After a rushed, utterly flawed and what some believe is an illegal process, 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.

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.

The changes, though good, are not sufficient. And because the FTC has continually failed to justify the wholesale changes as 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. 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. The Motion follows a court challenge to the rule that was filed by NADA and TADA.

The Motion 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.

NADA and KADA will continue to provide updates on the litigation; here is a brief background:

• On Jan. 4, 2024, NADA filed a court challenge against the FTC over its final Vehicle Shopping 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.

To learn more about this issue, please scan the QR codes.

NADA Press Release
https://www.nada.org/nada/press-releases/nada-releases-statement-ftcs-vehicle-shopping-rule

Text of the Final Rule
https://www.ftc.gov/system/files/ftc_gov/pdf/p204800_cars_rule.pdf#page=361

FTC Press Release
https://www.ftc.gov/news-events/news/press-releases/2023/12/ftc-announces-cars-rule-fight-scams-vehicle-shopping

FTC CARS Rule: Combating Auto Retail Scams — A Dealers Guide
https://www.ftc.gov/business-guidance/resources/ftc-cars-rule-combating-auto-retail-scams-dealers-guide

The new CARS Rule: What you need to know — A Customer Guide
https://consumer.ftc.gov/consumer-alerts/2023/12/new-cars-rule-what-you-need-know?utm_source=govdelivery