Last minute update: The FTC’s CARS Rule, which is the subject of this article and was intended to put a stop to shady dealerships’ worst abuses of customers, was scheduled to go into effect July 30, 2024, but was officially postponed (pdf) on January 18, 2024 as a result of lobbying by the Texas Automobile Dealers Association and the National Automobile Dealers Association, which oppose the rule.
On December 12, 2023, the Federal Trade Commission (FTC) finalized the Combating Auto Retail Scams rule (CARS) to end the most common abuses that dealerships like Red Rock Auto in Grand Junction have long perpetrated on customers when selling cars. The CARS Rule was scheduled to go into effect on July 30, 2024. [See above last minute update].
The new rule will:
- Ban unfair and deceptive practices and prohibit dealers from making any material misrepresentations during sales, meaning they can’t lie or misrepresent anything that would be likely to affect a customer’s choice to buy the car. For example, they can’t misrepresent the availability of the vehicle at the advertised price, or lie about any information on your credit application, or lie about when they will pay off your trade-in vehicle, or lie about whether or not consumer reviews and ratings about them are unbiased;
- Force dealers to clearly disclose the offering price at which anyone can buy the car and the total price the customers will be paying for the car, and not just tell them their monthly payments;
- Makes it illegal to charge consumers for any add-ons that are of no benefit the consumer, for example by adding an extended warranty to the sale of a brand new car that is already covered by a manufacturer’s warranty, or charging customers for “nitrogen filled tires” or for etching the vehicle’s VIN on the window glass.
- Must get express, informed consent from the customer that they are willing to be charged a specific total amount on their contracts, and only after the dealer offers a “clear, unambiguous disclosure” to the customer of all items included in the sale.
So the FTC’s new CARS Rule means no more bait-and-switch tactics, hidden junk fees or undisclosed charges for extras at dealerships.
Violation of any of these rules could result in provisions that require an auto seller to change how it does business going forward, give money back to their injured customers and pay civil penalties of up to $50,120 per violation.
The rule is intended not only to protect consumers against rampant abuses by dealerships, but to level the playing field for the honest dealers, too.