A U.S. House committee on June 13 passed a bill that includes a provision stopping the Federal Trade Commission from implementing its Combating Auto Retail Scams (CARS) Rule until next year.
The FTC announced the new rule in December 2023, aimed at reducing deceptive practices in the automotive industry, specifically bait-and-switch advertising and the imposition of hidden junk fees. Originally set to take effect July 30 of this year, it has been pushed back to Sept. 30, 2025.
In January, the National Automobile Dealers Association (NADA) and the Texas Automobile Dealers Association (TADA) filed a legal challenge to the rule in the U.S. Court of Appeals for the 5th Circuit, moving to stay the rule’s July 30 effective date. In response to the stay motion, the FTC issued an order delaying the effective date of the rule pending judicial review of the NADA/TADA petition.
However, despite the FTC’s postponement, the rule remains the law, necessitating the advancement of the amendment in the Fiscal Year 2025 Financial Services and General Government (FSGG) appropriations bill passed by the U.S. House Appropriations Committee.
NADA welcomed the delay of what it called the FTC's "onerous" vehicle shopping rule.
“America’s franchised new car dealerships strongly support the committee’s advancement of this legislation, which will stop the FTC’s disastrous vehicle shopping rule from taking effect,” said NADA President and CEO Mike Stanton. “This extremely flawed, unnecessary, and we believe illegal rule will greatly harm consumers by adding more cost, time, and paperwork to buying a car.”
NADA cited a study by the Center for Automotive Research (CAR) of the potential impact of the rule, which projected it would add 60 to 80 minutes to the car buying process, while increasing expenses by $24.1 billion over 10 years for consumers and small business dealers.
The study said to comply with the rule, dealer costs would include updated and ongoing training, investments in IT systems, as well as planning, preparation and compliance reviews. Each dealership location would face median upfront compliance costs of $31,450 and average recurring annual costs of $39,862 per location -- adding up to between $14.4 million and $17.2 million over a 10-year period for dealers nationally.
For consumers, the study estimated the new rule would cost them $1.3 billion annually in lost time.
