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Breaking Down the FTC CARS Rule

The retail automotive industry has been buzzing with discussions surrounding the Federal Trade Commission's (FTC) revised CARS Rule.

Scott Clay, Esq., VP & General Counsel at Mosaic Compliance Services, recently offered a concise breakdown of the main components of the FTC CARS Rule.

Key Components to the CARS Rule

Below is a breakdown of key aspects of the CARS Rule that could soon affect the retail automotive industry:

  • Prohibited Misrepresentations: The CARS Rule prohibits 16 specific misrepresentations.

  • Required Disclosures: Mandates clear communication of an Offering Price.

  • Ban on Non-Beneficial Add-Ons: Imposes a ban on non-beneficial add-ons.

  • Express, Informed Consent: An affirmative act that communicates a consumer's unambiguous agreement to be charged

  • Enhanced Recordkeeping: Additional documentation requirements including documentation of employee training.

Sitting down at a conference.  Person showing a car in a dealership.  Person explaining information on a clipboard

Prohibited Misrepresentations:

One of the significant facets of the revised CARS Rule is the prohibition of 16 specific misrepresentations, posing potential penalties for non-compliance. This gives the FTC the ability to seek immediate penalties against dealers for violation of these misrepresentations

Required Disclosures:

Perhaps the most notable change is the introduction of an "Offering Price," mandating clear communication of the true purchase price. This directive seeks to eradicate deceptive practices often concealed behind asterisks and fine print.

Ban on Non-Beneficial Add-Ons:

The CARS Rule imposes a ban on non-beneficial add-ons. Add-ons that convey no benefit to the consumer are illegal under this Rule. Additionally, dealers can not sell any item to a customer without first attaining their "Express, Informed Consent."

Enhanced Recordkeeping:

The CARS Rule advocates for enhanced recordkeeping practices, imposing a two-year mandate to ensure compliance with the rule and associated training requirements.

What Dealers Should Do:

In light of the evolving regulatory landscape, it is imperative for dealerships to stay informed about developments pertaining to the CARS Rule. While the rule is currently stayed, there remains a possibility of it becoming enforceable in the future.


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