By Ray Birch
KENSINGTON, Md.—The “ghost car” may sound like an old-school dealership trick, but consumer advocates, regulators and auto retail analysts warn the tactic is evolving in the digital era in ways that could create fresh risks for borrowers—and for the credit unions financing their purchases.
The practice centers on dealerships advertising vehicles online that are unavailable, already sold or priced so unrealistically low that few buyers could actually qualify for the deal. The objective, according to CarEdge co-founder Ray Shefska, is simple: get consumers to click, call or walk into the showroom.
“The whole concept behind ghost cars is to be able to advertise a vehicle that will attract a consumer’s interest,” Shefska told CUToday.info. “If they never click on that, you’re never going to have an opportunity to do business with that customer.”
While versions of the tactic have existed for decades, analysts say the online shopping environment—and pressure on dealerships to generate leads—has changed the scale and sophistication of the practice. Consumers today often begin the buying process through online marketplaces, dealership websites and automated search listings, meaning the first interaction with a dealer may happen long before a borrower speaks with a lender or walks onto a lot.
That growing concern is now drawing more federal scrutiny.
In March, the Federal Trade Commission sent warning letters to 97 dealership groups cautioning against deceptive advertising practices, including promoting unavailable vehicles and advertising prices consumers cannot realistically obtain. The FTC said dealers must avoid misleading shoppers with artificially low advertised prices that later balloon with mandatory fees or unavailable incentives.
The crackdown has intensified following a recent settlement involving the Lindsay Automotive Group, in which federal and Maryland authorities alleged consumers were overcharged through deceptive pricing and unwanted add-ons. Regulators said the settlement could return more than $75 million to affected consumers while imposing additional penalties on the dealer group.
Just A Hook
Consumer advocates say those cases highlight a broader issue: the advertised vehicle may simply be the opening hook.
“Consumers are increasingly being misled at the very first touchpoint of the buying journey,” Shefska said,
For credit unions, the implications go beyond member frustration. Ghost listings and misleading pricing can disrupt the lending process itself. Borrowers may seek preapproval based on a vehicle advertised at one price, only to discover the car is unavailable or carries thousands of dollars in added costs once they arrive at the dealership.
That can create underwriting complications, force loan restructurings or require lenders to deny financing that initially appeared affordable, Shefska said.
“I would think if somebody sees an advertised price for a ghost car and they go to their local credit union and get approved for a loan for X amount of money, and then they get to the dealership and find out the vehicle is $5,000 more, that impacts the credit union,” Shefska said. “You have to go through another approval process or explain why they may no longer qualify.”
Industry observers say the issue has become more significant as affordability pressures already strain auto lending. New vehicle prices remain elevated compared with pre-pandemic levels, and even modest pricing differences can materially affect monthly payments and loan eligibility.
Some consumer groups argue the hidden cost problem may be widespread. Research cited in recent consumer reports suggests the gap between an advertised vehicle price and the final out-the-door cost can run roughly 7% to 8% once fees, add-ons or substitutions are included. Other consumer research has estimated that 71% of used-vehicle purchases include at least one questionable or excessive fee, with buyers paying an average of hundreds of dollars more than expected.
At the same time, analysts stress that the majority of dealerships are not engaging in deceptive behavior.
Shefska said CarEdge has analyzed more than 55,000 negotiated vehicle quotes since last year to build what it calls a dealership transparency index grading dealers from A to F based on whether advertised prices align with actual out-the-door costs. According to Shefska, most dealers score relatively well, while a smaller group continues relying on aggressive pricing and lead-generation tactics.
Shefska said it is not necessary to avoid dealerships, but to better vet them.
Shefska suggested credit unions could use dealer-transparency tools and member education programs to steer borrowers toward dealerships with clearer pricing practices. He also reiterated advice long promoted by many credit unions: obtain financing preapproval before entering the dealership.
Call For Price
Another emerging concern is how dealers may adapt as regulators tighten scrutiny. Shefska said some dealerships increasingly use “call for price” advertising instead of posting actual pricing online, potentially making it harder for consumers to compare offers or determine whether a vehicle is genuinely available.
“The shadier dealers are trying to get around it,” Shefska said. “They’re pulling back a bit on that type of advertising, but now you see more ‘call for price.’”
For credit unions, analysts say the larger issue may be trust.
Many cooperatives position themselves as consumer advocates in the auto-buying process, particularly through indirect lending and car-buying programs. But if members repeatedly encounter misleading vehicle pricing after being referred into dealership networks, that frustration can spill over onto the lender relationship itself, Shefska noted.