FTC Pauses CARS Rule Effective Date

The Federal Trade Commission has issued an order postponing the effective date of the Combatting Auto Retail Scams (CARS) Rule while a legal challenge against the rule is pending.

Two industry groups have petitioned to overturn the rule, asserting that the rule should be stayed while the court challenge is pending. In its order, the Commission notes that these assertions rest on mischaracterizations of what the rule requires. Specifically, the Commission’s order points to the inaccurate argument that the rule will increase compliance costs for car dealers, which is not true for dealers who currently follow the law. 

The Commission’s order states, “In fact, the rule does not impose substantial costs, if any, on dealers that presently comply with the law, and to the extent there are costs, those are outweighed by the benefits to consumers, to law-abiding dealers, and to fair competition—as honest dealers will not be at a competitive disadvantage relative to dishonest dealers.” The Commission’s order explains that the petitioners’ suggestion that legally compliant dealers have to make unnecessary changes to satisfy petitioners’ misunderstandings of the rule have created uncertainty. The Commission further notes that if the court reviewing the rule grants expedited review, as the litigants requested, a stay of the effective date should not postpone implementation of the rule by more than a few months, if at all. The rule was set to go into effect July 30, 2024.

As the Commission noted when finalizing the rule, the CARS Rule will save consumers more than $3.4 billion and an estimated 72 million hours each year shopping for vehicles by targeting persistent and illegal bait-and-switch scams and junk fees in the car buying process.

The Commission vote to approve the issuance of the order was 3-0.