Effective Date Paused on CARS Rule Aimed At Helping You Save At Dealerships

The CARS rule — which aims to protect consumers from 'bait-and-switch' tactics and junk fees when vehicle shopping — is on hold pending a legal challenge.

used car for sale
(Image credit: Getty Images)

As car prices continue to rise, a new rule aimed at two common money-grabbing schemes that consumers often face when purchasing a vehicle has been put on hold, pending a legal challenge.

The Combating Auto Retail Scams (CARS) rule protects consumers during the significant and often arduous car-buying process by prohibiting certain sales tactics and procedures, according to the Federal Trade Commission (FTC), which initially planned to finalize the rule on July 30.

But the rule’s effective date has been postponed while a legal challenge against the rule is pending, the FTC recently announced.

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The National Automobile Dealers Association (NADA) and the Texas Automobile Dealers Association have petitioned a federal appeals court to overturn the rule, arguing that it should be stayed while their challenge is pending.

“We continue to believe the rule is unnecessary, redundant, confusing and will needlessly lengthen the car sales process for consumers,” the NADA said in a statement.

The rule specifically targets bait-and-switch tactics used by some dealers to get customers in the door, as well as hidden junk fees and costs that in some cases are for services or products that provide no consumer benefit, the FTC said.

The rule comes at a time when the auto market is recovering slowly and interest rates remain high.

Under the rule, dealers are prohibited from misrepresenting the cost of a car, and must make consumers aware of any rebates, discounts or deals available to them.

Dealers also must:

  • Make the offering price, or the price any consumer can pay for the car, available.
  • Let the customer know that any optional add-ons are not required to purchase the car.
  • Be transparent about what the total payment will look like when discussing financing and monthly payments.
  • Get the consumer consent for any charges to be paid as part of a vehicle purchase.

According to the FTC, bogus ad-ons could include warranty programs that duplicate a warranty they already have from the auto manufacturer, service contracts for oil changes on an electric vehicle as well as software or audio subscription services for cars that cannot support the subscription.

The rule will save consumers $3.4 billion and an estimated 72 million hours each year, the agency said.

The Consumer Federation of America, a non-profit that works to protect consumers, applauded the FTC for the rule, saying that CARS will bring improvements to the auto market. 

“This rule will help curb dishonest sales and financing practices in the industry,” Mitria Sposter, vice president and director of federal policy at the Center for Responsible Lending said in a statement. “The steep rise in automobile prices over the past few decades means we need to be doubly vigilant of junk charges and financing scams, especially given current interest rates.”

Military members expected to benefit

The rule will also help protect young military service members, who typically need cars on big military bases and are often relocated, the FTC said. They are routinely preyed on by dealers and have an average of twice the auto debt as civilians, the agency added.

Under CARS, dealers are prohibited from, among other things, lying about cost and financing information as well as their dealership’s affiliation with the military. 

“For our service members and their families a car is an essential purchase, and this CARS Rule will help fight predatory practices that target our men and women in uniform,” Ashish S. Vazirani, Department of Defense acting under secretary of Defense for Personnel and Readiness,” told the FTC. “The Department is pleased to see the FTC issue the CARS Rule and believes it will contribute to service members’ overall economic security and readiness.”

For more information on the rule, the FTC has created a website for dealers and consumers with frequently asked questions and advice for dealerships.  


Jamie Feldman

Jamie Feldman is a journalist, essayist and content creator. After building a byline as a lifestyle editor for HuffPost, her articles and editorials have since appeared in Cosmopolitan, Betches, Nylon, Bustle, Parade, and Well+Good. Her journey out of credit card debt, which she chronicles on TikTok, has amassed a loyal social media following. Her story has been featured in Fortune, Business Insider and on The Today Show, NBC Nightly News, CBS News, and NPR. She is currently producing a podcast on the same topic and living in Brooklyn, New York.