New FTC CARS Rule: Sales and Management Training by Experts

Urgent Compliance Alert: Federal Trade Commission CARS rule Effective Date July 30th, 2024

Attention Car Sales Professionals and Managers! The FTC CARS Rule is rolling out on July 30th, 2024. It’s not just about selling cars, it’s about staying compliant. Your dealership’s reputation, your team’s careers, and the very existence of your business could be at stake.

Don’t gamble with potential fines or the threat of closure. Invest in comprehensive training for your sales team today. Equip them with the knowledge and skills they need to navigate this new rule. Remember, a well-trained team is your best defense. Act now, stay compliant, and drive your business forward with confidence.

The clock is ticking. The Federal Trade Commission’s (FTC) issued final rule for “Combating Auto Retail Scams Trade Regulation Rule” aka CARS Rule located in 16 CFR 463. The rule itself is 372 pages of dense regulations written by lawyers at the Federal Trade Commission. These are rules written by lawyers in a manner and fashion that only lawyers can comprehend. They are dry, they are dull. You should not expect a car salesperson to read, digest, understand, and apply these complex rules without direct education presented in a way that is sure to keep your salespeople engaged and interested so they know what the rules require, what they allow, and what is now forbidden. You can read the full rule in the Federal Register by clicking the link below.

Federal Register Document

Don’t Get Caught Off Guard: FTC Enforcement Is Real

The FTC has a history of cracking down on dealerships that fail to comply with regulations. In the past five years alone, numerous dealerships have faced severe consequences, including:

  1. $4.5 Million Settlement: A national dealership chain paid a hefty fine for failing to implement adequate Anti-Money Laundering (AML) programs.
  2. $2.3 Million Settlement: A group of dealerships faced penalties for violating the FTC’s Used Car Rule, including deceptive advertising and unfair sales practices.
  3. $1.5 Million Settlement: A dealership was fined for violating the FTC’s Red Flags Rule, which requires businesses to have a program for detecting and preventing identity theft.
  4. $1 Million Settlement: A dealership was penalized for failing to disclose important information about vehicle histories to consumers.
  5. Dealership Closure: In some cases, dealerships have been forced to close their doors due to repeated or egregious violations of FTC regulations.

Protect Your Dealership: Expert-Led CARS Rule Training

Don’t let your dealership become another statistic. Our intensive, in-person training sessions, specifically designed for Mid-Atlantic dealerships, will equip you with the knowledge and tools to navigate the complexities of the new CARS Rule.

What You’ll Gain:

  • In-depth understanding: Learn the intricacies of the CARS Rule and its implications for your dealership’s operations.
  • Practical guidance: Receive actionable strategies for implementing AML compliance programs and procedures.
  • Expert insights: Benefit from the expertise of industry veterans who have a deep understanding of FTC regulations.
  • Interactive learning: Engage in dynamic discussions, ask questions, and network with fellow professionals.
  • Peace of mind: Ensure your dealership is fully compliant with the CARS Rule, avoiding costly fines and reputational damage.

The Federal Trade Commission’s (FTC) new Cars Rule, officially known as the Combating Auto Retail Scams Trade Regulation Rule (16 CFR Part 463), aims to protect consumers from deceptive practices in the auto sales industry. The rule, which took effect on January 27, 2024, imposes stricter regulations on dealerships’ advertising and sales practices.

The areas where dealerships face the biggest risks for fines and punishment due to potential violations include:

  1. Misleading Advertising: The Cars Rule prohibits dealerships from making false or misleading claims in their advertising, including online ads, social media posts, and in-store promotions. This includes misrepresenting the price, condition, or financing terms of a vehicle.
  2. Payment Packing: The rule explicitly forbids dealerships from adding optional products or services to a sale without the consumer’s express informed consent. This practice, known as payment packing, often results in consumers paying more than they agreed to.
  3. Yo-Yo Financing Scams: The rule targets yo-yo financing scams, where dealerships lure consumers with attractive financing offers that are later revoked, forcing them into less favorable terms. Dealerships must now obtain a consumer’s written intent to buy a vehicle before proceeding with financing.
  4. Failure to Disclose Key Information: The Cars Rule mandates that dealerships disclose key information to consumers before they sign any documents, including the total sale price, the terms of any financing agreement, and any add-on products or services.
  5. Bait-and-Switch Tactics: The rule prohibits bait-and-switch tactics, where dealerships advertise a vehicle at a low price to attract customers, then try to sell them a different, more expensive vehicle.

Violating the Cars Rule can result in significant fines and penalties for dealerships. The FTC has the authority to impose civil penalties of up to $50,120 per violation, and dealerships may also face consumer lawsuits and reputational damage.

It’s important to note that the FTC has published a compliance guide to help dealerships understand and comply with the Cars Rule. By carefully reviewing the rule and following the guidance, dealerships can minimize their risk of violations and protect themselves from costly fines and penalties.

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Don’t Wait! The Deadline Is Approaching.

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