The Federal Trade Commission (FTC) announced its final rule targeting deceptive conduct in the sale and financing of motor vehicles, titled the “Combatting Auto Retail Scams” (CARS) Rule. The rule holds great promise, safeguarding consumers and promoting transparency within the motor vehicle industry. This crucial regulation is poised to bring much-needed protection to car buyers and enhance the overall fairness of auto sales and financing practices.

After a decade of attempts to fix a broken auto marketplace, the FTC announced in July 2022 that it was pursuing an auto dealer rule against bait-and-switch pricing tactics and junk fees in the form of worthless add-on products and services. After receiving over 25,000 comments from the public and widespread support for addressing auto dealer misconduct, the FTC has published its final rule, summarizing the comments and laying out its plan for the CARS rule.

The CARS Rule will improve the auto market by curbing common predatory practices. We look forward to working with the FTC to ensure that all consumers, especially those in vulnerable populations, are prioritized throughout the process, given the industry’s egregious track record of discriminatory pricing, where Black and Latinx buyers often spend thousands more in racially targeted markups than white consumers.

The CARS Rule prohibits misrepresentations about key information, like price and cost, and requires dealers to provide the offering price, tell consumers add-ons are optional, and give information about the total payment when discussing monthly payments. The rule also prohibits dealers from charging for any add-on that has no benefit to the consumer.

The rule also includes clear protections for members of the military and their families who are targeted with deceptive information about whether dealers are affiliated with the military and face other issues specific to servicemembers.

The CARS Rule will take effect on July 30, 2024. The FTC has created new guidance for consumers to help them understand their rights when they buy a vehicle, and guidance for auto dealers with advice to help them prepare for the rule to go into effect.

This rule will help curb dishonest sales and financing practices in the industry. The steep rise in automobile prices over the past few decades and the current era of high interest rates means we need to be doubly vigilant of junk charges and financing scams, and remain focused on how these practices harm consumers of color in particular.