Over a year ago, we brought you the story about the new CARS (Combating Auto Retail Scams) Rules. You can read our post here.
Few have done more than yours truly to warn people about misleading ads from car dealers, and I have railed against them for decades. In the beginning, one side of me was very pleased with the CARS rules, but as the complexity of the rules became clearer, the downside was that the good dealers who didn’t break the rules we going to be saddled with more time consuming paperwork than they are already required to complete.
In June of 2024, a new, independent study by the Center for Automotive Research stated that “the FTC’s final CARS rules would increase costs by $24.1 billion over ten years, which consumers and small business dealers will have to absorb. Overall, the mandates of the rule would add at 60-80 minutes to the car buying process and cost consumers $1.3 billion per year in lost time.”
I do believe strongly that the Federal Trade Commission should do a much better job of policing ads by bad car dealers, and that swift and severe penalties should be imposed to send a message that this type of behavior will not be tolerated. The majority of dealers do not engage in deceptive practices, and for that reason, the National Auto Dealers Association, along with the Texas Auto Dealers Association sued the FTC to vacate the program, and the 5th Circuit Court of Appeals agreed. At least for now, the subject is dead.
Statement from the National Auto Dealers Association
National Automobile Dealers Association (NADA) President and CEO Mike Stanton issued the following statement in response to last Monday’s decision by the U.S. Court of Appeals for the Fifth Circuit to grant a petition filed by NADA and the Texas Automobile Dealers Association (TADA) to vacate the FTC Vehicle Shopping Rule (“CARS” Rule):
“Monday’s decision by the 5th Circuit Court of Appeals on NADA’s and TADA’s legal challenge is a victory for the rule of law and a great outcome for consumers. As we have been saying since this rushed, poorly researched, and unnecessary rule was announced, the FTC’s Vehicle Shopping Rule (“CARS” Rule) would have added massive amounts of time, complexity, paperwork and cost to the car-buying and car-shopping experience for virtually every customer. That truly would have been a nightmare for consumers and dealers alike. Thanks to the success of this legal challenge, dealers can get back to what they do best, which is creating the best-possible customer experience and reducing transaction times wherever possible.”
Statement from the Consumer Federation of America
The Consumer Federation of America also issued a statement regarding the ruling:
“While it is surprising that the Court of Appeals chose to ignore the decade of research and procedure the FTC put into the CARS Rule, it is not surprising that such a commonsense rule to lower costs for Americans faced a legal challenge in the Fifth Circuit,” said Erin Witte, director of consumer protection for Consumer Federation of America. “Buying a car is time consuming and frustrating. Rather than choosing to be part of the solution by simply agreeing to provide car buyers with transparency and fairness, the National Auto Dealers Association chose to aggravate the problem and sue the FTC in the court that has not hesitated to repeatedly put corporations over consumers. This fight is far from over.”
What The Court Said:
The National Automobile Dealers Association and the Texas Auto-mobile Dealers Association petition this Court for review of the Combating Auto Retail Scams Trade Regulation Rule (“CARS Rule”), a final trade regulation rule promulgated by the Federal Trade Commission (“FTC” or “Commission”). Petitioners ask this Court to vacate the CARS Rule on the grounds that: (1) the FTC violated its own regulations by failing to issue an advance notice of proposed rulemaking; (2) the FTC arbitrarily and capriciously failed to articulate a reasoned basis for the Rule; and (3) the FTC’s cost-benefit analysis was arbitrary and capricious. In the alternative, petitioners ask for a remand for the consideration of additional evidence.
Finding that the FTC failed to issue an advance notice of proposed rulemaking in violation of its own regulations, we GRANT the petition for review and VACATE the CARS Rule.
Read the entire court ruling here →
