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FTC postpones CARS rule after open meeting, following NADA, TADA petition

The FTC is hosting an open meeting to hear statements from the public on the upcoming CARS rule, targeting scams and junk fees in auto sales

This story was originally published January 17 but has been updated to reflect new details. Scroll down to see the edit.

The Federal Trade Commission (FTC) is scheduled to discuss the Combating Auto Retail Scams (CARS) Rule in a virtual open meeting scheduled for 11 a.m. EST, Thursday, January 18, 2024.

Prior to agency staff delivering a presentation on the CARS rule, citizens who signed up through an online form will have two minutes each to make comments on the new auto-retailing law. Prepared responses in text or video form may be shown during the meeting for applicants unable to attend. The agency will also hear remarks on proposed revisions to the Children’s Online Privacy Protection Rule.

By design, these meetings give commission leaders a chance to hear perspectives from members of the public on a range of policies affecting business, commerce, and other activities regulated by the FTC.

The CARS rule is a new regulation seeking to combat scams and improve transparency in the retail automotive sector. The policy, set to take effect on July 30, 2024, requires dealers to take additional precautions that ensure car buyers are fully informed during the sales process. These include:

1. obtaining the customer’s consent before charging any fees,

2. informing the buyer of their vehicle’s offering price,

3. reminding shoppers that all add-ons are optional, and

4. referencing the total payment amount when guiding the buyer through financing and insurance.

Dealers have expressed frustration with the CARS rule since it was announced in 2022, claiming the policy would place unwarranted burdens on businesses and negatively impact consumers. In a statement published in December, Mike Stanton, president and CEO of the National Automobile Dealers Association (NADA), published the following statement:

“This regulation is heavy-handed bureaucratic overreach and redundancy at its worst, that will needlessly lengthen the car sales process by forcing new layers of disclosures and complexity into the transaction. 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.”

Stanton added that the NADA would continue searching for ways to oppose the new regulation. Proponents of the CARS rule claim it will protect customers from junk fees, deceptive sales tactics, and other questionable practices.

To watch the open FTC meeting in real time, viewers must visit FTC.gov on January 18, where a link to livestream the event will be posted shortly before it is scheduled to occur. The commission will also upload a recording of the discussion alongside select comments from the public to its website later that day.

Edit, January 19, 2024:

The FTC issued an order postponing the effective date of the CARS act on the same day of its open meeting in response to a jointly filed Petition for Review (PFR) by the NADA and the Texas Automobile Dealers Association (TADA). The PFR, which, among other things, argues the policy is “arbitrary” and “capricious,” was filed in early January in the Fifth Circuit Court of Appeals.

The two associations filed a motion in the Fifth Circuit shortly thereafter, calling for a delay to allow the court more time to review the law.

In the postponement order issued January 18, the commission noted that the NADA and TADA had failed to submit their stay request to the FTC, which is required under the Federal Rules of Appellate Procedure, and called the petition’s claims “mischaracterizations” which “have created uncertainty.” Nevertheless, the FTC acquiesced and stayed the CARS act until the court completes its review, although it expects the delay to be brief.

CBT News will continue to report on this story as it develops.

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Colin Velez
Colin Velez
Colin Velez is a staff writer/reporter for CBT News. After obtaining his bachelor’s in Communication from Kennesaw State University in 2018, he kicked off his writing career by developing marketing and public relations material for various industries, including travel and fashion. Throughout the next four years, he developed a love for working with journalists and other content creators, and his passion eventually led him to his current position. Today, Colin writes news content and coordinates stories with auto-industry insiders and entrepreneurs throughout the U.S.

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