By: Jamie Szczecina
We want to bring your attention to a significant development in the automotive industry. The Federal Trade Commission (FTC) is set to implement the new "Combating Auto Retail Scams" (CARS) Rule. This transformative regulation aims to enhance transparency in the car buying and leasing process, ensuring a fair and informed consumer experience.
Understanding the CARS Rule
The FTC defines "offering price" as the total cost to the consumer, encompassing all sale-related charges except taxes, title and registration, and other government fees. To comply, your website must transparently represent this offering price as the drive-off-the-lot amount. While the enforcement date has been temporarily postponed, it's crucial for dealerships to proactively prepare for compliance.
Key Points to Consider
1. Effective Date: The CARS Rule was supposed to go into effect as early as July 30, 2024, but is now indefinitely on hold. In its decision to postpone the effective date, the FTC contested the foundation of NADA's petition for the Fifth Circuit to delay the implementation of the CARS Rule. The FTC argued that NADA's assertions rely on "inaccurate claims that it will necessitate dealers to revamp their procedures and significantly escalate compliance expenses."
2. "Offering Price" Definition: Ensure your website accurately reflects the offering price, including all sale-related charges but excluding specific government fees. In a press release dated January 4, 2024, NADA President Mike Stanton spoke on NADA's challenge to the CARS Rule and said that “NADA is challenging the FTC in court to stop this rule because it will add massive amounts of time, complexity, paperwork and cost to car buying and car shopping for tens of millions of Americans every year.”
3. Required Actions for Compliance:
Clearly disclose the offering price on your website.
Ensure the offering price includes all charges related to the sale, excluding specific government fees.
Regularly update vehicle pricing on your website or digital advertising.
Compliance Capabilities
Platforms can empower dealers to meet CARS Rule requirements through:
Configurability of Pricing
Adapt pricing strategies to align with CARS Rule mandates.
“Offering Price" Marketing
Present the offering price in a manner that suits your business model and communication strategy.
Disclaimers and Presentation
Communicate pricing transparently by breaking out and disclaiming the offering price as needed.
Data Transmission in Inventory Feed
Facilitate seamless transmission of accurate pricing and disclaimer information.
While platforms can provide tools for compliance, it is crucial to remember that legal responsibility rests with the dealer. Seek advice from legal counsel to ensure full adherence to the CARS Rule.
Next Steps for Compliance
Contact Your Attorney:
Seek professional guidance on compliance steps.
Review Website Pricing:
Ensure alignment with the FTC's definition of "offering price."
Update Website:
Clearly and accurately disclose the offering price, excluding specific government fees.
Evaluate Advertising Practices:
Adjust practices related to add-on products or services to meet FTC's requirements.
AMG is committed to providing you with the tools and support necessary for a seamless transition into compliance with the CARS Rule. Your understanding and cooperation are essential as we collectively navigate this transformative phase in the automotive industry.
Sources:
“FTC Pumps Brakes on Cars Rule, at Least for Now.” JD Supra, www.jdsupra.com/legalnews/ftc-pumps-brakes-on-cars-rule-at-least-6539903/#:~:text=Through%20the%20CARS%20Rule%2C%20the,is%20now%20indefinitely%20on%20hold. Accessed 19 Mar. 2024.
Martinez, Mike. “FTC’s New CARS Rule Effective July 2024.” FTC’s New Cars Rule Effective July 2024, www2.dealeron.com/webmail/709943/946868093/d8b3e83f7dca25c3ac97dc0988852d16605aca4793ce16f99ba23183b5d51d03. Accessed 19 Mar. 2024.