The Federal Trade Commission finalized a new rule it says is aimed at preventing scams in the vehicle-shopping process, but an industry advocacy group says the measure will simply needlessly burden auto dealers.
The Combating Auto Retail Scams, or CARS, is scheduled to take effect on July 30 of next year, though the National Automobile Dealers Association said it will still try to prevent that from happening.
The FTC says the rule is intended to protect consumers from what are known as bait-and-switch tactics and hidden junk fees. It says the new rule could save U.S. vehicle shoppers more than $3.4 billion and some 72 million hours a year in the shopping process.
The agency issued guidance for auto dealers to comply with the rule that includes a website covering frequently asked questions.
NADA says the rule addresses already illegal activities and will only serve to lengthen the car sales process with its additional disclosures and complexity.
“The FTC made up data to support its claims, then rejected calls to slow down the process and test the effectiveness of its proposal with real consumers,” said NADA President and CEO Mike Stanton in a statement. “We are exploring all options on how to keep this ill-conceived rule from taking effect.”
NADA filed arguments against the rule after it was proposed in June 2022. It cites on its website a Center for Automotive Research study that estimates it would result in each dealership incurring median upfront compliance costs of about $47,000, or about $2.2 billion as a retail industry nationally.
NADA created a video explaining the rule's implications for dealers.
