FTC is Riding Shotgun with Potential Car Buyers

  • The FTC finalized a new rule intended to protect consumers buying a new car from unlawful and deceptive sales tactics pursuant to its authority under the Dodd-Frank Act to prescribe rules relating to unfair or deceptive practices by motor vehicle dealers.
  • The Combating Auto Retail Scams Trade Regulation Rule (CARS Rule) prohibits dealers from using bait-and-switch claims to lure potential buyers to the lot and from charging consumers for add-ons that do not provide a benefit. The rule also requires dealers to provide accurate information about the cost of a car, terms of financing, the availability of discounts or rebates, and the actual availability of vehicles being advertised, and obtain consumers’ express informed consent for any charges associated with their purchase.
  • The CARS Rule also contains specific protections for servicemembers, including prohibitions on dealers making misrepresentations regarding affiliations with the military or any governmental organization, whether a vehicle can be moved out of state (which affects families that frequently move between bases), and whether a vehicle can be repossessed (which would contradict laws protecting servicemembers from vehicle repossession).
  • The CARS Rule will take effect on July 30, 2024.