The Federal Trade Commission (FTC) has recently implemented the Combating Auto Retail Scams (CARS) Rule to protect car buyers from deceptive bait-and-switch tactics and hidden junk fees. Designed to bring greater transparency to vehicle purchases, the CARS Rule is expected to save consumers over $3.4 billion and reduce an estimated 72 million hours annually spent on car shopping.
The CARS Rule prohibits automotive dealers from misleading buyers on essential purchase details, such as the cost of the car, financing terms, and the availability of discounts. It also targets hidden fees often embedded in complex contracts that consumers may unknowingly agree to pay. In some instances, these fees are for products or services with little to no value.
This rule outlines several important protections:
- Clear Disclosure: Dealers must provide the total purchase price upfront, disclose that add-ons are optional, and get clear consumer consent for any additional charges.
- Ban on Useless Add-Ons: Fees for add-ons that don't benefit consumers, such as redundant warranties or services for electric vehicles, are now restricted.
- Accurate Information for Military Buyers: Special protections are in place for military members, prohibiting dealers from falsely claiming government affiliations or misrepresenting the repossession process, which is crucial for service members frequently stationed in different states.
The journey to establish the CARS Rule began in June 2022, with the FTC inviting feedback from the public, which included consumers, servicemembers, and dealers. The response was overwhelming, with many dealers expressing support for the rule as a measure that promotes fair competition by penalizing deceptive practices. This rule also aims to create a more even playing field, protecting both consumers and dealers alike.
CEO Melissa Clark stated, "Learning about the FTC's Combating Auto Retail Scams (CARS) Rule is crucial for us at Sokal, especially when it comes to advertising. By staying informed on these new regulations, we can help dealers craft compliant, transparent marketing strategies that protect their businesses while continuing to build trust with their customers."
The CARS Rule officially took effect on July 30, 2024. In preparation, the FTC has released educational resources to help both consumers and dealerships understand the new requirements. The FTC’s initiative represents a significant step in protecting consumers' rights, aiming to make car buying a fairer and more transparent process. You can explore more about this and other consumer rights on the FTC website at consumer.ftc.gov!
