Policy Watch · United States
By TradeBasis · Published September 10, 2026 · Regulatory status verified September 2026
In May 2026, a widely syndicated personal finance site published a guide to the FTC CARS Rule stating that it “took effect in January 2024” and “gives car buyers new rights and protections when shopping at dealerships across the country.”
Every part of that is wrong. The CARS Rule never took effect. It was vacated by a federal appeals court on January 27, 2025, sixteen months before that article was published, and the FTC formally removed it from the Code of Federal Regulations three months before it was published.
This is not an isolated error. The industry spent most of 2024 preparing for a rule that died, and the compliance checklists, readiness guides and explainer articles from that period are still indexed, still being read, and still being cited. Meanwhile the actual regulatory picture moved somewhere else entirely.
So here is the current state of play, with dates and sources: what happened to the CARS Rule, what federal law actually governs US vehicle dealers in 2026, what the FTC is still enforcing without it, and the state-level patchwork that has grown into the space it left. This is a summary of regulatory status, not legal advice — confirm anything you intend to act on with your state dealer association or counsel.
Quick Answer
Where US dealer regulation actually stands, September 2026:
- The CARS Rule is dead. Vacated by the Fifth Circuit on January 27, 2025 before its compliance date; formally withdrawn from the CFR effective February 12, 2026; no appeal, no re-proposal. None of its requirements apply.
- It died on procedure, not substance. The court found the FTC skipped a required advance notice of proposed rulemaking. It did not rule that hidden fees or unwanted add-ons were acceptable.
- The Used Car Rule was never affected. 16 CFR Part 455 has applied since 1985 to anyone selling more than five used vehicles in 12 months, in every state except Maine and Wisconsin. Buyers Guide requirements are unchanged.
- Enforcement never stopped. A $20 million settlement against Leader Automotive Group in December 2024 – the largest the FTC has obtained against a dealer – and warning letters to 97 dealership groups in March 2026.
- The FTC’s stated position on advertised price: it must be the total price including all mandatory dealer-imposed fees – doc fees, dealer prep, e-filing, market adjustments – with only government taxes and registration excluded. All 50 states.
- States filled the gap. California, Minnesota, Virginia, Massachusetts and Oregon have all-in pricing requirements in force; Colorado and Connecticut take effect in 2026. A California CARS Act is pending with a proposed October 1, 2026 start.
- State penalties are real: up to $25,000 per violation in Minnesota, $5,000 in Massachusetts, and a $39 million claim sought by the Connecticut Attorney General in one related matter.
- The net effect for dealers is worse, not better. One national standard was replaced by a fragmenting state patchwork plus active federal enforcement under general authority.
The timeline, with dates
| Date | What happened |
|---|---|
| July 2022 | FTC publishes the proposed Motor Vehicle Dealers Trade Regulation Rule for public comment. |
| December 2023 | FTC finalizes the rule as the CARS Rule (Combating Auto Retail Scams), published January 4, 2024, with a July 30, 2024 effective date. |
| Early 2024 | NADA and the Texas Automobile Dealers Association petition the Fifth Circuit to strike the rule down. The FTC postpones the effective date pending the challenge. |
| December 2024 | FTC obtains a $20 million settlement against Leader Automotive Group under existing authority – its largest ever against an auto dealer. |
| January 27, 2025 | The Fifth Circuit vacates the CARS Rule 2-1 on procedural grounds: the FTC failed to issue the advance notice of proposed rulemaking required by Section 18(b) of the FTC Act. |
| March 2025 | Massachusetts Attorney General adopts a broad Junk Fee Rule under Chapter 93A, sweeping in vehicle advertising. |
| February 12, 2026 | FTC formally withdraws the CARS Rule from the Code of Federal Regulations. No appeal was filed. |
| March 2026 | FTC sends warning letters to 97 dealership groups on advertised-price practices, under Section 5. |
| July 1, 2026 | Connecticut’s cross-industry price disclosure law takes effect. |
| October 1, 2026 (proposed) | Proposed effective date for the California CARS Act, passed by the state Senate and pending in the Assembly. |
What the CARS Rule would have required — and why that still matters
Understanding what the rule targeted explains why its death changed less than dealers assume.
