Congress to decide fate of FTC's CARS rule

The House Appropriations Committee has voted in favor of a bill that would handicap the Federal Trade Commission’s (FTC) ability to enforce its Combatting Auto Retail Scams (CARS) rule.

What is the CARS rule? CARS places a variety of restrictions on how dealers sell vehicles. Pitched by the FTC as a means of protecting consumers from hidden fees and unsavory sales practices, some of the provisions require retailers to disclose and obtain express consent for all charges while others mandate that every buyer be shown the same final price, calculated with any fees.

What happened in Congress?

• The Financial Services and General Government Appropriations Act allocates a budget of $388.7 million to the FTC, but blocks enforcement of several regulatory provisions including the CARS rule.

• The Appropriations Committee voted in favor of the bill 33-24 on June 13.

Opposition to CARS: Lobby groups representing the retail automotive sector, led by the National Automobile Dealers Association (NADA), have been chiefly responsible for challenging the FTC’s right to enforce CARS. Although it was originally set to go into effect by the end of July, the FTC postponed enactment after the NADA called for a court review of the rule in January, which is still underway.

While not a comprehensive list of grievances, the NADA, alongside dealers and other retail auto groups, oppose the bill on four main grounds:

• The FTC would overstep its authority as a regulator by enforcing the new rules.

• The FTC did not follow due process in designing or approving CARS.

• CARS would add hours to the vehicle buying process by placing extensive requirements on dealers.

• Various state and local regulations require dealers to follow some of the provisions the FTC is seeking to enforce, making passage of CARS redundant.

What happens now?

The House Appropriation Committee’s vote does not mean CARS is officially dead. Instead, the committee will recommend it to the full House, who must then vote on whether to accept the recommendation. As with all bills, senate and presidential approval are also required (ignoring the possibility of a veto), but there has yet to be any discussion of the bill outside the House of Representatives.

The court is still in the process of reviewing the CARS Act, after having received written arguments from both the NADA and the FTC. The two groups have asked for oral arguments as well, but it is not clear when this will occur.

Bottom line: Regardless of whether you believe the CARS rule is pro-consumer, anti-dealer, good, or bad, its actual effect on the retail automotive sector won’t be fully clear until it goes into effect. However, given the extent of its provisions, and the likelihood that the courts and Senate will side with the FTC, it is important for dealers to make preparations.

Become an automotive insider in just 5 minutes.

Get the weekly email that delivers transparent insights into the car market.

Join 64,000 others now, it's free:

Boost sales with Bumper.com's vehicle history reports, featuring NMVTIS data. Our reports can enhance trust and help you close deals faster.

As an NMVTIS-approved data provider, Bumper.com offers essential information crucial for auto dealers. Discover how our tools can help transform your business and streamline operations.

Connect with us at NIADA booth #613 or schedule a demo to learn how Bumper.com can help elevate your dealership's performance and take your sales to the next level.