Combating Auto Retail Scams (CARS) Rule

Vidya Sethuraman
India Post News Service

The Federal Trade Commission (FTC) has announced new rules meant to prevent sellers from perpetrating scams against car shoppers. The new CARS Rule—which stands for Combating Auto Retail Scams—takes on two items car buyers have long complained about: bait-and-switch tactics and junk fees.

Specifically, the CARS Rule stands on four main legs:

(1) Dealers cannot misrepresent a vehicle’s price;

(2) Dealers must “clearly disclose” the actual price someone can pay for the car;

(3) Dealers cannot charge consumers for add-ons that don’t provide a benefit; and

(4) Dealers must get a buyer’s “express, informed consent before charging them for anything.”

Malini Mithal, Deputy Director of the FTC Financial Department, said that cars are an important expense for American families and are usually very costly. At the same time, people cannot live without cars, so the Federal Trade Commission has launched a special campaign to crack down on car sales.  All kinds of people can fall victim to unscrupulous car dealers suggesting those kinds of scams.

The CARS rules are designed to combat illegal practices that use lengthy and opaque sales processes to deceive consumers. Dealers will not be able to misrepresent “the availability of vehicles at an advertised price,” for example, or “any costs, limitations, benefit, or any other aspect of an add-on product or service.” The CARS Rule also makes it illegal to “charge consumers for add-ons that don’t provide a benefit.”

Jamie D. Brooks, an attorney with the FTS Financial Department, said the CARS rules will further protect the rights and interests of military car buyers. Young military personnel are often targets of dealer scams. According to statistics, the car debt of military personnel is twice that of civilians.  The FTC said, around 20 percent of service members have at least $20,000 in auto debt by the time they’re 24. That’s twice as much as in the general population.

FTC said it should save car shoppers in the U.S. more than $3.4 billion each year, along with an estimated 72 million hours spent shopping for vehicles.

Also Read: The FTC breaks through language barriers to reach consumers targeted by fraud