The CARS Rule would have prohibited misrepresentations about the cost or terms of purchasing a vehicle or any add-on product, required disclosure of an “offering price” — the actual price at which anyone could buy the vehicle — and barred charging consumers for add-on products that provide no benefit. The FTC estimated it would save American consumers more than $3.4 billion and roughly 72 million hours of shopping time annually.
The Fifth Circuit never evaluated any of that. Its objection was that Section 18(b) of the FTC Act and the Commission’s own regulations require an advance notice of proposed rulemaking before declaring acts or practices unfair or deceptive, and the FTC skipped that step. The rule fell on procedure.
This is the crux of the whole situation and it is what the obsolete guidance keeps missing. The court did not decide that deceptive prices, hidden charges or worthless add-ons were acceptable. It decided the FTC took an invalid route to prohibiting them. The underlying conduct remained subject to every authority that existed before, and the FTC has used those authorities since.
What federal law actually applies to dealers in 2026
The Used Car Rule (16 CFR Part 455)
In force since 1985 and entirely untouched by the CARS Rule litigation. It requires a Buyers Guide displayed on every used vehicle offered for sale, disclosing warranty status and related terms.
Two details dealers get wrong. The threshold is more than five used vehicles in a 12-month period, which catches essentially every franchise and independent store and a fair number of operations that do not think of themselves as dealers at all. And it applies in every state except Maine and Wisconsin, which are exempt because their own state rules impose comparable disclosure obligations.
The maximum civil penalty figure did not increase for 2026. The FTC’s inflation adjustment depends on October CPI-U data, and because that data was not published for October 2025 there was no statutory basis for a 2026 multiplier, so agencies were directed to hold at 2025 levels. Expect it to resume climbing once the mechanism has data again.
Magnuson-Moss Warranty Act
Governs written warranties on consumer products including vehicles. Unaffected.
Section 5 of the FTC Act
The general prohibition on unfair and deceptive acts and practices. This is the authority that has done the actual work since the CARS Rule fell, and it is broader in some respects than the rule would have been, because it is not limited to an enumerated list of practices.
The enforcement that did not stop
If the practical takeaway from January 2025 was “nothing applies now,” the last twenty months have argued otherwise.
December 2024: the $20 million settlement. The FTC obtained a $20 million judgment against Leader Automotive Group over undisclosed add-ons, junk fees and deceptive pricing — the largest monetary judgment the agency has ever obtained against an auto dealer. This was under existing authority, with no CARS Rule involved.
March 2026: warning letters to 97 dealership groups. This is the single most operationally important development in the post-CARS period, and it received far less attention than the rule’s demise. The FTC advised 97 dealership groups across the country that an advertised price must be the total price, including all mandatory dealer-imposed fees and charges, with only required government charges excluded.
Read the scope of that carefully. Doc fees, dealer prep, e-filing charges and market adjustments are all mandatory dealer-imposed fees. Under the position the FTC has stated, every one of them belongs in the advertised number. Only government taxes and registration sit outside it. In all 50 states.
That is materially similar to what the CARS Rule’s offering-price provision would have required. The rule is gone; the expectation arrived anyway, through enforcement rather than rulemaking.
The states filled the gap, and they are not coordinating
The most consequential development is the one dealers tracking only federal news have missed entirely. State legislatures and attorneys general moved into the space the FTC vacated, and they did it independently.
Broad price transparency laws
Several states enacted cross-industry statutes requiring all-in pricing or equivalent disclosure across most or all consumer transactions. These are not dealer-specific, which is precisely why they catch dealers who are watching only automotive regulation.
| State | Status | Notes |
|---|---|---|
| California | In force | Honest Pricing Law. A separate California CARS Act is pending in the Assembly with a proposed October 1, 2026 effective date. |
| Minnesota | In force since January 1, 2025 | Advertised prices must include all mandatory fees or surcharges; government taxes excluded. Penalties up to $25,000 per violation. |
| Massachusetts | In force | AG Junk Fee Rule under Chapter 93A, adopted March 2025. Total price at initial presentation. $5,000 per violation. |
| Virginia | In force | Cross-industry price disclosure, with a telecommunications exemption. |
| Oregon | In force | Broad price transparency requirement. |
| Colorado | Effective 2026 | Cross-industry price and fee disclosure law. |
| Connecticut | Effective July 1, 2026 | The AG has sought $39 million in one related matter, indicating enforcement appetite. |
Additional states have similar proposals pending. The trend is bipartisan and shows no sign of slowing.
