big costs” such as processing fees in fine print. While written for consumers, this is a useful compliance marker because it shows the FTC’s public-facing interpretation of what makes an auto ad deceptive.

For digital placement, the FTC’s .com Disclosures guidance remains the agency’s core disclosure reference for online advertising. FTC staff described it as guidance on how to make online and mobile disclosures “clear and conspicuous” to avoid deception, and the publication emphasizes that online advertising is subject to the same consumer protection rules as other media. In the recent Leader settlement language, “clear and conspicuous” is defined in a way that fits digital vehicle ads: disclosures must stand out by size, contrast, location, and timing, and in interactive electronic media they must be unavoidable.

Recent FTC auto dealer enforcement and consent outcomes

The FTC’s recent dealer cases show a clear pattern. In Passport in 2022, the FTC alleged that the dealer advertised certified, inspected, or reconditioned cars at specific prices and then added certification, reconditioning, or inspection fees when consumers tried to pay the advertised amount; the case resulted in more than $3.3 million for refunds. In Napleton in 2022, the FTC and Illinois alleged hidden add-on fees and obtained a $10 million settlement.

In Coulter in 2024, the FTC and Arizona alleged deceptive online pricing, including online prices discounted below suggested retail prices that were not actually available because the dealership later added “market adjustment,” pre-installed add-ons, and other fees; the matter settled for $2.6 million. In Asbury in 2024, the FTC filed an administrative complaint alleging add-ons packed into deals without consent, with the case still pending as of May 8, 2026.

In Leader in December 2024, the FTC and Illinois alleged bait-and-switch low-price advertising, required preinstalled add-ons, surprise “market adjustments,” and post-advertisement certification and reconditioning fees; the proposed settlement requires clear disclosure of a car’s “offering price”—the actual price any consumer can pay for the car, excluding only required government charges—and express informed consent for charges. In Lindsay, first filed in December 2024 and settled in April 2026, the FTC and Maryland alleged falsely low advertised prices, rebate stacking that most consumers could not qualify for, and mandatory financing conditions; the proposed order requires the dealer to clearly and conspicuously disclose the total amount the consumer must pay for the car, excluding only required government charges, and to obtain express informed consent before charging fees.

What this means for dealer markups over MSRP

The FTC materials do not say a dealer can never sell above MSRP. Instead, they say the dealer cannot advertise a lower price and then impose a mandatory extra amount later. In the context of a mandatory $5,000 dealer markup, the legally significant question is not whether the charge is labelled “market adjustment,” “ADM,” “protection package,” “dealer installed accessories,” or “markup.” The question is whether the consumer must pay it to buy the vehicle. If yes, the charge belongs in the advertised price. That conclusion is the clearest safe harbor under the FTC’s 2026 warning letters and the recent dealer cases.

How the FTC would likely analyze a Civic Type R advertised at MSRP plus a mandatory $5,000 markup

There does not appear to be an FTC page using the exact example “Honda Civic Type R + $5,000 markup.” But the FTC’s warning letter and cases provide a strong, predictable framework. If a dealer advertises a specific Civic Type R at MSRP $46,890 and then requires a $5,000 dealer market adjustment to complete the purchase, the FTC would likely view the real advertised price as $51,890 before government charges. Advertising only $46,890 as the sale price would create the same kind of deceptive mismatch the FTC has described as illegal—an advertised price that does not reflect all required fees or charges.

On a dealer website, especially on inventory cards and the vehicle detail page, the featured dollar figure should therefore be the real dealer selling price, inclusive of any mandatory markup. It is fine to show MSRP as a comparison number, but it should be secondary to the actual selling price. A clear format would be: “Dealer Price $51,890” and immediately below it “Includes $5,000 dealer market adjustment; excludes tax, title, and registration.” If state law allows an additional documentary fee to be excluded, that exclusion should also be stated in the jurisdictionally required way. Disclosures should be adjacent to the price, easy to read, and not relegated to hover text or a hard-to-find footnote.

