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First Steps to Understanding the CARS Rule

Modern car dealership setting with diverse employees and customers discussing compliance and consumer protection. The scene features clear glass walls, informative posters, and a professional atmosphere, emphasizing transparency, trust, and collaborative engagement.

The FTC's Combating Auto Retail Scams (CARS) Rule has sparked significant discussion within the auto retail industry. At Mosaic Compliance Services, we are committed to helping dealerships navigate these regulatory changes and stay compliant. This post will delve into the CARS Rule, its implications, and how dealerships should anticipate adapting practices to meet the new standards.



Understanding the CARS Rule's Framework:

The CARS Rule is a trade regulation issued under the authority of the Federal Trade Commission Act, similar to how Regulation Z operates under the Truth in Lending Act (TILA). This rule sets forth specific compliance requirements for dealerships, focusing on disclosures, advertising practices, and the sale of add-on products.



Key Provisions of the CARS Rule

The FTC designed the CARS Rule to enhance consumer protection and transparency in auto sales. Here are the critical aspects of the rule:

  1. Prohibition of Misrepresentations: The rule mandates that all information provided during the car buying process must be truthful and accurate.

  2. Clear Disclosure of Offering Price: Dealers must clearly disclose the actual price a consumer will pay for the vehicle, excluding only required government charges.

  3. Protection Against Unnecessary Charges: The rule makes it illegal for dealers to charge consumers for add-ons that do not provide a real benefit.

  4. Express, Informed Consent: Dealers must obtain explicit, informed consent from consumers before charging them for any additional products or services. This consent must be given after clear disclosures are made both in writing and orally for in-person transactions.


Potential Impacts of the CARS Rule

While the CARS Rule aims to improve consumer protection, it also presents challenges for dealerships:

  • Increased Complexity: The new disclosure and consent requirements may lengthen the car buying process.

  • Shifting Sales Strategies: Dealers might need to adjust their approaches to explain the value of add-on products.

  • Potential Cost Increases: Stricter regulations could lead to higher overall costs for car purchases.


Navigating the Compliance Landscape

Adapting to the CARS Rule will require a proactive approach. Here are some strategies to help dealerships stay compliant:

  • Stay Informed: Keep up with the latest updates on the CARS Rule and its implementation.

  • Review Advertising Practices: Ensure all advertising materials and website content comply with the rule's disclosure requirements.

  • Update Contracts and Forms: Make necessary changes to contracts and forms to align with the new regulations.

  • Train Your Team: Provide comprehensive training to your sales and compliance teams on the CARS Rule and its implications.


Conclusion

The CARS Rule represents a significant shift in the regulatory landscape for auto dealerships. While it introduces new challenges, it also offers an opportunity to build trust with consumers through enhanced transparency and fair practices. Mosaic Compliance Services is here to support you in navigating these changes and ensuring your dealership remains compliant.


Ready to Learn More?

For a more detailed breakdown of the CARS Rule and expert insights, watch the full-length video from Mosaic Compliance Services. Together, we can build a stronger, more transparent future for the auto industry.






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