FTC Temporarily Halts CARS Rule Enforcement Amid Industry Lawsuit
The U.S. Federal Trade Commission (FTC) has temporarily halted the enforcement of the Combating Auto Retail Scams (CARS) rule following a lawsuit by the National Automobile Dealers Association (NADA) and the Texas Automobile Dealers Association (TADA). The associations argue that the rule would create unnecessary paperwork and hinder consumer car purchases.
The CARS rule, set to commence on July 30, 2024, aims to curb car dealers' bait-and-switch tactics and excessive fees. It seeks to prohibit misrepresentations of key vehicle information and charges for unnecessary add-ons. However, NADA and TADA contend that the FTC lacks authority to issue such a rule and have sued the agency.
Mike Stanton, NADA's president and CEO, welcomed the stay order, asserting that the FTC failed to prove the necessity of the rule and has not tested its consumer impact. The FTC, however, maintains that the rule will not burden compliant car dealers and will not put honest dealers at a competitive disadvantage.
The Federal Labor Court's 2023 ruling validated the CARS regulation, affirming its compliance with labor law standards and consumer protection principles.
The FTC's stay order delays the CARS rule's enforcement pending a federal appeals court's decision. NADA and TADA's lawsuit challenges the FTC's authority to issue the rule. The FTC expects only a few months' delay in the rule's implementation, despite the ongoing legal proceedings.
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