On third-party listings, the same logic applies. If the platform has a structured price field, the number in that field should be the amount the consumer must actually pay to buy the vehicle from that dealer, excluding only government charges and narrowly permitted exclusions. If the platform allows an MSRP field and a dealer-price field, use both: put MSRP in the MSRP field and put the actual marked-up sale price in the sale-price field. If the platform supports only one public-facing price field and that field cannot be made compliant, the safer approach is to avoid showing a price at all rather than showing MSRP and correcting it later in the description. That is not stated in a single FTC sentence, but it follows directly from the FTC’s insistence that the advertised price must match the real price and from state rules that apply to internet advertising.

For search ads and short-form display ads, the same principle applies, but the formatting challenge is harder. The safest approach is either to advertise the actual dealer selling price or to avoid a specific price claim altogether. If a paid search ad says “Civic Type R $46,890,” but the landing page or in-store price is $51,890, that is precisely the kind of bait-and-switch concern the FTC warns about. If space is limited, “Civic Type R in stock — see dealer price” is generally safer than a teaser price that omits mandatory markup. If a price is used, any required qualification must be proximate and usable on mobile; the FTC’s online disclosure guidance and recent orders are hostile to disclosures that are hidden, contradicted, or avoidable.

If the $5,000 amount is truly optional because it corresponds to an optional item the consumer may decline—for example, an optional wheel/tire package or service contract not required to buy the car—it should not be embedded as a mandatory markup. Instead, the advertised vehicle price should exclude that optional item, and the dealer should present it later as an optional add-on with separate disclosure and affirmative consumer consent. Recent FTC dealer orders and complaints are especially focused on add-ons the consumer did not knowingly authorize or was falsely told were mandatory.

State-law overlays for California, New York, Texas, Florida, and Illinois

California

California has one of the clearest statutory regimes for this problem. Under Vehicle Code section 11713.1, a dealer may not advertise the total price of a vehicle without including all costs to the purchaser at the time of sale, except for specified items such as taxes, registration fees, the California tire fee, certain emissions charges, finance charges, and dealer document/electronic filing charges. California also requires a specific disclosure statement for the excluded items on qualifying advertisements and provides that advertised vehicles must be sold at or below the advertised total price while the vehicle remains unsold. The statute expressly treats a web page of a dealer’s internet site displaying a vehicle price as an “advertisement.”

California is especially important for over-MSRP situations because the same section expressly regulates supplemental price stickers above MSRP. If a dealer places a supplemental sticker on a new vehicle with a price above MSRP, the sticker must prominently state that the amount is the dealer’s asking price and not MSRP, must clearly disclose MSRP, must list each item not included in MSRP and the price of each item, and if the supplemental sticker price is greater than MSRP plus those added items, the remaining difference must be disclosed and described as “added mark-up.” That is unusually close to the exact issue of an ADM over MSRP.

California’s broader 2024 SB 478 “Honest Pricing Law” also reinforces the same principle across consumer markets: the price a Californian sees should be the price they pay, mandatory fees must be included, and businesses cannot comply merely by revealing mandatory fees later in the transaction. Auto sales already have more specific dealer rules, but SB 478 underscores California’s anti-drip-pricing posture.

New York

New York’s current Attorney General guidance states that all auto advertising should be in plain language, clear and conspicuous, and nondeceptive, and that deceptive advertising can result from direct statements, reasonable inferences, or disclaimers that contradict or materially modify the principal message. In the AG’s dealer advertising guidelines, a price advertisement is deceptive unless the stated price is the actual purchase price, exclusive only of registration and title fees and taxes, and unless the dealer includes an adjacent statement that the price includes everything except those items. The guidance also treats unreadable small print, contradictory footnotes, and hidden limitations as deceptive.

New York’s AG consumer page also gives practical warning examples that map directly onto markup and rebate problems. It flags “all rebates and incentives applied” pricing as misleading when limited rebates are baked into the advertised price, warns about “under invoice” or “below dealer cost” claims, and says a dealer referencing MSRP-based discounts on new cars should disclose the MSRP amount used as the comparator. That means a New York dealer advertising a Type R with a markup should not headline MSRP as the sales price and then reveal a mandatory markup later.

