The CARS Rule Overturned: What It Means for Auto Dealers and Consumers

In a major win for the auto retail industry, the 5th U.S. Circuit Court of Appeals has struck down the Federal Trade Commission’s (FTC) Combating Auto Retail Scams (CARS) Rule, citing procedural violations in its enactment. The ruling, delivered in favor of the National Automobile Dealers Association (NADA) and the Texas Automobile Dealers Association (TADA), effectively nullifies regulations that were set to impose stricter disclosure and consent requirements on dealerships nationwide.

The now-invalidated rule sought to enhance transparency in vehicle sales by prohibiting deceptive pricing, hidden fees, and misleading financing terms. While consumer advocates praised the initiative, dealers argued that the rule added unnecessary compliance burdens that could disrupt sales processes and increase costs.

Although the FTC has the option to appeal the decision to the Supreme Court, its next steps remain uncertain. For now, dealerships can continue their current sales practices without the immediate threat of additional federal oversight.

FTC Clarifies Customization Concerns

One of the unintended consequences of the CARS Rule was confusion surrounding its impact on vehicle customization. Some dealers began restricting aftermarket add-ons—such as window tinting, paint protection, and performance upgrades—out of fear that these products might be deemed “junk fees” under the new regulations. In response, the FTC issued a formal clarification, stating that the rule did not prohibit dealers from offering products that provide real value to consumers.

This means that as long as add-ons are properly disclosed and benefit the buyer, dealerships can continue offering customization services without regulatory pushback. This is welcome news for enthusiasts and everyday buyers alike, as aftermarket upgrades remain a key part of vehicle ownership.

With the CARS Rule now overturned, dealerships regain more flexibility in their sales and financing processes. However, the ruling doesn’t eliminate state-level consumer protection laws or the FTC’s broader authority to regulate unfair business practices. For both dealers and consumers, the key takeaway is that transparency and fair dealing will remain at the heart of a successful automotive sales experience.