In a major victory for car dealers, the U.S. Appeals Court has struck down the Federal Trade Commission’s (FTC) controversial CARS Rule, a decision that industry advocates view as a rejection of regulatory overreach. In today’s episode of Inside Automotive, Len Bellavia Esq., founding partner of Bellavia Blatt, breaks down the ruling and its implications, highlighting the FTC’s flawed approach and the automotive industry’s already stringent regulatory environment.
Bellavia describes the overturning of the FTC’s CARS Rule as more than just a legal win—it reflects growing frustration with excessive regulation targeting dealers. He argues that the FTC pushed an outdated and negative perception of car dealers, comparing their stance to the 1980s film Used Cars, which stereotyped the industry as deceptive.
The court’s decision stemmed from the FTC’s failure to follow proper rulemaking procedures. Instead of issuing an advanced notice for stakeholder input, the agency attempted to bypass its own regulatory process, ultimately misleading the court. This procedural misstep led the court to strike down the rule entirely rather than seeking a compromise.
In addition, Bellavia emphasizes that dealers are already subject to extensive oversight from multiple agencies, including the Consumer Financial Protection Bureau (CFPB), state attorneys general, and various regulatory bodies. He notes that franchise dealers receive consumer satisfaction reports regularly, and online review platforms such as Google, Yelp, and DealerRater provide additional accountability. Given these factors, he argues the CARS Rule was unnecessary and would have only added bureaucratic burdens without benefiting consumers.
Moreover, Bellavia highlights the practical issues the rule would have created, requiring dealers to implement up to 15 new disclosures that could add at least one to three hours to the car-buying process. In contrast, he points out that closing on a house can now be faster than purchasing a vehicle—a reality he calls “absolutely crazy.”
Looking ahead, Bellavia stresses the need for more lawmakers with automotive industry experience, citing Bernie Moreno’s political rise as an example. He believes a deeper understanding of the industry among policymakers could help curb the recurring tendency of regulators to unfairly target dealers.
"The great irony here is the Federal Trade Commission is designed to enforce rules, right? Make sure there's no deception, that the public is taken into account, and the rules are applied and abided by. Well, what did they do? They broke the rules. They tried to deceive the court. The very agency that's supposed to be all about being above board was about as close to the bottom as they could be." – Len Bellavia
