FTC’s CARS Rule may be sidelined—but regulatory pressures persist

The Combating Auto Retail Scams (CARS) Rule may be benched for now, but its playbook is still in motion—with state attorneys general and private litigants likely picking up where the FTC left off.

Let’s rewind: The CARS Rule, introduced by the FTC in 2022, aimed to tackle hidden fees and bait-and-switch tactics in car sales.

• Industry groups like NADA challenged it on two fronts—arguing the FTC skipped procedural steps and failed to show the rule would benefit consumers without adding excessive costs for dealers.

• And in January, the Fifth Circuit Court of Appeals agreed, tossing the rule back to the FTC for not following its own procedural playbook.

So, where do we stand now?

Some might assume a lighter federal hand under the current administration means less regulatory heat—but according to Chris Capurso and Brooke Conkle, partners at Troutman Pepper Lock, that could be a costly misread.

Here’s what we know: The CARS Rule is back in the hands of the FTC for a potential do-over. But when federal efforts stall, state enforcement tends to step in. 

• Worth noting, many of the consumer protections outlined in the CARS Rule are already baked into existing state laws—meaning enforcement never really stopped.

The kicker? Dealers can’t assume red states mean less risk—attorney general (AG) scrutiny cuts across political lines, according to Capurso and Conkle.

Take Texas and Florida—both often seen as conservative strongholds, yet they’re among the most aggressive states when it comes to investigating dealer practices and responding to consumer complaints.

• And it doesn’t take much—just a few complaints can put a dealer on a state AG’s radar, even in states you wouldn’t expect, Conkle said. 

The threat of private litigation is also still at play, leaving dealers exposed to class actions over document fees and disclosure issues—risks that remain active regardless of what happens to the CARS Rule.

Need a reminder? The Bronx Honda case from 2020—which resulted in a hefty $1.5 million fee for the dealership and its general manager following allegations it had been charging higher financing fees to Black and Hispanic customers based on race.

• That case happened under the first Trump administration—showing that serious enforcement can land, regardless of who’s in charge.

Looking ahead: The FTC’s CARS Rule may be on hold—but other enforcement isn’t. And with state AGs and private litigants looming—dealers need to stay proactive to avoid costly fallout.

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