FTC Halts Enforcement of CARS Rule Amid Legal Challenge
The U.S. Federal Trade Commission (FTC) has temporarily halted the enforcement of the Combating Auto Retail Scams (CARS) rule. The stay order, issued on July 29, 2024, delays the rule's implementation until a federal appeals court decides on its legality. The National Automobile Dealers Association (NADA) and the Texas Automobile Dealers Association (TADA) had previously sued the FTC, challenging its authority to issue the rule.
The CARS rule, set to take effect on July 30, 2024, aims to protect consumers from deceptive practices in car dealerships. It bans bait-and-switch sales tactics and junk fees by prohibiting misrepresentations about vehicle prices and the benefits of add-on services. The FTC maintains that the rule does not impose significant costs on compliant car dealers and benefits consumers, honest dealers, and fair competition.
NADA, however, opposes the rule. It argues that the CARS rule would create unnecessary paperwork and hinder consumers' ability to purchase cars. NADA had previously hinted at suing to block the rule and welcomed the FTC's decision to stay its enforcement. The legal dispute is taking place in the United States District Court for the District of Columbia.
The stay order delays the implementation of the CARS rule until the court's decision. The FTC believes the rule benefits consumers and fair competition, while NADA argues it creates unnecessary burdens. The outcome of the legal dispute will determine the future of the CARS rule and its impact on the auto retail industry.