The doc fee patchwork
Documentation fees are legal in all 50 states, but the caps illustrate how little national consistency exists. Roughly 22 states cap the fee and roughly 28 do not.
Published 2026 caps include California at $85, New York at $175, Washington at $200, Texas at $225, Illinois at $377.63 and Pennsylvania at $490. Six states index their caps to the Consumer Price Index, so those figures rise automatically each year without new legislation — which is why some of them are oddly specific numbers rather than round ones. In uncapped states, fees commonly run $500 to $999, and Florida averages well above that.
The spread between the lowest capped state and a typical uncapped market is roughly tenfold for identical administrative work. Whatever the amount, the FTC’s March 2026 position is that a mandatory doc fee belongs inside the advertised price.
Price against the market, not against a guess
As all-in pricing becomes the expectation across more states, the advertised number carries more weight and leaves less room to recover margin later in the deal. TradeBasis shows US dealers, independents and wholesalers what comparable vehicles are actually listed and selling for in their own market radius, plus the competitive set showing where their number sits against nearby stores.
Lite $99/month. Pro $249/month. No setup fees and no contract.
Why losing the federal rule made life harder, not easier
The industry treated January 2025 as a win, and in the narrow sense of avoiding a specific compliance burden it was. The broader picture is less comfortable.
One standard became many. A single federal rule, whatever its flaws, would have produced one national compliance target. What exists instead is a growing set of state regimes with different scopes, different exemptions, different effective dates and different penalty structures. A group operating in California, Minnesota and Connecticut now tracks three regimes plus federal enforcement, and none of them were written with each other in mind.
Penalties are not smaller. Minnesota permits up to $25,000 per violation. Applied across a dealership’s advertising inventory, per-violation math scales fast.
Enforcement discretion replaced a written rule. A rule tells you what the line is. Section 5 enforcement tells you where the line was after somebody crosses it. For a dealer trying to be compliant, a published standard is easier to work with than a general prohibition plus a warning letter campaign.
The direction of travel is unchanged. California’s own CARS Act cleared its Senate. Massachusetts got there by regulation instead of legislation. The FTC arrived at substantially the same advertised-price position through enforcement. Whichever route, the destination looks similar.
Practical takeaways for dealers
Not legal advice, and state specifics vary considerably — but these follow directly from the material above.
1. Throw out your 2024 CARS Rule materials
Readiness checklists and compliance guides produced in 2024 describe requirements that do not exist. Keeping them in circulation internally creates confusion about what is actually mandatory.
2. Confirm your Buyers Guide practice is current
The Used Car Rule never went anywhere, applies to anyone selling more than five used vehicles in 12 months, and is the most commonly enforced federal requirement on a used lot. Maine and Wisconsin operators follow their state equivalents.
3. Audit what is inside your advertised price
The FTC’s stated position is that mandatory dealer-imposed fees belong in the advertised number, with only government taxes and registration outside it. If your listed price excludes a doc fee, dealer prep charge or market adjustment that every buyer pays, that is the gap the March 2026 letters addressed.
4. Check your state, then check the states you advertise into
Online listings reach buyers across state lines. If you advertise into a state with an all-in pricing requirement, the exposure is worth understanding.
5. Watch California through the autumn
If the California CARS Act passes with its proposed October 1, 2026 effective date, the largest vehicle market in the country will have a dealer-specific analogue of the vacated federal rule. Other states have historically followed California on consumer pricing rules.
6. Treat transparent pricing as a commercial position, not just compliance
Where all-in pricing is required, the advertised number does more work and there is less room to make margin back later in the deal. That raises the cost of pricing inaccurately in either direction, which is an argument for pricing against live local market data rather than a national guide.
