FTC CARS Rule Resource Hub

The Federal Trade Commission’s Combatting Auto Retail Scams Rule (or CARS Rule for short) has been a hot topic for dealers since it was announced in December of 2023. The rule will have a profound impact on dealer advertising, sales, and financing strategies. The rule is designed to protect consumers from deceptive practices when buying or leasing a vehicle.

The Federal Trade Commission’s Combatting Auto Retail Scams Rule (or CARS Rule for short) has been a hot topic for dealers since it was announced in December of 2023. The rule will have a profound impact on dealer advertising, sales, and financing strategies. The rule is designed to protect consumers from deceptive practices when buying or leasing a vehicle.

First proposed in mid-2022, the CARS Rule was initially called the Motor Vehicle Dealer Trade Regulation Rule, and was often referred to within the industry as the “Vehicle Shopping Rule.” After reviewing solicited feedback from thousands of consumers, consumer advocate groups, dealerships, automotive trade associations, and industry experts, the FTC revised the proposed rule and re-named it.

Violations of the rule constitute unfair and deceptive acts and practices under Section 5 of the FTC ACT, and the FTC can impose penalties of $50,120 per violation.

It’s unclear right now. As part of the rulemaking process, the FTC is holding a hearing on October 9th, where we will get more clarity on the effective date. Watch this on-demand webinar to learn more.

The rule applies to “any self-propelled vehicle designed for transporting persons or property on a public street, highway or road.”

Right now, this includes auto dealers and excludes things like boats, motorcycles, RVs, and golf carts. Beyond car dealers, there’s a gray area around medium—or heavy-duty trucks, tractors, or trailers.

There are various rules impacting the advertising of vehicles for sale. A few of them include:

• The rule prohibits automobile dealers from listing vehicles that are unavailable for sale.
• The rules also warn against making untrue or misleading “pre-approval” claims.
• Things like “speed reading” disclosures in radio and TV ads and placing disclaimer language behind “view details” links on your website have also been forbidden.

Dealers must clearly disclose the offering price: The full cash price that a dealer will sell or finance the vehicle to a consumer, less any mandatory government fees (such as tax, title, and registration fees). Dealers cannot include deductions in the advertised price for rebates or down payments in the Offering Price.

Dive into Offering Price best practices in this article >

To eliminate any perception of deceptive practices, when displaying a payment, the rule requires dealers to display the total amount after making all payments and the total payment amount due at signing or downpayment.

Car buyers must also be able to compare two payments with varying amounts and see a clear disclosure that the customer will pay more over the life of the loan for the lower payment.

According to the FTC, “A dealer may not charge for an add-on product or service if the consumer wouldn’t benefit from it.”

An add-on product cannot be presented to a customer unless it is disclosed that it is not required for purchasing or leasing the vehicle, and cannot be sold without the express, informed consent of the customer. The rule prohibits dealers from the predatory practice of charging for items that provide little to no benefit to the consumer. This prevents dealers from charging for things like adding nitrogen to tires.

Learn more about what’s considered an Add-On in this article >

While some records must be kept longer, the FTC rules specifically requires that certain records be kept for at least 24 months.

In an interesting interplay between federal and state laws, the rule aims to set minimum standards across the country. The rule was set if a state law or regulation gives even greater protection to consumers than the CARS Rule, the state standard will take precedence to the extent of conflict.