What is the FTC CARS Rule?

The FTC CARS Rule (Combating Auto Retail Scams Rule) is a federal regulation finalized in December 2023 and effective January 2024. It requires car dealers to clearly disclose the actual price of a vehicle upfront, prohibits charging consumers for add-on products they did not consent to, bans misrepresentations about financing terms, and requires dealers to provide the total payment amount before signing.

When did the FTC CARS Rule take effect?

The FTC CARS Rule was finalized in December 2023 and took effect in January 2024. It applies to new and used car dealers across the United States. The rule was challenged in court by dealer groups but survived legal challenge and remains fully in effect as of 2026.

What does the CARS Rule prohibit dealers from doing?

Under the FTC CARS Rule, dealers cannot: advertise a lower price than they will actually honor; charge for add-on products (like paint protection or extended warranties) without the consumer's explicit consent; misrepresent financing terms, monthly payments, or total cost; or misrepresent government fees, rebates, or other terms.

How do I file a complaint if a dealer violates the CARS Rule?

You can report CARS Rule violations to the Federal Trade Commission at reportfraud.ftc.gov. You can also file a complaint with your state's attorney general, who often has additional consumer protection authority over car dealers. Keep documentation of all misrepresentations — written quotes, voicemails, and text messages.

New FTC Car Dealer Rules 2026 — What the CARS Rule Means for Buyers

The FTC CARS Rule — Combating Auto Retail Scams — is the most significant federal regulation of car dealer practices in decades. It took effect in January 2024 and gives car buyers new rights and protections when shopping at dealerships across the country.

Quick answer: The CARS Rule requires dealers to disclose the real purchase price upfront, bans charging for add-ons you did not agree to, and prohibits misrepresentations about financing. It applies to all US car dealers selling new and used vehicles.

What the FTC CARS Rule Requires

1. Upfront Price Disclosure

Dealers must clearly disclose the total “offering price” — the actual price at which the vehicle is available for sale — before any negotiation begins. This prohibits bait-and-switch advertising where a lower price is advertised but not honored when you arrive.

The offering price must include all charges except:

Government fees (taxes, registration, title fees)
Optional add-ons the consumer separately consents to

2. No Charges for Unagreed Add-Ons

This is one of the most significant provisions. Dealers cannot charge you for any product or service you did not explicitly consent to. This covers:

Paint and fabric protection packages
Extended warranties or service contracts
GAP insurance
Credit insurance products
Any other add-on bundled into the deal without your agreement

Charging for unagreed add-ons is classified as an unfair and deceptive practice under the FTC Act.

3. No Misrepresentations

The CARS Rule prohibits dealers from making false statements about:

Topic	Example Prohibited Misrepresentation
Monthly payment	Quoting a payment that hides a balloon payment at end
Loan term	Representing a 72-month loan as a 60-month loan
Total amount financed	Understating the amount financed
Government fees	Inflating registration or title fees
Rebates or incentives	Misrepresenting eligibility or amounts
Vehicle history	Claiming a clean title when it is salvage
Add-on savings	Claiming add-ons are required or provide savings they do not

4. Total Payment Disclosure Before Signing

Before a consumer signs any binding purchase or financing document, the dealer must disclose the total amount the consumer will pay including all charges. This prevents consumers from being surprised by the true cost after the purchase is psychologically committed.

What Has Not Changed

The CARS Rule strengthens disclosures and prohibits specific abuses, but does not:

Cap dealer profit margins or markups
Set maximum document fees
Require dealers to match competitor prices
Prohibit all sales of add-on products (only unagreed charges)

Dealers can still mark up financing rates (dealer reserve), charge documentation fees, and sell add-on products — they just cannot do so through deception or without your consent.

Why the Rule Matters: Before vs. After

Practice	Before CARS Rule	After CARS Rule
Advertising a price you cannot get	Common	Prohibited
Charging for add-ons after the sale	Common	Prohibited
Hiding total loan cost until signing	Common	Prohibited
Misrepresenting financing terms	Common	Prohibited
Misrepresenting government fees	Occurred	Prohibited

How to Use the CARS Rule When Buying a Car

Request the offering price in writing before discussing any other terms. Under the rule, this is required.
Review every add-on charge in the finance office. Ask for each item to be explained and clearly state which ones you consent to and which you decline.
Ask for total payment before signing. The dealer is required to disclose this. Verify it matches what was discussed.
Document everything. Save written quotes, emails, and any advertising. These are your evidence if a violation occurs.
Report violations. File complaints at reportfraud.ftc.gov and your state attorney general’s office.

The CARS Rule works alongside other existing consumer protections:

Truth in Lending Act (TILA) — Requires disclosure of APR and finance charges on any credit transaction
Equal Credit Opportunity Act (ECOA) — Prohibits credit discrimination based on race, sex, religion, national origin, age, or marital status
State consumer protection laws — Many states have additional protections beyond the CARS Rule

Written by WealthVieu

WealthVieu researches and writes data-driven personal finance guides using primary sources including the IRS, Bureau of Labor Statistics, Federal Reserve, and Census Bureau.

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