In today’s episode of Training Camp, host Adam Marburger is joined by Jim Ganther, compliance expert and owner and CEO of Mosaic Compliance Services. He outlines the future of dealership regulation following the federal court defeat of the Federal Trade Commission’s (FTC) CARS Rule. Although the rule was struck down in the Fifth Circuit for procedural missteps, Ganther says a revised version is inevitable. However, it will likely involve a slower but deliberate process by the FTC to reintroduce similar guidelines under a different name, likely within 24 months.
The original CARS Rule, short for “Combating Auto Retail Scams,” was viewed by many in the industry as both insulting in name and overreaching in scope. While prohibitions on payment packing and consumer fraud are longstanding, the rule attempted to impose new controls on dealer-customer interactions, which raised industry concerns. Ganther expects the future rule to omit these more controversial provisions and be rebranded with a less inflammatory title, such as the “Vehicle Purchase Rule.”
Ganther emphasizes that most dealers are already operating ethically and investing in compliance. He estimates that his compliance firm and the top two competitors work with roughly 15,000 to 17,000 new car franchise dealers. These firms provide monthly compliance support, showing that a strong majority of dealers are committed to doing things the right way. However, the outliers continue to damage the industry’s reputation, drawing regulatory attention and contributing to sweeping rules that affect everyone.
He predicts that once the FTC is fully staffed, a formal rulemaking process will begin. This includes stages like advanced notice, public comment periods, potential extensions, and finally, enactment. The fines associated with violations are already over $53,000 per instance and expected to climb with inflation.
On the topic of dealership compliance trends, Ganther notes that the industry has shifted dramatically over the past decade. What was once a niche concern is now mainstream, with more dealers proactively aligning with legal standards and investing in third-party compliance oversight.
Looking ahead, Ganther discusses the role of artificial intelligence in compliance. While AI offers promise, particularly in areas like monitoring evolving state laws and streamlining certain document checks, it is not yet viable for complex tasks like full deal audits. The cost and reliability of advanced AI solutions still lag behind human expertise. Infrastructure challenges, such as the need for more robust power generation and advanced chip production, also limit AI’s near-term potential.
In practical terms, Ganther says AI will support but not replace dealership personnel. Instead of layoffs, AI may lead to slower hiring rates. Its role is similar to that of a junior associate in a law firm—useful for research and support, but not yet trustworthy for final decisions without human oversight.
“AI has immense potential, but it requires infrastructure that we currently do not have. We're not going to realize the potential of artificial intelligence until we have a much more robust electrical grid and generation capacity.” – Jim Ganther
