FTC CARS Rule: Is It in Effect in 2026? (Plain-English Answer for Dealers)

The FTC CARS Rule is not in effect. The Fifth Circuit vacated it on January 27, 2025 before it ever took effect, and the FTC formally withdrew it from the books effective February 12, 2026. There is no CARS Rule deadline hanging over your store. But the conduct the rule targeted, deceptive pricing and hidden fees and worthless add-ons, is still illegal under Section 5 of the FTC Act. In March 2026 the FTC sent warning letters to 97 dealership groups about exactly that. This is a plain-English explainer for dealership operators, not legal advice. Talk to your attorney for that.

It sounds like a compliance-software pitch, an OEM bulletin, or a 20-group conversation put “the FTC rule for car dealers” on your radar, and now you’re trying to figure out whether you missed a deadline. Maybe your office manager forwarded a law firm alert that ran twelve pages and never actually answered the one question you had. You don’t need a citation to a docket number. You need to know if there’s something your store has to do, and by when.

Short version: the rule is dead, and that’s the part most articles get wrong because they were written in 2024 when it looked like the rule was coming. The part that should actually concern you is what replaced it.

Is the FTC CARS Rule in Effect in 2026?

No. Here’s the timeline, dated, so you can hand this to your DP or your attorney and they can check the dates themselves.

Date	What happened	Source
Dec 12, 2023	FTC announces the Combating Auto Retail Scams (CARS) Rule	FTC
Jan 4, 2024	Final rule published in the Federal Register; original effective date July 30, 2024	Federal Register, 89 FR (docket 2023-27997)
Jan 27, 2025	Fifth Circuit vacates the rule, 2-1, before it ever took effect	NADA v. FTC, U.S. Court of Appeals for the Fifth Circuit
Feb 12, 2026	FTC formally withdraws the rule from the books	Federal Register (docket 2026-02866)
March 2026	FTC sends warning letters to 97 dealership groups on deceptive pricing under Section 5	FTC press release

So there was never a live compliance date. The FTC stayed the original July 2024 effective date while the case was pending, and the court threw the rule out before it could ever apply to a single store. The National Automobile Dealers Association and the Texas Automobile Dealers Association brought the challenge to the Fifth Circuit, and they won.

If you read something in 2024 telling you to prepare for a July deadline, that document is stale. Ignore it.

What Was the CARS Rule Supposed to Do?

The rule mattered enough to fight in court, so it’s worth knowing what it would have required. Think of these four points less as dead law and more as the FTC’s own written list of what it considers deceptive in a car deal. That list didn’t disappear when the rule did.

Want to see what this looks like in a real dealership flow? Try the live demo and watch the lead turn into a phone call on your own device.

According to the FTC’s final rule (Jan 4, 2024) and law firm summaries from Alston & Bird and Consumer Finance Monitor, the CARS Rule would have:

1. Required honest advertised pricing. Dealers would have had to disclose the “offering price,” the actual price anyone can pay to get the car, excluding only required government charges. No teaser prices that leave out mandatory dealer fees.
2. Prohibited misrepresentations. Sixteen-plus categories, including vehicle availability, financing terms, and rebates or discounts that aren’t available to everyone.
3. Required express informed consent for every charge. An affirmative act by the customer communicating clear agreement to be charged, stating what the charge is for and the amount. That covered the vehicle, financing fees, transaction fees, and add-ons.
4. Set add-on rules. No charging for add-ons with no possible benefit to that customer, like a service contract covering oil changes on an EV. And a requirement to state plainly that add-ons are optional and the car can be bought without them.

Read that list again. None of it is exotic. A clean store was already doing most of it.

Why Was the Rule Thrown Out?

This is the part that trips people up, and it’s the whole reason you can’t treat “vacated” as “you’re off the hook.”

The Fifth Circuit struck the rule on procedural grounds. Per Holland & Knight’s February 2025 client alert and the ABA Banking Journal, the court found the FTC skipped a required step. Under Section 18(b) of the FTC Act, the agency was supposed to issue an Advance Notice of Proposed Rulemaking before finalizing the rule, and it didn’t. So the court vacated the rule for how it was made.

What the court did not do, and Crowell & Moring made this point clearly, is rule that deceptive pricing, hidden fees, or worthless add-ons are legal. The substance was never blessed. Only the paperwork process was struck down.

You’re probably thinking that’s a technicality, and you’d be right. The FTC still believes everything on that four-point list is deceptive. It just has to enforce that belief a different way now.

Why the Dead Rule Doesn’t Get You Off the Hook

Here’s the reframe nobody hands a GM in plain English. The rule is gone. The enforcement is not.