Know what your competition is asking before you set your price
TradeBasis is built for US dealers, independents and wholesalers who need a defensible number fast: live market data, comparable listings, and a competitive set showing exactly what nearby stores are pricing the same vehicles at. Appraise a purchase or price a retail unit against the market you actually sell in.
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Frequently asked questions
Is the FTC CARS Rule still in effect in 2026?
No. The CARS Rule is not in effect and never was. The Fifth Circuit vacated it on January 27, 2025 in a 2-1 decision, before its compliance date. The FTC did not appeal and formally withdrew the rule from the Code of Federal Regulations effective February 12, 2026. It has not been re-proposed. No CARS Rule requirement applies to any dealer, and any guidance published in 2024 telling dealers to prepare for CARS Rule compliance is obsolete.
Why was the CARS Rule struck down?
On procedure, not substance. The Fifth Circuit held that the FTC violated its own regulations under Section 18(b) of the FTC Act by failing to issue an advance notice of proposed rulemaking before declaring certain acts or practices unfair or deceptive. The court did not rule on whether banning undisclosed fees or unwanted add-ons was good policy. That distinction matters: the conduct the rule targeted can still be unlawful under existing authority, and the FTC would be free to restart rulemaking with the correct procedural steps.
What federal rules do apply to used car dealers in 2026?
Three, all untouched by the litigation. The FTC Used Car Rule (16 CFR Part 455) has been in force since 1985 and requires a Buyers Guide on every used vehicle offered for sale, applying to anyone selling more than five used vehicles in a 12-month period, in every state except Maine and Wisconsin, which are exempt because their own rules impose comparable obligations. The Magnuson-Moss Warranty Act governs written warranties. And Section 5 of the FTC Act prohibits unfair and deceptive acts and practices generally, which is the authority the FTC has continued to enforce against dealers.
Is the FTC still enforcing against dealers after losing the CARS Rule?
Yes, actively. In December 2024 the FTC obtained a $20 million settlement against Leader Automotive Group over undisclosed add-ons, junk fees and deceptive pricing, the largest monetary judgment the agency has ever obtained against an auto dealer. In March 2026 the FTC sent warning letters to 97 dealership groups stating that an advertised price must be the total price including all mandatory dealer-imposed fees such as doc fees, dealer prep, e-filing charges and market adjustments, with only government taxes and registration excluded. That position applies in all 50 states and rests on Section 5 authority rather than the vacated rule.
Which states have passed their own dealer pricing laws?
Several, and the number is growing. California, Minnesota, Virginia, Massachusetts and Oregon have broad price transparency requirements in effect requiring all-in pricing or equivalent disclosure across most consumer transactions, which sweeps in vehicle advertising. Colorado’s and Connecticut’s cross-industry laws take effect in 2026, with Connecticut’s effective July 1, 2026. Massachusetts implemented its requirement through an Attorney General regulation under Chapter 93A rather than legislation. Separately, a California CARS Act modeled on the federal rule passed the state Senate and is pending in the Assembly with a proposed effective date of October 1, 2026.
What are the penalties under state junk fee laws?
Substantial and varied. Minnesota allows penalties up to $25,000 per violation. Massachusetts authorizes $5,000 per violation. In one related matter the Connecticut Attorney General has sought $39 million. Because these are per-violation figures applied across a dealership’s advertising, exposure can scale quickly. This is the central practical point about the post-CARS landscape: the federal rule that would have set one national standard is gone, but the replacement is a patchwork of state regimes with independent penalty structures.
Are dealer doc fees legal and are they capped?
Documentation fees are legal in all 50 states, but caps vary enormously. Roughly 22 states cap the fee and roughly 28 do not. Published 2026 caps include California at $85, New York at $175, Washington at $200, Texas at $225, Illinois at $377.63 and Pennsylvania at $490. Six states index their caps to the Consumer Price Index, so those rise automatically each year without new legislation. In uncapped states, fees commonly run from $500 to $999 and in some markets higher. The FTC’s March 2026 position is that whatever the amount, a mandatory doc fee belongs in the advertised price.
Did the FTC Used Car Rule change for 2026?
