The New FTC CARS Rule and What You Should Know

What Does the FTC CARS Rule Mean for Car and Truck Buyers?

Pricing and Payments

• A dealer must tell you the offering price, which is the full price of the vehicle.  The offering price must include all costs and fees EXCEPT for required government fees, like taxes and license and registration costs.
• If a dealer is quoting monthly payments, they must tell you the total amount you’ll pay for the vehicle.  And if they offer you a lower monthly payment, they must tell you if it will raise the total cost of the vehicle.

Add-on products or services

• You have the right to refuse any products or services that increase the price of the vehicle.  Like what?  Rustproofing, protective paint coatings, extended warranties, guaranteed asset protection (GAP) agreements, and wheel and tire warranties.
• A dealer cannot charge you for products or services that have no benefit like
  • a duplicative warranty
  • a service contract for oil changes on an electric vehicle
  • nitrogen-filled tires that contain no more nitrogen than normally exists in the air
  • a GAP agreement that doesn’t cover your vehicle or your neighborhood or other parts of your deal

Real consent for all charges

• A dealer cannot charge you for any item unless they’ve told you what it is and how much it costs, and you’ve agreed to the charge.

The CARS Rule will make it easier to shop around for a vehicle based on the actual price.  And the FTC estimates that car buyers will save $3.4 billion per year.

The CARS Rule takes effect on July 30, 2024.

Takeaway:  The CARS Rule prohibits misrepresentations about key information, like price and cost.  Dealers have to provide the offering price—the actual price any consumer can pay for the vehicle; tell consumers that optional add-ons (like extended warranties) are not required; and give information about the total payment when discussing monthly payments.  The Rule prohibits dealers from charging for any add-on that does not provide a benefit to consumers.  Examples of such add-ons include: warranty programs that duplicate a manufacturer’s warranty, service contracts for oil changes on an electric vehicle, GAP agreements that do not actually cover the car or neighborhood in which it is housed, or other parts of the deal, and software or audio subscription services on a vehicle that cannot support the software or subscription.  The Rule requires dealers to get consumers’ express, informed consent for any charges that they pay as part of a vehicle purchase.  The Rule also prohibits dealers from lying to servicemembers (and other consumers) about important cost and financing information, and about whether the dealers are affiliated with the military or any other governmental organization.

Richard B. Newman is a digital marketing practices attorney at Hinch Newman LLP.  Follow FTC defense lawyer on X.