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The $3 Million Warning: State-Level Enforcement Replaces FTC’s CARS Rule

Toby Graham

While the FTC’s CARS Rule has been shelved, the regulatory threat hasn’t disappeared—it’s shifted to state-level enforcement targeting dealers, with potentially devastating financial consequences. Multiple dealerships now face millions in fines and settlements from state attorneys general while state legislatures pick up where the FTC left off by introducing similar bills. Here’s what’s happening and how to protect your dealership.

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State Attorneys General Target Dealers, Settlements in the Millions

State Attorneys General are aggressively targeting practices the shelved CARS Rule would have addressed:

Maryland

In Maryland, a dealership must pay a $3 MILLION SETTLEMENT in addition to customer refunds

The dealership got penalized for:

  • Charging additional financing fees above advertised prices
  • Payment packing
  • Failing to disclose complete pricing information
  • Not itemizing purchased goods and services

Indiana

Advertising inaccuracies cost dealer $240,000

In Indiana, a dealership charged more than the advertised price for financed vehicles, resulting in over $240,000 in restitution payments to 110 affected consumers.

State Legislatures Accelerate Enforcement with CARS-Like Bills

California and Massachusetts are leading the charge with their own bills that mirror the federal CARS Act.

Massachusetts

New law targets “junk” fees and mandates greater price transparency for consumers

Taking effect September 2, 2025, the law requires that businesses, including dealerships:

  • Provide clear total pricing, including all mandatory fees, before collecting consumer information
  • Disclose the nature, purpose, and amount of all fees, including whether charges are optional, with instructions on avoiding these fees
  • Clearly disclose recurring charges and all financial obligations, including instructions for cancellation
  • Provide simple subscription cancellation processes

California

California has proposed its own CARS Act with even stricter requirements

California has proposed its own legislation, called the CARS Act, that strongly reflects the FTC CARS Rule. The bill consists of even stricter requirements including: 

  • Prohibiting misrepresentation in vehicle sales
  • Banning “valueless” add-ons
  • Mandating clear disclosure of offering price
  • Implementing a 10-day right to cancel on used vehicle sales
  • Requiring seven-year record-keeping

Take Immediate Action to Protect Your Dealership

  1. Request KPA’s Dealership Compliance Assessment – Our comprehensive review identifies compliance issues before regulators do
  2. Review your advertising and F&I practices to align with emerging state regulations
  3. Implement proper documentation procedures for all transactions
  4. Train staff immediately on compliance requirements

Don’t Wait for Your Multi-Million Dollar Wake-Up Call

KPA’s Complete Compliance solution helps you:

  • Ensure transparent pricing and advertising practices
  • Develop compliant F&I processes
  • Protect against costly fines and legal complications
  • Stay ahead of evolving regulations across all states

Learn how we can help your dealership navigate this changing regulatory landscape.

Schedule a Meeting

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Toby Graham

Toby manages the editorial and content strategy here at KPA. She's on a quest to help people tell clear, fun stories that their audience can relate to. She's a HUGE sugar junkie...and usually starts wandering the halls looking for cookies around 3pm daily.

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