FTC pauses controversial CARS rule after dealer lawsuits spark legal battle
The U.S. Federal Trade Commission (FTC) has temporarily halted the enforcement of the Combating Auto Retail Scams (CARS) rule. The rule, set to take effect on July 30, 2024, aims to protect consumers from deceptive practices by car dealers. The National Automobile Dealers Association (NADA) and the Texas Automobile Dealers Association have sued the FTC, arguing against the rule's implementation.
The CARS rule targets bait-and-switch sales tactics and excessive fees by prohibiting misrepresentation of key vehicle information and junk fees. The FTC maintains that the rule benefits consumers and honest dealers, promoting fair competition. However, NADA opposes the rule, claiming it would create unnecessary paperwork and hinder car purchases for consumers.
In December 2023, NADA hinted at legal action against the CARS rule and has since pursued this in courts and Congress. The associations filed a lawsuit in the United States District Court for the Northern District of Texas, challenging the FTC's authority to issue the rule. The FTC's stay order, issued in response, delays the rule's enforcement until a federal appeals court decides on its legality.
The FTC's stay order suspends the CARS rule's enforcement pending a federal appeals court's decision. NADA continues to advocate against the rule, while the FTC stands by its consumer and dealer protections. The outcome of the lawsuit will determine the rule's future and its impact on the automotive industry.
