What the CARS Rule Decision Means for Dealerships

The CARS Rule Was Struck Down on Procedural Grounds

The 5th Circuit’s decision to vacate the rule wasn’t about its content. Instead, the court ruled that the FTC failed to follow proper rule-making procedures. The agency skipped a crucial step: announcing its intent to develop the rule before gathering preliminary feedback.

While the FTC could restart the process, it’s unlikely to happen under the current administration. However, the core principles behind the rule remain relevant.

Most Compliance Obligations Still Apply

Even without the CARS Rule, dealerships are still subject to existing consumer protection laws. In fact, around 90% of what the rule sought to enforce is already covered by federal and state regulations.

This includes:

• Deceptive pricing practices
• Misleading advertising
• Unfair lending practices

Dealerships should not assume that the vacated rule gives them a free pass. Compliance with long-standing FTC guidelines and state laws remains essential.

FTC Enforcement Isn’t Going Away

Auto-related complaints consistently rank among the top 10 categories reported to the FTC. Over the past five years, the agency has aggressively pursued enforcement actions against dealerships for unfair and deceptive practices- leading to millions in penalties.

Four of the five current FTC commissioners will return in 2025, and their past voting records suggest they will continue enforcement efforts. This means dealerships should expect ongoing scrutiny, even without the CARS Rule in place.

Pricing Transparency Is Still a Best Practice

A key goal of the CARS Rule was to increase transparency in vehicle pricing, requiring a standardized “offering price” that included all mandatory non-government fees. The FTC has pushed for similar measures in other industries, such as online ticket sales, to prevent hidden costs at checkout.

Even though the rule was struck down, transparent pricing remains a smart business move. Clear fee disclosures can:

• Build consumer trust
• Reduce regulatory risk
• Prevent unfair competition from dealers advertising deceptively low prices with hidden fees

Some dealerships even supported the CARS Rule for this reason, believing it would create a level playing field. Regardless of the ruling, transparency in pricing is a strategy worth adopting.

State Regulators and Private Lawsuits Fill the Gaps

If federal oversight weakens, state attorneys general are likely to step in. They have a long history of enforcing dealership compliance at the state level.

Additionally, private lawsuits pose an increasing risk. Consumer protection laws allow individuals to take legal action against dealerships for misleading advertising or deceptive practices. Even in the absence of federal or state intervention, plaintiffs’ attorneys actively pursue claims against non-compliant dealerships.

What Should Dealerships Do Now?

While the CARS Rule may be gone, the principles behind it are still shaping industry expectations. To stay ahead:

• Maintain compliance with existing consumer protection laws
• Adopt transparent pricing strategies to build trust and minimize risk
• Keep up with state-level regulations that may fill enforcement gaps
• Monitor FTC actions- regulatory scrutiny on dealerships isn’t disappearing
• Consult with legal and accounting experts to ensure compliance with evolving regulations

We Can Help You Remain Compliant

The CARS Rule decision may have eliminated a specific set of requirements, but dealerships remain under the microscope. Now is the time to double down on ethical business practices and proactive compliance to avoid regulatory penalties and legal challenges.

For expert guidance on dealership compliance and financial strategies, contact Brady Ware’s dealership accounting and consulting team today.