Many people hate car shopping despite the fact that they love cars. The problem is the sales techniques and the things sellers try and push onto buyers. Often, sellers use techniques that cause people to ask, “Shouldn’t that be illegal?” The Federal Trade Commission has responded by passing new rules to address specific acts by car dealers – making some of the most egregious sales techniques illegal.
The new rule is called the Combating Auto Retail Scams Act so that it will form a cool acronym; “CARS” – Get it?! In typical federal bureaucratic form, it is voluminous. Wading through all 372 pages reveals the primary areas the feds have addressed. Let's get into it.
“Bait-and-Switch” is explicitly forbidden. If a dealer advertises a car with a specific price, it better be available at that price to someone who makes the trek to the dealer. Likewise with any advertised financing rates or discounts. Another thing you might not have thought of, but the advertised car actually needs to exist. It turns out that some unscrupulous dealers list non-existent cars, or cars that already sold, for excellent prices. They then use that to upsale customers into a different car. “But let me show you something we just got in!”
More importantly, the CARS rule forbids misrepresentations about important information. Things like the price of the vehicle or other costs which the consumer will be charged. Dealers will also be required to be truthful about optional “add-ons”. They can’t tell you that it is required for you to buy an extended warranty, for example.
It’s worth nothing that many of the rules contained in CARS were inspired by public feedback the FTC gathered during a public comment period. Story after story described similar common scams. That leads to the addition of some rules you’d think might be obvious, but here we are. A dealer cannot sell a service contract for oil changes on an electric vehicle. The dealer cannot sell a GAP policy that is void because it’s not available for that particular car or neighborhood where the buyer lives. Same for subscriptions that cannot be used on the vehicle being sold.
Sadly, a number of the rules in CARS were inspired by a complaints from members of our armed services. The Department of Defense even weighed in on this one, saying service members needed more protection from “predatory practices” of dealers. So, dealers cannot mislead a buyer by saying the dealer has some sort of affiliation or relationship with the military, and it cannot lie about which financed vehicles can and cannot be taken out of state. While service members often move from state to state, some dealers want to keep a close eye on their collateral if they provided financing. While there are already laws in place dictating when a financier can and cannot repossess a vehicle bought by a service member, CARS reinforces them.
The CARS is expected to go into effect July 30, 2024. I suspect a lot of car dealers will complain about these regulations and how difficult it is to keep track of them all. However, if you take the time to go through the rules you’ll see they can be summarized pretty easily into a few basic concepts. Bait-and-Switch is illegal, as are other unscrupulous and misleading sales tactics. And don’t rip off service members. It seems pretty hard to argue with that.
Steve Lehto is an attorney from Michigan specializing in Lemon Law. Also an author, his books include Preston Tucker and His Battle to Build the Car of Tomorrow and Dodge Daytona and Plymouth Superbird: Design, Development, Production and Competition. He also has a podcast.
