What happened to the CARS Rule
The Combating Auto Retail Scams (CARS) Rule was finalized by the FTC in December 2023 and scheduled to take effect in July 2024. NADA and the Texas Automobile Dealers Association challenged it in the Fifth Circuit. On January 27, 2025, the court vacated the rule in its entirety on procedural grounds — finding that the FTC failed to issue an Advance Notice of Proposed Rulemaking before promulgating the Rule. The court did not rule on the substance.
On February 12, 2026, the FTC published a formal withdrawal of the CARS Rule in the Federal Register, bringing the regulatory text in line with the court’s decision. As of this writing, there is no active CARS Rule.
What this actually means for dealers
The ceremony around CARS is over; the substantive pressure is not. Every behavior the CARS Rule targeted — bait-and-switch pricing, hidden fees, add-ons charged without consent, misrepresentations about price, financing, or rebates — remains actionable through other channels:
- FTC Act Section 5. The FTC retains broad authority to pursue unfair or deceptive acts. The Lindsay Automotive case (Maryland/Virginia dealer group, potential liability ~$75M) was brought under Section 5, not CARS.
- FTC Unfair or Deceptive Fees Rule. A narrower “junk fees” rule was finalized December 17, 2024 and became effective May 12, 2025. It does not explicitly regulate vehicle sales, but the FTC continues to apply its general deception authority to dealer pricing.
- State attorneys general. California (CARS Act — the state law, unrelated to the FTC rule of the same acronym), New York, Massachusetts, Maryland, Rhode Island, and others are actively enforcing state-level UDAP statutes against dealer fee practices.
- State doc-fee caps. 22 states cap dealer documentation fees; exceeding the cap is a straight statutory violation. See the 2026 doc fee by state guide.
- Private class actions. Plaintiffs’ firms are aggressive. Indiana dealers recently settled doc-fee claims for $13.5 million. Similar suits are pending in multiple states.
What dealers should still be doing
The CARS Rule’s substantive commandments are a good floor even without the rule in force — because they map to what plaintiffs, state AGs, and the FTC look for when things go wrong:
- Offering price disclosure. The advertised price should include all fees the consumer is required to pay, except government-imposed charges.
- Add-on consent. Every add-on (GAP, service contract, tire & wheel, window etch) gets documented, express, informed consent from the customer — not a pre-checked box.
- Consistent representations. Ad, website, phone quote, email, and in-store paperwork should tell the same price story.
- Documented retention. Keep the signed work-ups, the menus, the consent artifacts. A loose PDF in an inbox is not a deal jacket.
Where Test Drive Pro fits
Test Drive Pro builds the front half of the deal jacket — verified ID, signed test drive agreement, TCPA consent, timestamped drive, assigned salesperson. For dealers worried about the post-CARS litigation environment, that is the part of the defense that is easiest to get wrong on paper and easiest to get right in software. See Doc fee disclosure & consent and junk fees class-action defense for the dealer-facing playbook.
This page reflects the rule’s status as of April 2026. The FTC may revisit the rulemaking under the proper procedural pathway; state-level activity continues. This is general information, not legal advice — work with counsel on your dealership’s specific posture.