Consumers, including service members and families, will get new protections against scams and deceptive practices in the convoluted, frustrating and sometimes deceptive vehicle shopping experience, thanks to a new policy announced by the Federal Trade Commission.

The Combating Auto Retail Scams Rule, or CARS Rule, “is expected to save consumers nationwide more than $3.4 billion and an estimated 72 million hours each year shopping for vehicles,” according to a Dec. 12 announcement by the FTC. The new 372-page rule goes into effect on July 30, 2024.

The new CARS Rule will take a harder stance on prohibiting price misrepresentations, among other key information. Of interest to the military community is the prohibition against lying about whether dealers are affiliated with the military or any government entity.

Dealers are also prohibited from lying about whether a vehicle can be moved out of state or out of the country, a particular concern to military families who relocate frequently. Those with car loans may be affected, however, because in many cases lenders won’t allow a vehicle to be moved overseas, and there’s no law against that.

But for leased vehicles, under certain circumstances, the Servicemembers Civil Relief Act allows active duty troops to terminate their lease without having to pay penalties or early termination charges.

The CARS Rule, which applies to all motor vehicle dealers, focuses on two common types of illegal tactics used when buying or leasing vehicles: bait-and-switch advertising and hidden junk fees. For military consumers, such auto-related gripes are among the top 10 complaints the FTC receives.

“As a small business owner and active duty military member I have played the role of both a buyer, toiling for hours to just reach fair deals on vehicles, as well as that of an advocate for my sailors who have been preyed upon by local dealerships,” one sailor wrote to the FTC during the rulemaking process. “Nowhere else in our society do so many average citizens have to mentally prepare for a battle over fair pricing and treatment for something that is realistically a modern necessity.”

Over the years, a number of issues have emerged with car dealerships outside military bases, resulting in some commanders restricting troops’ access to certain businesses.

The FTC noted that service members, particularly young troops, have an average of twice as much auto debt as civilians. By age 24, about 20% of young troops have at least $20,000 in auto debt, which is nearly two-thirds of an enlisted service member’s base salary at that age, according to the rule, which cited information from a 2022 report from the Consumer Financial Protection Bureau.

Some of the other provisions designed to help all consumers include:

  • Requiring dealers to get consumers’ specific consent for add-ons and other charges
  • Requiring accurate price disclosures in dealers’ advertising and sales communications
  • Prohibiting the sale of any add-on product or service that doesn’t provide any benefit to the consumer

Consumers have also complained to the FTC about driving hours to dealerships based on advertised prices, spending hours in the process of choosing and test-driving a vehicle, and negotiating the price and financing terms.

These processes, according to many complaints, are often made worse when dealers add-on products or packages they claim are required to purchase or finance the vehicle — even though such items were not included in the low prices advertised.

Some members of the industry commented that many of the areas covered by the proposed rule were already addressed in industry guidance. The FTC responded that “although industry guidance can provide helpful information to dealers, dealers who choose not to follow such guidance, or engage in deceptive or unfair practices, subject their customers to significant harm,” according to the rule.

“When dealerships advertise prices, discounts, or other terms that are not actually available to typical consumers, consumers who select that dealership instead of others spend time visiting the dealership or otherwise interacting with the dealership under false pretenses,” the document added.

From July 2022 to September 2022, the FTC received more than 27,000 comments about the proposed rule from various individuals and entities, ranging from car dealers to consumers.

Violation of the CARS Rule could result in actions that require a company to change its business practices, give money back to injured consumers, and pay civil penalties of as much as $50,120 per violation.

Karen has covered military families, quality of life and consumer issues for Military Times for more than 30 years, and is co-author of a chapter on media coverage of military families in the book "A Battle Plan for Supporting Military Families." She previously worked for newspapers in Guam, Norfolk, Jacksonville, Fla., and Athens, Ga.

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