Texas

Texas is particularly explicit. Under 43 Tex. Admin. Code § 215.250, when a dealer features a sales price in an advertisement, the dealer must be willing to sell the vehicle for that featured sales price to any retail buyer, and the featured price must be the price before other negotiated items. The rule expressly says that destination charges, dealer preparation charges, and “additional dealership markup, if any” must be included in the featured sales price. The only costs generally excluded are registration/title/license fees, taxes, and other fees expressly allowed by law. The same rule also prohibits qualifications such as “with trade,” “with dealer-arranged financing,” “rebate assigned to dealer,” or “with down payment,” and prohibits advertising an “internet price” or “e-price” that suggests a different or unique sales price just for online consumers.

Texas also regulates internet and specific-vehicle identification. TxDMV’s official advertising presentation, summarizing the Texas rules, states that if an advertised price pertains to one specific vehicle, the ad must disclose the stock number or VIN, and that all ads must be accurate, clear, conspicuous, and not false, deceptive, or misleading. The same TxDMV materials show approved examples for limited rebates: limited or conditional rebates cannot be used in the featured price if they are not available to all buyers, but may be described below the featured price with their conditions.

Texas documentary fees are a separate overlay. The Texas OCCC’s July 2, 2024 bulletin says a seller may charge a documentary fee of $225 or less without prior OCCC filing, but before charging more than $225, the seller must file notice and cost analysis with the OCCC under Texas Finance Code section 348.006 and amended Texas Administrative Code section 84.205. That does not replace the TxDMV ad-price rules, but it matters if the dealer intends to exclude or separately charge documentary fees permitted by law.

Florida

Florida’s statute is also direct. Under Fla. Stat. § 501.976(16), a dealer may not advertise the price of a vehicle unless the vehicle is identified by year, make, model, and style name, and the advertised price must include all fees or charges that the customer must pay, including freight or destination charge, dealer preparation charge, and charges for undercoating or rustproofing. State and local taxes, tags, registration fees, and title fees need not be included unless local law requires otherwise. Florida also requires all fees permitted to be added to cash price to be fully disclosed in binding contracts.

Florida’s Attorney General consumer guidance complements the statute by warning that low-price specials can be misleading where dealers recoup profit through overpriced add-ons such as rustproofing and undercoating, and that advertised finance specials may carry conditions such as large down payments, sticker-price requirements, or add-on purchases. A Florida dealer therefore should treat a mandatory ADM the same way as any other mandatory charge: include it in the advertised price.

Illinois

Illinois Attorney General motor vehicle advertising regulations are also strong. 14 Ill. Adm. Code Part 475 requires all material terms and conditions to be disclosed clearly and conspicuously at the outset, prohibits confusing or contradictory footnotes, and deems 10-point type or larger readily noticeable in print. For price ads specifically, Section 475.310 says it is deceptive to advertise the total price of a motor vehicle without including all costs to the purchaser at the time of sale or necessary or usual prior to delivery, including delivery, dealer preparation, and any other charges of any nature. Taxes, license and title fees, and a documentary service fee may be excluded only if the ad clearly discloses that the costs are excluded. Purchasers must be able to buy all vehicles described by the ad at the advertised price.

Illinois also has a clear rebate rule. Under Section 475.530, it is deceptive to advertise a price or installment payment with rebates deducted unless every consumer seeking to purchase or lease the advertised vehicle is eligible for the rebate; limited rebates may be advertised only if their limiting terms are clearly and conspicuously disclosed, and they may not be deducted from the advertised price. This aligns closely with the FTC’s recent rebate-stacking cases.

Compliant and noncompliant examples

Sample disclosure flow

This flow reflects the FTC’s “actual price consumers see” position, the consent language in recent orders, and state rules requiring the full advertised price or featured sales price to include mandatory dealer charges.

Sample website vehicle detail page mockup

2025 Honda Civic Type R
VIN: JHMFL5G4XSX000123

Dealer Price: $51,890
MSRP: $46,890

Includes $5,000 dealer market adjustment.
Excludes tax, title, license/registration, and applicable dealer doc fee where permitted by law.
Optional products and service contracts not included.

