FTC: Major New “CARS Rule” to Protect Shoppers from Scams When Buying Cars

WASHINGTON, D.C. – The Federal Trade Commission (FTC) has instituted a new rule designed to protect consumers from scams when shopping for vehicles.

The Combating Auto Retail Scams (CARS) Rule addresses several issues that consumers have complained about in recent years, including fraudulent behavior on the part of unscrupulous sellers such as bait-and-switch tactics, as well as so-called “junk fees” added to the purchase prices of the vehicles for “unnecessary” services such as certification, reconditioning, or inspections.

FTC’s new CARS rule could save car shoppers $3.4 billion each year. https://t.co/GISRo3Orn4

— Car and Driver (@CARandDRIVER) December 18, 2023

The CARS Rule is comprised of four distinct mandates, which are as follows:

1.  Prohibits misrepresentations about material information. The CARS Rule makes it illegal for a dealer to make misrepresentations about certain topics that would affect a consumer’s buying or leasing choices. Deceptive claims about price, financing, or add-ons are a few examples.
2. Requires dealers to clearly disclose the offering price – the actual price anyone can pay to get the car, excluding only required government charges. Before they visit the dealership and throughout the transaction, consumers have the right to know the drive-off-the-lot price. If a dealer mentions optional add-ons, the dealer has to tell consumers they can say no. And if discussing a monthly payment, the dealer has to tell the consumer the total payment. (The only costs that can be excluded from the offering price are required government charges – for example, taxes, license and registration costs, or inspection or certification fees.)
3. Makes it illegal for dealers to charge consumers for add-ons that don’t provide a benefit. Under the CARS Rule, if the consumer won’t benefit from an add-on product or service, the dealer can’t charge for it.
4. Requires dealers to get consumers express, informed consent before charging them for anything. That means no surprise fees or hidden charges. Dealers must get a buyer’s clear and informed “yes” to what they’re buying and how much they’re being charged.

The CARS Rule Was originally proposed by the FTC in June 2022, and slated to go into effect on July 30, 2024. When the rule is in force, the FTC stated that it is anticipated to save car-shopping consumers in the United States over $3.4 billion per year.

The FTC has set up a website for auto dealers to allow them to review the rules in depth to ensure that they can be followed accurately.

• FTC CARS Rule: Combating Auto Retail Scams – A Dealers Guide: https://www.ftc.gov/business-guidance/resources/ftc-cars-rule-combating-auto-retail-scams-dealers-guide