No. The Used Car Rule and its Buyers Guide requirements are unchanged, and the maximum civil penalty figure did not rise for 2026. The FTC’s inflation adjustment mechanism depends on October CPI-U data, and because that data was not published for October 2025 there was no statutory basis for a 2026 multiplier, so agencies were directed to hold at 2025 levels. Expect the figure to resume climbing once the adjustment mechanism has data again.
The Bottom Line
The FTC CARS Rule is dead. It was vacated on January 27, 2025 before it ever took effect, withdrawn from the federal rulebook on February 12, 2026, and has not been re-proposed. If you read anything suggesting it is in force, including material published this year, that source is wrong.
What did not change is almost everything else. The Used Car Rule has governed every used lot in the country since 1985 and still does. Magnuson-Moss still applies. Section 5 still prohibits unfair and deceptive practices, and the FTC has used it to obtain its largest-ever judgment against an auto dealer and to put 97 dealership groups on notice that advertised prices must include mandatory dealer fees.
And the states did not wait. California, Minnesota, Massachusetts, Virginia and Oregon already require all-in pricing across consumer transactions. Colorado and Connecticut join them in 2026. California’s own CARS Act is one chamber away from a proposed October start. Penalties run to $25,000 per violation in Minnesota alone.
The honest summary is that dealers won the case and lost the simplicity. One national rule with a published standard was replaced by federal enforcement under general authority plus a fragmenting patchwork of state regimes with independent penalties and effective dates. The practical response has not changed much either way: advertise a number that includes what every buyer actually has to pay, keep the Buyers Guide right, and know which states your listings reach.
Related reading from TradeBasis
| Resource | What it covers |
|---|---|
| US Used Vehicle Market Report: September 2026 | August 2026 wholesale data, why Manheim and Black Book diverged by vehicle age, and seven appraisal adjustments. |
| Car Appraisal Software Pricing in 2026 | Every sourced price in the category and the add-on structures that change the real number. |
| Appraisal Software for Independent Dealers and Wholesalers | Buyer’s guide by operator profile and the franchise features independents can ignore. |
| TradeBasis US Market Index (JSON) | Free machine-readable monthly dataset of US used-vehicle market conditions, CC-BY-4.0. |
Sources
- US Court of Appeals for the Fifth Circuit, decision vacating the FTC CARS Rule, January 27, 2025.
- Mayer Brown, “A Post-CARS Rule Brake? Not So Fast,” March 2025 (procedural basis for vacatur, continued regulatory activity).
- Consumer Financial Services Review, “Fifth Circuit Vacates the FTC’s CARS Shopping Rule,” January 29, 2025.
- Federal Trade Commission, withdrawal of the CARS Rule from the Code of Federal Regulations, effective February 12, 2026.
- Federal Trade Commission, Used Motor Vehicle Trade Regulation Rule, 16 CFR Part 455.
- Federal Trade Commission, warning letters to 97 dealership groups regarding advertised pricing, March 2026.
- Federal Trade Commission settlement with Leader Automotive Group, December 2024.
- Nelson Mullins, “States Pick Up Stroke Regulating New Car Sales Practices Following FTC Loss on CARS Rule,” 2025 (California CARS Act, Massachusetts Junk Fee Rule).
- Troutman Pepper Locke / Regulatory Oversight, “State Attorneys General and Continued Enforcement Against Junk Fees in 2026,” April 2026.
- Wiley, “Expanding Patchwork of State Junk Fees Laws Presents Compliance Challenges” (state penalty figures).
- Minnesota House of Representatives, summary of the state’s mandatory fee disclosure law effective January 1, 2025.
- CarPro, “California CARS Act Coming Soon – Will Other States Follow?” 2026.
- Published 2026 state documentation fee cap surveys.
TradeBasis is a used-vehicle appraisal and market intelligence platform for dealers, independents and wholesalers, operated by Basis Software Inc. This article describes the regulatory status of federal and state rules as of September 2026 and is provided for informational purposes only. It is not legal advice. Regulatory status changes; confirm current standing with the FTC, your state dealer association or qualified counsel before making compliance decisions.