Section 5 is alive. Section 5 of the FTC Act prohibits unfair and deceptive acts and practices. It predates the CARS Rule by decades and it didn’t go anywhere. The FTC can pursue deceptive pricing, hidden fees, and bogus add-ons directly under Section 5, case by case, without any auto-specific rule on the books. Crowell & Moring and Holland & Knight both make this point.

The FTC is actively enforcing in 2026. In March 2026 the FTC sent warning letters to 97 auto dealership groups about deceptive pricing, under Section 5, per the FTC’s own press release. The flagged practices were the same ones the rule targeted: advertised prices that exclude mandatory dealer fees, prices conditioned on using dealer financing, and advertising cars the store doesn’t have. Recent actions against dealer groups have involved consumer redress and multimillion-dollar exposure. That’s the live risk, not a dead rule.

The states are live and growing. State attorneys general bring their own cases, sometimes jointly with the FTC. State advertising regulations and a spreading set of “junk fee” laws apply no matter what the federal rule’s status is. California and Illinois are aggressive. So the federal rule dying does nothing to your state-level exposure.

One more nuance worth its own sentence, because it catches stores: a state law that lets you charge a doc fee is not federal permission to advertise a price that excludes it. State law controls what you can charge. Section 5 controls how you advertise. Two different questions.

What Your Store Should Do Anyway

No CARS deadline. Plenty of reason to keep your house clean. Here’s the on-the-ground version, by department.

Advertising. This is what the 97 letters were about, so it’s the hottest spot in 2026. Your advertised price should reflect the total price the customer actually pays, including mandatory dealer-imposed fees like doc fees, excluding only government charges (tax, title, registration). Don’t bake in rebates not available to everyone. Don’t condition the price on dealer financing. Don’t advertise units you don’t have.

F&I and add-ons. Present add-ons as genuinely optional. Document that the customer agreed to each charge and knew the amount and what it covered. Don’t sell a product that can’t benefit that customer or that vehicle. The vacated rule’s “express informed consent” idea is still the cleanest standard for proving the customer knowingly said yes.

Phone and chat. A price quote on the phone is held to the same honesty standard as your printed ad. If a BDC agent quotes a number, it needs to be honest and complete. The same goes for whatever’s typed in chat. And whatever gets auto-populated into a quote from an ADF lead needs to match what the customer actually sees.

Recordkeeping. Keep the deal jacket clean. Advertised price, the real out-the-door breakdown, signed acknowledgments for every add-on, and a record of what was disclosed. Name one person who owns advertising review and any FTC or AG inquiry.

A clean store on Monday morning isn’t reacting to a rule. It’s running a process that holds up if a complaint ever lands.

Where a Record of What Was Said Helps

Most stores can prove what was on the window sticker and what got signed in the box. Far fewer can prove what a salesperson or BDC agent actually said on the phone. That gap is where pricing and disclosure disputes live.

If a customer claims the salesperson quoted a price that left out a fee, or said an add-on was required, the store with a recording and transcript can show what was actually said and what the customer agreed to. The store relying on a CRM note that says “quoted price” can’t. This is the same logic behind recording and retaining your calls for any dispute, where the same 12-month retention thinking applies.

Ringlead records and transcribes every inbound and outbound call, including the ones from personal cell phones, and runs an automated disclosure on the line. That produces a record of what was said and what the customer agreed to. The compliance-monitoring layer flags consent, do-not-call, and profanity. Be clear on what this is and isn’t: it supports a defensible record. It does not make a store compliant, and it’s not legal advice. Compliance is the dealer’s job, with counsel. The honest value here is the same as the rest of what we do, visibility into what was actually said.

The Bottom-Line Checklist

• Know the status. The CARS Rule is vacated and withdrawn. No deadline. (Fifth Circuit, Jan 27, 2025; FTC withdrawal, Feb 12, 2026.)
• Don’t relax. Section 5 still applies, and the FTC warned 97 dealer groups in March 2026.
• Audit your advertised prices. Total price including mandatory fees, government charges excluded.
• Make add-ons optional and documented. Express, informed, written consent for each one.
• Hold phone and chat quotes to the ad standard. Honest and complete, every time.
• Keep a defensible record. Clean deal jackets, retained call recordings, one named owner.
• Check your state. State AGs and advertising laws apply regardless. Consult counsel in your jurisdiction.

A clean record of what your store said on every call is part of that defensible posture, not a substitute for it. If you want to see how fast your team currently connects and what actually gets said on those first calls, that’s what a speed audit measures.

Get Your Free Speed-to-Lead Score

The audit submits a handful of mystery-shop leads, times the response, and shows you what your salespeople actually say once they connect, the same response speed that wins the deal in the first place. Worst case, you walk away with free intel on your own store.

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