Don't say we didn't warn you. The demise of the Cars Rule may have been a bit overstated. A few weeks ago, we predicted that we'll soon see states picking up the proverbial consumer protection baton, and it's already starting to happen.
A member of the California legislature has introduced CA SB 766 - the California Combating Auto Retail Scams (CARS) Act. As you might imagine, it sure sounds similar to the FTC's version that was recently vacated by the Fifth Circuit. IF PASSED (and we want to emphasize that this is only a proposed piece of legislation, it has not yet passed), the bill would make it a violation for a dealer to:
Make any misrepresentation regarding material information about specified matters relating to the vehicle sale, including the costs or terms of purchasing, financing, or leasing a vehicle, the availability of vehicles at an advertised price, and the remedy available if a dealer fails to sell or lease a vehicle at the offering price.
Fail to make certain disclosures clear and conspicuous, including specified information relating to the offering price and any add-on product or services.
Charge for certain items, including an add-on product or service, if the vehicle purchaser or lessee would not benefit from the add-on product or services.
Prohibit a dealer from selling or leasing a used vehicle without providing the purchaser or lessee a 10 day right to cancel the purchase or lease, as provided.
Require a dealer to create and retain, for a period of 7 years from the date the record is created, all records necessary to demonstrate compliance with the act, including specified records.
Again, this isn't the law yet, but let's face it, California is at the forefront of consumer protection, so we think this has a pretty decent chance of passing with minimal changes. You can bet other states will be watching this Bill with interest and even use some of the same language when crafting their own statutes. What starts in California does have a tendency to travel to other places.
Tip of the Week
Continue to take compliance obligations seriously and examine your sales and financing process to make sure that it is transparent, straightforward and fair to the consumer. Ask whether add on products provide value commensurate with the cost, and whether your process can withstand scrutiny by a regulator or lawyer. Examine your ads with a critical set of eyes. The FTC is still policing dealer behavior, and from the looks of it, there may be a few more state cops on the beat soon.
As always, reach out to Ignite at info@IgniteCP.com for help.
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