The FTC CARS Rule Is Not in Effect
The Combating Auto Retail Scams Rule was vacated before it ever took effect and has since been withdrawn from the federal rulebook. A lot of dealer-facing material still says otherwise — here is the actual status, and what governs in its place.
Key takeaways
- The Fifth Circuit vacated the CARS Rule on January 27, 2025, before any of its requirements took effect
- The court's objection was procedural: the FTC skipped the advance notice of proposed rulemaking its own regulations required
- The FTC formally withdrew the rule from the federal rulebook effective February 12, 2026, did not appeal, and has not re-proposed it
- No CARS Rule requirement is in force — but the Used Car Rule, Magnuson-Moss, and state law were never affected and still apply in full
Disclaimer: This page describes the regulatory status of a federal rule as of August 2026 and is not legal advice. Regulatory status can change; confirm current standing with the FTC, your state dealer association, or counsel before making compliance decisions.
Quick Answer
The CARS Rule — formally the Rule on Combating Auto Retail Scams, sometimes called the FTC Vehicle Shopping Rule — is not in effect and never was. The U.S. Court of Appeals for the Fifth Circuit vacated it on January 27, 2025, before its compliance date, on the ground that the FTC failed to follow its own rulemaking procedures by skipping the required advance notice of proposed rulemaking. The FTC did not appeal, and formally withdrew the rule from the federal rulebook effective February 12, 2026. As of August 2026 it has not been re-proposed. None of its requirements apply to dealers. What was never affected, and still applies in full, is the FTC Used Car Rule, the Magnuson-Moss Warranty Act, the FTC's general authority over deceptive and unfair practices, and the whole body of state dealer and consumer protection law.
Why this needs saying
The CARS Rule was finalized in December 2023 with a compliance date in 2024, and the industry spent most of a year preparing for it. Compliance vendors published readiness checklists. Trade press ran explainers. Dealer groups budgeted for process changes and training.
Then it was struck down — and a great deal of that material is still online, still ranking, and still written in the future tense. A dealer searching the term today can easily land on a 2024 explainer describing obligations that were never imposed, or a vendor page selling readiness for a rule that no longer exists.
The practical risk is not that a store over-complies with a dead rule. It is that "CARS Rule compliance" gets treated as the whole of federal obligation, and a store that believes it has been handled stops looking at the requirements that are genuinely enforceable — starting with the Used Car Rule, which has been in force for decades and carries real per-violation penalties.
What actually happened
What the rule would have required
The CARS Rule was aimed at vehicle shopping practices: how prices are advertised and disclosed, the handling of add-on products and charges, and the information given to consumers during the financing conversation. Its stated purpose was to address misrepresentations in advertising and undisclosed charges — the cluster of practices the FTC characterized as auto retail scams. Because it never took effect, its specific obligations are of historical interest only, and this page does not restate them as though they were live requirements.
The Fifth Circuit vacated it
On January 27, 2025, the Fifth Circuit vacated the rule in its entirety. The decision turned on procedure rather than substance. The court found that the FTC had failed to follow its own regulations in promulgating the rule — specifically, that it skipped the advance notice of proposed rulemaking step required to inform the rulemaking process before a proposed rule is issued.
That distinction matters for how much weight to put on the outcome. The court did not hold that the conduct the rule targeted is lawful, or that the FTC lacks authority over deceptive practices in vehicle retail. It held that this particular rule was made improperly. The agency remained free to start over through the correct process.
The FTC withdrew it, and has not returned
The FTC did not appeal. It subsequently withdrew the final rule, a withdrawal that took effect February 12, 2026 — which is what moved the rule from "vacated by a court" to formally gone from the rulebook. (The CARS Rule was never actually codified: its amendment to the CFR was published in January 2024 and then delayed indefinitely that February, so there was no codified text to remove.) As of August 2026 the Commission has not re-proposed it or issued the advance notice that would begin a fresh attempt.
Whether a future Commission revives the effort is genuinely unknown, and worth watching rather than predicting. The procedural defect the court identified is curable, so a renewed rulemaking is possible. Nothing about that possibility creates an obligation today.
What still applies
The CARS Rule was an addition to the federal framework, not a replacement of it. Everything that governed dealer conduct before it was written governs dealer conduct now.
- The FTC Used Car Rule. Unaffected and actively enforced. Every used vehicle you display needs a compliant Buyers Guide, in the correct version for your state, before a customer can inspect it — with penalties running to tens of thousands of dollars per violation. See our guide to the Used Car Rule and Buyers Guide.
- The Magnuson-Moss Warranty Act and the FTC Warranty Disclosure Rule. If you offer a written warranty, or the manufacturer's warranty still applies, these govern what you disclose — and Magnuson-Moss prohibits eliminating implied warranties when a written warranty is provided.
