FTC Halts CARS Rule Enforcement Amid Legal Challenge
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 bait-and-switch sales tactics and junk fees by car dealers. However, the National Automobile Dealers Association (NADA) and the Texas Automobile Dealers Association (TADA) have challenged the FTC's authority to issue the rule in a lawsuit.
The CARS rule seeks to prohibit misrepresentation of key vehicle information and charging for unnecessary add-ons. The FTC maintains that the rule does not impose substantial costs on compliant dealers and benefits consumers, honest dealers, and fair competition. However, NADA and TADA argue that the rule would create unnecessary paperwork and hinder consumers' ability to purchase vehicles.
The FTC's stay order delays the implementation of the CARS rule until the U.S. Court of Appeals for the Fifth Circuit decides on its legality. NADA previously hinted at suing to block the rule and welcomed the FTC's decision to stay its enforcement. No information could be found on who has filed the lawsuit against the FTC in the U.S. Court of Appeals for the Fifth Circuit challenging the effectiveness of the CARS rule proposal—no mention of this case was found in the available German-language sources.
The FTC's stay order means the CARS rule will not take effect as planned on July 30, 2024. The court's decision on the rule's legality will determine its future implementation. Meanwhile, consumers and dealers await clarity on the rule's impact on the auto retail industry.
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