California Combating Auto Retail Scams (CARS) Act Signed Into Law

The following is a bulletin prepared by Stefan Lawrence, Counsel at Early Warning Services, LLC and Co-Chair of the CFSC.

Summary

The California Combating Auto Retail Scams (CARS) Act was signed into law by Governor Newsom on October 6. Effective October 1, 2026, the law is designed to increase transparency and consumer protection in the car buying process by holding automobile dealers to stricter requirements.

Key Provisions of the CARS Act

• Disclosure Requirements:
  • Dealers must clearly display the total price of the vehicle in all advertising. This “total price” must include non-optional features and destination charges, but can exclude government fees (e.g., tax, title, and license).
  • Dealers must disclose the optional nature of certain non-essential products and services, for example, GAP insurance, service contracts, etc.
• Prohibition on Misrepresentation: Dealers are prohibited from misrepresenting key facts about the sale, lease, or financing of the vehicle, such as cost, financing terms, etc.
• Add-ons:
  • Dealers are prohibited from charging for add-on products or services that offer no benefit to the buyer (e.g., unnecessary warranties or services).
  • Should a buyer wish to purchase optional add-on products or services, however, they now have up to ten (10) days to do so, rather than having to pay at time of purchase.
• Cooling Off Period for Used Cars: Consumers can return a used car purchased for $50,000 or less and cancel the sales contract within three (3) days, provided they have not driven the car for more than 400 miles or caused damage to the vehicle.

Impact on Dealers and Consumers

For automobile dealers, the CARS Act introduces a new layer of regulatory complexity with respect to advertising, sales practices, and add-on products. Car buyers will enjoy stronger consumer protections, including a clearer understanding of the total cost of the vehicle before signing the paperwork.

Credits & Contact

This bulletin was prepared by Stefan Lawrence, Counsel, Early Warning Services, LLC.

Thank you for your continued support of the Committee.