Federal Trade Commission introduces rule to combat vehicle shopping scams

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By Carina

The Federal Trade Commission (FTC) has finalized the Combating Auto Retail Scams (CARS) Rule, aimed at tackling illegal tactics such as bait-and-switch and hidden junk fees in car sales.

This new regulation is projected to save consumers over $3.4 billion annually and reduce the time spent on vehicle shopping by 72 million hours yearly.

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CARS rule targets deceptive auto practices, protects military families

The CARS Rule includes specific provisions to protect military members and their families, often targeted with deceptive practices related to dealership affiliations and other issues unique to service members.

FTC Chair Lina M. Khan stated, “The CARS Rule will prohibit exploitative junk fees in the car-buying process, saving people time and money and protecting honest dealers.”

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CARS rule cracks down on false auto advertising, hidden fees

The rule bans misleading claims that attract buyers, such as inaccurate information about vehicle costs, financing terms, discounts, rebates, and actual vehicle availability.

It also addresses hidden junk fees in contracts, often for services or products without consumer benefit. Khan commented on the rule’s intent to safeguard consumers from unexpected and unnecessary costs.

Essential requirements of the CARS Rule

● No Misrepresentations: Prohibiting false information about critical aspects like price and cost.

●     Clear Disclosure: Dealers must provide the offering price, inform consumers about optional add-ons, and disclose total payments when discussing monthly installments.

●     No Unjustified Add-Ons: Banning charges for add-ons that do not benefit consumers.

● Obtaining Informed Consent: Dealers must gain explicit consent for any additional charges.

CARS rule shields service members from auto debt exploitation

The rule addresses specific challenges service members face, often accumulating significant auto debt.

It prohibits deceitful practices about cost, financing, military affiliations, vehicle relocation, and repossession rights.

Ashish S. Vazirani, Acting DoD Under Secretary of Defense for Personnel and Readiness, praised the rule for its potential to enhance the economic security and readiness of military personnel.

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FTC’s collaborative approach shapes consumer-friendly auto sales rule

The FTC’s rule-making process began in June 2022 and involved a public comment period, receiving feedback from consumers, service members, veterans, and auto dealers.

The FTC adjusted the proposed rule based on these comments, balancing consumer protection with fair competition among dealers.

CARS Rule: Protecting consumers and fair auto sales practices

The CARS Rule, effective July 30, 2024, aims to shield consumers from common scams and ensure a level playing field for ethical auto dealers.

The FTC has developed guidance for consumers and dealers to prepare for the rule’s implementation.

FTC’s commitment to consumer education and protection

The FTC continues its mission to foster competition and educate consumers.

Consumers can learn more about their rights under the CARS Rule and other topics at the FTC’s consumer information website and report fraud or bad business practices through their reporting platform.

The FTC regularly updates its social media, consumer alerts, and business blog to provide the latest news and information.

CARS rule bolsters honesty, consumer protection in auto sales

The FTC’s CARS Rule protects consumers, particularly service members, from deceptive practices in the auto sales industry.

By requiring transparency and informed consent, the rule aims to create a more honest and consumer-friendly auto market.

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