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What You Need to Know About the New FTC CARS Rule


What You Need to Know About the New FTC CARS Rule

On December 12, the Federal Trade Commission announced a final rule for Combating Auto Retail Scams (CARS).  The CARS Rule will have a profound impact on dealership advertising, sales, and financing strategies prior to its effective date of July 30, 2024.  We’ve been following the FTC CARS Rule very closely since it was first proposed, and have put together what you need to know.

Is the FTC CARS Rule Any Relation to the Proposed Vehicle Shopping Rule?

Yes.  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.

What are the Penalties for Violating the CARS Rule?

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.

Does the CARS Rule Apply in Every State?

Yes. The CARS Rule sets forth minimum standards across the country. If a state law or regulation gives even greater protection to consumers than the CARS Rule, the state standard will take precedence over the CARS Rule to the extent that there is a conflict.

Source: FTC

What Does the CARS Rule Require and Prohibit?

Here’s a quick overview, but we’ll take a deep dive into each of these over the coming weeks.

There is a laundry list of prohibited misrepresentations.

The FTC considers these as “deceptive claims” regardless of whether they’re express or implied.

All vehicles must have a properly disclosed “Offering Price.”

The offering price is the full cash price that a dealership will sell or finance the vehicle to a consumer, less any mandatory government fees (such as tax, title, and registration fees).

An add-on product cannot be offered unless it benefits the customer.

Add-ons 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.

Businesses must obtain informed consent before charging consumers.

This is to ensure that consumers understand in advance what they’ll be charged, and that businesses receive a fully-informed “yes” before a business can charge them.

There are additional disclosure requirements for payment quotes and payment comparisons, in addition to those already required by Regulation M and Regulation Z.

There are recordkeeping requirements.  While some of these records must be kept longer, the CARS Rule specifically requires that certain records be kept for at least 24 months.

The CARS Rule requirements cannot be waived, and merely asking a consumer to waive any provision is a violation.

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Does KPA have an CARS Rule Solution?

Yes, 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 >  

FTC CARS Resource Hub

The upcoming CARS Rule, effective July 30, 2024, will greatly influence dealership practices. Access our comprehensive resource hub for all the necessary information.

Visit the Resource Hub

Adam Crowell

Adam Crowell is a licensed practicing attorney and nationally recognized compliance expert and speaker that regularly contributes on a variety of compliance and risk mitigation subjects. He brings to KPA over 21 years of legal experience and thought leadership for the development of strategic relationships and solutions for proactively avoiding claims, fines, and lawsuits.

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