- May 1, 2005
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Fifth District Court Throws Out CARS Rule on a Technicality
Think of the battle over the CARS Rule as a championship boxing match between two heavyweights: the Federal Trade Commission (FTC), the government agency tasked with protecting America’s consumers, and the National Automobile Dealer Association (NADA), a 108-year-old association of over 16,000 car dealers. On January 27, the referee—the U.S. Court of Appeals for the Fifth District—stepped into the ring and threw out the FTC on a technicality.
What’s the CARS Rule? Its full name is the Combating Auto Retail Scams Trade Regulation Rule. Its stated purpose is to “add truth and transparency to the car buying and leasing process by making it clear that certain deceptive or unfair practices are illegal.” Examples given in the Rule are misrepresentation of costs (whether buying, financing, or leasing), vehicle availability at a given price, and the cost or benefit of any add-on. Under the Rule, dealers must disclose the offering price, that add-ons aren’t required, and the total of payments for a financed or lease transaction. To the FTC’s credit, it points out that these practices are standard for any honest dealer...
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