[Get e-price]   [Reserve vehicle]   [View itemized out-the-door worksheet]

The key design choice is that the actual dealer price is the dominant number, while MSRP and the markup explanation are secondary but adjacent, readable, and unavoidable on mobile. That design is much safer than leading with MSRP and repairing the problem in a footnote or later checkout step.

Comparison table

These examples synthesize the FTC’s 2026 warning letters, recent dealer cases, and the current state rules in California, New York, Texas, Florida, and Illinois.

Placement recommendations

For dealer websites, the required pricing disclosure should appear above the fold, adjacent to the featured price, and in a text style that is readable on mobile without expanding a disclosure drawer. If the site uses a modal, hover, or tabbed interface, the disclosure should still be unavoidable when the consumer encounters the price. For video or audio ads, material price qualifications should be presented in the same medium as the claim and not hidden in a rapid, low-volume disclaimer. For interactive media, avoid disclosure designs that require a consumer to click through several layers before seeing the actual required price.

Practical compliance checklist, enforcement risk, and mitigation

A workable compliance program should start with a single VIN-level source of truth for price. The system should determine, before publication, whether a charge is mandatory to buy the vehicle. If yes, the charge belongs in the published selling price. Only government charges and expressly permitted exclusions under applicable state law should remain outside that number. The same logic should drive website cards, VDPs, syndication feeds, paid search feeds, and third-party listings so that the consumer sees the same price everywhere.

Dealers should also separate mandatory price from optional add-ons operationally. Optional products should never be pre-bundled into a required “dealer package” unless the package truly is mandatory and therefore already included in the advertised price. Before any charge for optional items, recent FTC orders support a consent standard that is affirmative, unambiguous, and close in time and placement to a clear disclosure of what the charge is for and how much it is. In practice, that means a separately itemized buyer’s order, unchecked opt-in controls for optional products, and a deal-jacket record showing consumer assent.

The most important copy controls are simple. Do not use “internet price,” “e-price,” “MSRP,” or “starting at” as the public comparison-shopping number if the consumer must pay more. Do not include limited rebates in the headline price unless every consumer qualifies. Do not condition the advertised price on dealer-arranged financing unless that condition is treated lawfully and disclosed in a way permitted by the jurisdiction; Texas flatly prohibits “with dealer-arranged financing” qualifications in featured sales price advertising, and the FTC’s warning letters specifically identify dealer-financing conditions as a deceptive risk. Do not try to solve a bad headline price with a footnote.

The documented controls should include archived screenshots of every advertised VIN, timestamped feed exports for third-party listings, approval logs for price changes, records of MSRP versus dealer price calculations, rebate-eligibility logic, and periodic mystery-shopping of both desktop and mobile experiences. While the withdrawn CARS Rule is not binding, it is still a useful model because it emphasized accurate pricing disclosures, express informed consent, and recordkeeping; recent FTC settlements are moving in the same direction.

The risk profile is no longer theoretical. Recent outcomes have included multimillion-dollar settlements, injunctions requiring clearer price disclosures and consent procedures, and ongoing administrative litigation. Passport produced more than $3.3 million in refunds; Napleton involved $10 million; Coulter, $2.6 million; Leader’s proposed settlement is $20 million and requires offering-price disclosures and consent; Lindsay’s 2026 settlement requires clear total-price disclosure and informed consent, and the FTC notes stipulated final orders have the force of law when approved by the court.

The best mitigation strategy is to design for the regulator’s simplest question: “Is the number consumers saw the real number they had to pay for that vehicle, excluding only government charges and truly optional extras?” If the honest answer is yes, the dealer is in a much stronger position. If the answer depends on a footnote, an eligibility matrix, a salesperson explanation, or a late-stage worksheet, the risk is materially higher.

Open questions and limitations

This report prioritizes high-confidence primary sources and the major states you requested. A few state-specific nuances were not exhaustively cataloged here, including every local fee rule, every documentary-fee cap, and every franchise-brand program rule. New York’s dealer advertising guidance remains authoritative and current on the AG’s site, but it appears to originate from an older guidance document rather than a new 2020s regulation. Finally, third-party marketplace capabilities vary substantially; where a platform cannot display a compliant public price, the safest compliance choice is often to omit price rather than publish a lower noncompliant number and attempt to fix it later.