FTC’s New CARS Rule Could Save Car Shoppers $3.4 Billion Each Year

• You’ve got heard the tales (or skilled it your self): automobile sellers piling on junk charges, baiting-and-switching consumers, and promoting seniors pointless add-ons. All of those ways will likely be unlawful underneath the brand new FTC CARS Rule.
• Combating Auto Retail Rip-off (CARS) prohibits sellers from misrepresenting their costs. The rule particularly seems out for army service members, whom sellers typically goal.
• The Federal Commerce Fee began speaking about this new rule in 2022, but it surely received’t go into impact till late summer time 2024.

The Federal Commerce Fee (FTC) has introduced new guidelines meant to stop sellers from perpetrating scams in opposition to automobile consumers. The brand new CARS Rule—which stands for Combating Auto Retail Scams—takes on two objects automobile patrons have lengthy complained about: bait-and-switch ways and junk charges. Anybody who has ever been peeved over a shock $500 “safety” add-on is aware of how maddening this may be.

Particularly, the CARS Rule stands on 4 important legs: (1) Sellers can not misrepresent a automobile’s worth; (2) Sellers should “clearly disclose” the precise worth somebody pays for the automobile; (3) Sellers can not cost customers for add-ons that do not present a profit; and (4) Sellers should get a purchaser’s “specific, knowledgeable consent earlier than charging them for something.”

The FTC initially proposed what turned the CARS Rule in June 2022. In July 2023, a bunch of 17 Democratic U.S. lawmakers issued a press release asking the FTC to finalize these guidelines. Whereas the brand new CARS Rule has now been confirmed, it will not go into impact till late subsequent summer time: July 30, 2024. When the rule lastly arrives, the FTC stated it ought to save automobile consumers within the U.S. greater than $3.4 billion annually, together with an estimated 72 million hours spent looking for autos.

The FTC has arrange an internet site for auto sellers who need to observe the brand new guidelines precisely. The fee stated nothing ought to change for “sincere sellers,” but it surely does listing some classes of actions that will likely be unlawful underneath the CARS Rule that we’re guessing lots of our readers have encountered whereas looking. Sellers won’t be able to misrepresent “the supply of autos at an marketed worth,” for instance, or “any prices, limitation, profit, or some other side of an add-on services or products.” The CARS Rule additionally makes it unlawful to “cost customers for add-ons that do not present a profit.”

Safety for Service Members and Older Folks

All types of individuals can fall sufferer to unscrupulous automobile sellers suggesting these sorts of scams. For instance, the Los Angeles County District Lawyer’s workplace says older adults are sometimes the goal of unethical auto sellers. The CARS Rule focuses explicitly on stopping scams aimed toward army service members, which scammers goal, the FTC stated, with “misleading details about whether or not sellers are affiliated with the army and different particular points that have an effect on service members.” The FTC stated round 20 p.c of service members have a minimum of $20,000 in auto debt by the point they’re 24. That is twice as a lot as within the common inhabitants.

“The Division of Protection appreciates the FTC’s CARS Rule,” Ashish S. Vazirani, appearing DoD undersecretary of protection for personnel and readiness, stated in a press release. “For our service members and their households, a automobile is a vital buy, and this CARS Rule will assist struggle predatory practices that focus on our women and men in uniform.”

Contributing Editor

Sebastian Blanco has been writing about electrical autos, hybrids, and hydrogen vehicles since 2006. His articles and automobile critiques have appeared within the New York Occasions, Automotive Information, Reuters, SAE, Autoblog, InsideEVs, Vehicles.com, Automobile Discuss, and different retailers. His first green-car media occasion was the launch of the Tesla Roadster, and since then he has been monitoring the shift away from gasoline-powered autos and discovering the brand new know-how’s significance not only for the auto trade, however for the world as a complete. Throw within the latest shift to autonomous autos, and there are extra attention-grabbing adjustments taking place now than most individuals can wrap their heads round. You could find him on Twitter or, on good days, behind the wheel of a brand new EV.