Yahoo Autos FTC's New CARS Rule Could Save Car Shoppers $3.4 Billion Each Year
You've heard the stories (or experienced it yourself): car dealers piling on junk fees, baiting-and-switching shoppers, and selling seniors unnecessary add-ons. All of these tactics will be illegal under the new FTC CARS Rule.
Combating Auto Retail Scam (CARS) prohibits dealers from misrepresenting their prices. The rule specifically looks out for military service members, whom dealers often target.
The Federal Trade Commission started talking about this new rule in 2022, but it won't go into effect until late summer 2024.
The Federal Trade Commission (FTC) has announced new rules meant to prevent sellers from perpetrating scams against car shoppers. The new CARS Rule—which stands for Combating Auto Retail Scams—takes on two items car buyers have long complained about: bait-and-switch tactics and junk fees. Anyone who has ever been peeved over a surprise $500 "protection" add-on knows how maddening this can be.
Specifically, the CARS Rule stands on four main legs: (1) Dealers cannot misrepresent a vehicle's price; (2) Dealers must "clearly disclose" the actual price someone can pay for the car; (3) Dealers cannot charge consumers for add-ons that don't provide a benefit; and (4) Dealers must get a buyer's "express, informed consent before charging them for anything."
The FTC originally proposed what became the CARS Rule in June 2022. In July 2023, a group of 17 Democratic U.S. lawmakers issued a statement asking the FTC to finalize those rules. While the new CARS Rule has now been confirmed, it won't go into effect until late next summer: July 30, 2024. When the rule finally arrives, the FTC said it should save car shoppers in the U.S. more than $3.4 billion each year, along with an estimated 72 million hours spent shopping for vehicles.
The FTC has set up a website for auto dealers who want to follow the new rules accurately. The commission said nothing should change for "honest dealers," but it does list some categories of actions that will be illegal under the CARS Rule that we're guessing many of our readers have encountered while browsing. Dealers will not be able to misrepresent "the availability of vehicles at an advertised price," for example, or "any costs, limitation, benefit, or any other aspect of an add-on product or service." The CARS Rule also makes it illegal to "charge consumers for add-ons that don't provide a benefit."
Protection for Service Members and Older People
All kinds of people can fall victim to unscrupulous car dealers suggesting those kinds of scams. For example, the Los Angeles County District Attorney's office says older adults are often the target of unethical auto dealers. The CARS Rule focuses explicitly on preventing scams aimed at military service members, which scammers target, the FTC said, with "deceptive information about whether dealers are affiliated with the military and other specific issues that affect service members." The FTC said around 20 percent of service members have at least $20,000 in auto debt by the time they're 24. That's twice as much as in the general population.
"The Department of Defense appreciates the FTC's CARS Rule," Ashish S. Vazirani, acting DoD undersecretary of defense for personnel and readiness, said in a statement. "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."
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