FTC is Riding Shotgun with Potential Car Buyers

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  • 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.
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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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