The FTC’s Combating Auto Retail Scams Rule (CARS Rule) is a significant stride in bringing transparency and honesty to the car buying and leasing process. This initiative was significantly bolstered by CarEdge, a key player in rallying public support for the rule. In early 2022, CarEdge leveraged the power of community to highlight the need for such regulations and led the call for public action. The result was thousands of public comments in support of the regulation, and ultimately, meaningful progress towards changing car buying for the better. 

Here’s a look at what the new CARS Rule means for car buyers and auto dealers moving forward.

The FTC CARS Rule Enforces Transparent Car Pricing

The Federal Trade Commission’s new CARS Rule enforces four fundamental principles of truth and transparency in the auto retail industry, which reputable dealers already practice. It’s seen as a significant win for consumers, offering them the same standards of truth and transparency that apply in other transactions. This new regulation takes effect on July 30, 2024.

Here’s how the CARS Rule protects consumers and benefits honest car dealers:

1. The rule prohibits deceptive information about pricing, financing, add-ons, and other ‘material’ information

2. Dealers are required to disclose the offering price – the actual price anyone can pay for the car – excluding only required government fees

3. It is illegal for car dealers to charge for add-ons that don’t provide a benefit to consumers

4. Dealers are now required to get customers’ express, informed consent before charging them for any amount

The rule provides clear legal provisions to protect consumers and adds confidence in their dealings with car dealers. For honest dealers, it levels the playing field by setting uniform standards that all dealers must meet. This enables them to compete fairly based on accurate claims about price, financing, and services.

The rule prohibits misrepresentations about material information and requires dealers to clearly disclose the offering price of a vehicle (the out-the-door price), excluding only mandatory government charges. It also mandates that dealers must inform consumers that they can refuse optional add-ons and must disclose the total payment amount, including any conditions.

Additionally, the rule makes it illegal for dealers to charge for add-ons that don’t benefit the consumer. This is a major win for car buyers following the proliferation of anti-consumer pricing during the car shortages of 2022. Finally, good news is here for those contemplating a car purchase.

Compliance Guidelines Announced

To ensure adherence to the rule, the FTC has laid out guidelines for clear and conspicuous disclosures. These disclosures must be understandable to ordinary consumers and in the same language as the advertisement or communication. The rule also covers practices in languages other than English, ensuring that all consumers receive the same level of protection regardless of the language used.

Read the complete FTC guidance here

CarEdge Will Continue to Advocate For Consumers

This is a major win for American consumers. The rule sets a standard for clear and conspicuous disclosures and includes specific recordkeeping requirements for dealers. Now, for the first time, violations could lead to significant penalties. The rule represents a major step forward in protecting consumers and ensuring fair competition among auto dealers.

CarEdge will continue to push for meaningful change, always with the goal of taking the hassle out of car buying. 

Learn more about how CarEdge is changing car buying for the better.