Recently, the Federal Trade Commission unexpectedly released its final Vehicle Shopping Rule, now called the Combating Auto Retail Scams (CARS) Rule, which takes effect July 30, 2024.

The Changes

In response to comments submitted by NADA and state and metro dealer associations, the FTC scaled back the proposed rule in several important ways.

Among other changes, the FTC eliminated requirements that dealers:

• Maintain on their website a list of all “add-on” products offered and the price of each such product;
• Provide a series of written disclosures related to the sale of “add-on” products; and
• Retain copies of “add-on” lists and documents describing “add-on” products offered to consumers.

But, the final rule would still impose several new problematic oral and written disclosures, numerous ill-defined requirements and additional burdensome record-keeping obligations.

As a Response

NADA and the Texas Automobile Dealers Association (TADA) filed a Motion in the U.S. Court of Appeals for the 5th Circuit to stay the July 30, 2024, effective date of the FTC’s Vehicle Shopping Rule.

And, the Motion follows a court challenge to the rule that was filed last week by NADA and TADA. NADA will continue to provide updates on the litigation. 

Background

• On Jan. 4, 2024, NADA filed a court challenge against the FTC over its final Vehicle Shopping Rule, which the agency derisively named the “Combating Auto Retail Scams Trade Regulation Rule” or “CARS Rule.”
• The FTC claims its rule is in response to “chronic deceptive or unfair practices” in the auto retail marketplace. These assertions are misguided, completely unfounded, and do not reflect the modern auto retail industry.
• The rule is now final. It contains draconian penalties and franchised dealers have been given less than eight months to comply with the significant and unnecessary regulatory burdens laid out in the final rule.

Q: Why is NADA challenging the FTC in court?

A: NADA is challenging the FTC in court to stop a rule that will add massive amounts of time, complexity, paperwork and cost to car buying and car shopping for tens of millions of Americans every year. The FTC’s Vehicle Shopping Rule is simply terrible for consumers.

Q: Is a court challenge the best course of action?

A: After a rushed, utterly flawed and we believe illegal process, the FTC issued its final Vehicle Shopping Rule in December 2023 and set a compliance deadline of July 30, 2024. Because the FTC has failed at every juncture to justify these wholesale changes to the way Americans shop for and purchase new cars, NADA was left with no choice but to seek legal relief to prevent this rule from taking effect.