- The FTC's general authority over deceptive and unfair practices. The absence of a vehicle-specific rule does not make misleading advertising or undisclosed charges lawful. Enforcement under the Commission's general authority does not depend on a bespoke industry rule existing — and the Commission has demonstrated the point since the vacatur. In March 2026 the FTC sent warning letters to 97 auto dealership groups over pricing practices it said may violate Section 5 of the FTC Act, citing advertised prices that do not reflect all required fees, prices reflecting rebates not available to every consumer, and prices advertised without disclosing additional down payment requirements. That is the CARS Rule's subject matter being pursued without the CARS Rule, which is why the vacatur changed less about acceptable conduct than the headlines suggested.
- State dealer and consumer protection law. For most stores this is the more demanding layer anyway. Many states regulate advertised pricing, add-on disclosure, and documentary fees directly, and several were moving in the same direction as CARS independently of it. State requirements were untouched by the Fifth Circuit's decision.
The honest summary for a dealer principal: the federal compliance burden today is roughly what it was in 2023. If your store built better pricing-disclosure and add-on-consent practices while preparing for CARS, there is no regulatory reason to unwind them — and in states tightening their own rules, keeping them is the cheaper path.
A note for dealers reading Canadian material
Canada has no CARS Rule equivalent and no federal dealer conduct rule of this kind at all. Vehicle retail is regulated provincially, so the closest analogues are provincial: Ontario's all-in price advertising requirement, for instance, obliges advertised prices to include all fees and charges except tax and licensing, which addresses part of the same territory CARS aimed at — but does so under a provincial statute administered by a delegated authority. There is a federal layer in Canada, it simply comes from general competition law rather than an auto-specific rule: the Competition Act's drip-pricing provision (s. 74.01(1.1)) deems the making of a representation of a price that is not attainable because of fixed obligatory charges or fees to be a false or misleading representation, carving out only amounts imposed on the purchaser by or under an Act of Parliament or a provincial legislature.
The direction of the difference is worth noting if you operate in both markets. American federal rulemaking for dealers is contested and can be undone in court; Canadian provincial requirements are comparatively settled and change through regulatory amendment rather than litigation. Our Canadian dealership compliance guide covers how the provincial regulators divide that ground.
Frequently asked questions
Is the FTC CARS Rule in effect?
No. The Fifth Circuit vacated it on January 27, 2025, before it took effect, and the FTC withdrew it from the federal rulebook effective February 12, 2026. No CARS Rule requirement applies to dealers.
Why was the CARS Rule struck down?
On procedural grounds. The court found the FTC failed to follow its own regulations in making the rule, specifically by skipping the advance notice of proposed rulemaking required to inform the rulemaking process. The decision did not address whether the underlying conduct the rule targeted is lawful.
Could the CARS Rule come back?
Possibly. The defect the court identified was procedural and therefore curable, so the FTC could begin a fresh rulemaking with the required advance notice. It did not appeal the decision and, as of August 2026, has not re-proposed the rule or issued such a notice.
Do I still need to worry about junk fees and add-on disclosure?
Yes, though not because of CARS. The FTC retains general authority over deceptive and unfair practices regardless of whether an industry-specific rule exists, and many states regulate advertised pricing, add-on disclosure, and documentary fees directly. For most dealerships state law is the more demanding layer.
Which federal rules do still apply to used car dealers?
The FTC Used Car Rule with its Buyers Guide requirement, which was never affected by the CARS litigation; the Magnuson-Moss Warranty Act and the FTC Warranty Disclosure Rule where a written or manufacturer's warranty is involved; and the FTC's general enforcement authority over deceptive and unfair practices.
Should we roll back the process changes we made for CARS?
There is no regulatory requirement to keep them, but little reason to unwind them either. Clearer pricing disclosure and documented consent for add-ons reduce exposure under state law and under the FTC's general authority, both of which survived the vacatur intact.
The bottom line
The CARS Rule is gone: vacated on procedure in January 2025, withdrawn from the rulebook in February 2026, not re-proposed. If your compliance materials still describe it as upcoming, they are out of date, and the risk is that the error travels — a store that thinks federal compliance was settled by a CARS readiness project may not be looking at the Used Car Rule, which is the requirement that actually gets enforced.
Check what version of the Buyers Guide your state requires, confirm it is on every unit before display, and treat the pricing and add-on discipline you may have built for CARS as protection under state law and general FTC authority rather than as work that was wasted.
Related reading
Built for dealership operations, not just compliance
READY HUB coordinates the work on every vehicle — recon, delivery, and everything still owed on a deal — with clear ownership and status across departments.