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Drive Toward CARS Rule Compliance by Steering Clear of Deceptive Claims

Drive Toward CARS Rule Compliance by Steering Clear of Deceptive Claims

The FTC’s newly announced Combatting Auto Retail Scams Rule (or CARS Rule for short) has been a hot topic for dealers since it was announced in December. The CARS Rule will have a profound impact on dealership advertising, sales, and financing strategies prior to its effective date of July 30, 2024. KPA’s putting together a series of articles to help dealers educate themselves on the do’s and don’t of CARS Rule compliance. One of the four pillars of the CARS Rule (or, as we like to jokingly refer to them, the four horsemen of the apocalypse) the FTC is keeping an eye out for deceptive claims.

We’ve been following the CARS Rule closely since it was first proposed. Here’s what you need to know.

What the FTC says about Deceptive Claims

According to the FTC, A key part of the CARS Rule is a prohibition on misrepresentations about certain categories of information that are material to consumers when shopping for a car.” 

The penalties for violating the CARS Rule are steep.

Violations of the CARS 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.

What does the FTC mean by “material”?

Material information would be considered any information that would affect a person’s choices or conduct regarding goods or services. If something’s going to impact a decision a person would make about buying or leasing a car, it would be considered material to the decision.

There is a laundry list of prohibited misrepresentations.

Express or implied, make sure you’re not misrepresenting the following, as the FTC will consider them deceptive claims:

  • The costs or terms of buying, financing, or leasing a vehicle
  • Any costs, limitation, benefit, or any other aspect of an add-on product or service
  • Whether the terms are, or transaction is, for financing or a lease
  • Any rebates or discounts that factor into the advertised price but aren’t available to all
  • The availability of vehicles at an advertised price
  • If a consumer has been or will be preapproved or guaranteed any product, service, or term
  • Any information related to a consumer’s financing application
  • When the transaction is final or binding on all parties
  • Keeping cash down payments or trade-in vehicles, charging fees, or initiating legal process or any action if a transaction isn’t finalized or if the consumer doesn’t wish to go forward with a transaction
  • If a dealer will pay off some, or all, of the financing or lease on a consumer’s trade-in vehicle
  • If consumer reviews or ratings are unbiased, independent, or ordinary consumer reviews or ratings of the dealer or the dealer’s products or services
  • Whether the dealer or any of the dealer’s personnel or products or services is or was affiliated with, endorsed or approved by, or otherwise associated with the United States government or any federal, state, or local government agency, unit, or department, including the Department of Defense or any branch of the military
  • Whether consumers have won a prize or sweepstakes
  • Whether, or under what circumstances, a vehicle may be moved, including across state lines or out of the country
  • Whether, or under what circumstances, a vehicle may be repossessed

Stay on the Right Side of the CARS Rule with Help from KPA

KPA has been working on its CARS Rule Solution ever since the proposed rule was first announced, and is the ONLY solution offering:

  • Professional and automated website scans to help find and remediate violations of CARS, TILA, Reg M, Reg Z, and more, before vehicle delivery 
  • Remote and onsite deal jacket auditing 
  • Employee CARS Rule training, along with other advertising, sales, and F&I trainings
  • Employee Assessments 
  • CARS Policies 
  • Consumer Complaint Management System 
  • Electronic archive for sales and marketing materials

We’ve been providing advertising, sales, and F&I solutions for over a decade, and KPA’s CARS Solution will help you navigate and comply with CARS well before July 30, 2024.

Schedule a meeting today >  

About The Author

Toby Graham

Toby manages the marketing communications team 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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