The Federal Trade Commission’s (FTC) Combating Auto Retail Scams (CARS) Rule stands to significantly enhance the car buying and leasing experience for consumers. By fostering an environment of transparency, honesty, and fairness, the rule not only protects buyers from deceptive practices but also encourages more ethical behavior from dealers.

As a result, the overall process of purchasing or leasing a vehicle becomes more straightforward, less stressful, and more aligned with consumer interests and rights. This Rule is particularly significant for service members who have faced targeted exploitation in the past, marking a crucial stride in safeguarding their rights and financial wellbeing.

In addition, starting this year, California is banning surprise “junk fees,” charges that are frequently slipped onto a bill for a range of products and services, from food delivery to sporting event tickets. SB 478 becomes effective July 1, 2024. SB 478 is aimed at so-called “drip pricing,” which the statute describes as “advertising a price that is less than the actual price that a consumer will have to pay for a good or service.”

The law makes it illegal to advertise a low initial price for a product and then tack on additional mandatory fees later in the checkout process. This law provides as follows:

(29) (A) Advertising, displaying, or offering a price for a good or service that does not include all mandatory fees or charges other than either of the following:

(i) Taxes or fees imposed by a government on the transaction.

(ii) Postage or carriage charges that will be reasonably and actually incurred to ship the physical good to the consumer.

… A motor vehicle manufacturer, or any other person, that (a) advertises a motor vehicle manufacturer’s suggested retail price (MSRP) set by an automobile manufacturer, or lease payments based upon an MSRP, or (b) Advertise the total price of a vehicle without including all costs to the purchaser at time of sale, except taxes, vehicle registration fees, the California tire fee, emission testing charges not exceeding fifty dollars ($50), actual fees charged for certificates pursuant to the Health and Safety Code, finance charges, and any dealer document processing charge or charge to electronically register or transfer the vehicle, does not, by doing so, violate paragraph (29) of subdivision (a) of Section 1770 of the Civil Code.

These two laws together may have a significant impact of automotive dealer disclosure practices, particularly targeting the military.

The CARS Rule holds particular importance for military service members, who often face distinct challenges in the vehicle purchasing process. The new regulations under this rule offer much-needed protections tailored to the unique circumstances of service members.

The Need for Consumer Protection

Young military service members, often stationed away from home and with limited experience in such transactions, have been particularly vulnerable. The transient and demanding nature of military life can make them easy targets for unscrupulous dealers. Service members, especially younger ones, were found to be more susceptible to high auto debt.

This vulnerability is often exploited by unscrupulous dealers who target military personnel due to their regular paychecks and sometimes limited experience in vehicle transactions. The financial burdens resulting from unfair auto deals can have significant impacts on the lives and careers of these individuals.

The CARS Rule introduces essential protections that address these vulnerabilities. One of the key aspects is the enforcement of honest advertising and transparent pricing. This is particularly beneficial for service members who frequently rely on advertised deals, especially when shopping for vehicles in new locations or under time constraints due to deployments or relocations.

Another critical component is the requirement for dealers to obtain explicit consent for any additional charges. This measure is crucial in protecting service members from unwanted or unnecessary add-ons, which are commonly pushed by dealers in areas with a high military presence. Such practices often lead to financial strains that could be avoided with clearer consent protocols.

Specific Rules Focused on the Military

The CARS Rule also considers the unique lifestyle of military personnel, including frequent relocations. It ensures that service members are not misled about the ability to move their vehicles to new duty stations or about their legal rights, such as protections against vehicle repossession under specific circumstances. This aspect of the rule is vital in preventing exploitation during times of vulnerability for military families.

In addition to these protections, the FTC and military consumer advocacy groups are expected to provide educational resources and support. This initiative aims to empower service members, enabling them to make informed decisions and identify deceptive practices effectively.

Military organizations have welcomed the CARS Rule, particularly its specific focus on the challenges faced by service members.

The rule’s commitment to ensuring transparent pricing, mandatory consent for additional charges, and clear guidelines on misleading practices around legal rights and vehicle relocation is seen as a critical step in protecting military personnel from predatory sales tactics. This response underscores the rule’s importance in addressing the unique vulnerabilities of service members in the auto retail market.

Conclusion

Overall, the CARS Rule represents a significant stride in safeguarding the financial well-being of military service members in the auto retail market. By addressing their unique challenges, the rule not only protects them from predatory practices but also enhances the integrity and fairness of the market for all consumers.

The rule’s emphasis on transparency and honesty in pricing and transactions will empower consumers, enabling them to make more informed decisions. This shift towards greater clarity and fairness is expected to not only improve the consumer experience but also foster a more ethical automotive market.

For military service members, the CARS Rule offers additional crucial safeguards, recognizing and addressing their specific vulnerabilities within the auto retail sector.

These protections are a testament to the FTC’s commitment to ensuring that all consumers, particularly those who serve our nation, are treated with fairness and respect in their financial dealings.