What Is the California CARS Act?

The California Combating Auto Retail Scams (CARS) Act is a new state law that takes effect October 1, 2026. It imposes strict requirements on how dealers' price, advertise, and disclose information about vehicles. The law requires dealers to display a “Total Price” that includes all mandatory fees and dealer charges, separately show government taxes and fees, clearly disclose that add-ons are optional, and maintain detailed records for two years.

Why Does It Matter?

If you’re a California dealer, compliance is mandatory. Non-compliance creates legal liability and operational risk. Even if you operate outside California, similar transparency expectations are spreading—the FTC is already sending enforcement warning letters to dealers nationwide about pricing practices.

Why Do Dealers Nationwide Need to Pay Attention?

The FTC sent warning letters to over 90 U.S. dealers in 2026, clarifying its enforcement position under existing federal law. These aren’t new rules (the FTC’s attempt at a federal CARS Rule failed), but they signal aggressive enforcement of pricing transparency practices like hiding required fees, misusing rebates without clear eligibility criteria, conditioning prices on undisclosed financing, and advertising unavailable vehicles.

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Understanding CARS Act and FTC Pricing Compliance

While the CARS Act applies only to California and the FTC’s position is an enforcement warning rather than legislation, both converge on one principle: advertised vehicle prices must be truthful, transparent, and available.

The key difference? The CARS Act adds specific transaction, disclosure, and recordkeeping requirements that go beyond what the FTC targets. But the overlap is clear: all-in vehicle pricing that actually reflects what customers will pay.

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What the CARS Act Requires

Pricing transparency is the cornerstone. Dealers must clearly display a vehicle’s Total Price in advertising and first written responses—and actually make the vehicle available at that price. The Total Price must include the actual selling price and required dealer charges but exclude taxes and government fees, which should be shown separately. Conditional rebates, optional add-ons, finance charges, and customer-specific amounts cannot reduce the Total Price.

Payment quotes for specific vehicles must show the total amount a customer will pay, including any assumed down payments or trade-ins. Comparisons of different monthly payments must include a lower-payment warning.

Add-on disclosures require that if an add-on is discussed in writing, dealers must disclose at least once that it is not required, and the consumer can purchase or lease without it. Dealers also cannot misstate an add-on or charge for one that provides no benefit.

California’s pre-contract disclosure law (Civil Code § 2982.2) requires a separate buyer-signed form before executing conditional sale contracts involving service contracts, insurance, GAP coverage, or cancellation options.

Used vehicles require additional disclosures and honor California’s three-day cancellation right for qualifying transactions.

Finally, dealers must retain all covered records for at least two years.

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How Tekion Is Supporting Compliance

Tekion is updating platform-controlled workflows across pricing, payments, add-ons, pre-contract disclosures, forms, and recordkeeping to align with these requirements.

The updates include a consistent Total Price across all pricing surfaces; required totals and assumptions in written payment quotes with appropriate warnings; written optional add-on disclosures with affirmative consumer selection; and pre-contract forms with buyer signatures where required. The platform will also support California used-vehicle disclosures and contract notices and retain covered records for 2 years.

Tekion’s approach uses one transparent Total Price that includes required dealer charges (such as document or e-filing fees) while keeping true government charges and customer-specific amounts separate.

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CARS Act Compliance Checklist for Dealers

While Tekion’s platform updates support compliance, dealers remain fully responsible for their own compliance. This includes:

• Pricing accuracy and inventory management

• Rebate and financing conditions and eligibility

• Correct classification and display of fees, installed items, optional products, and listed items

• Staff training and adherence to new processes

• Advertising outside Tekion

• Obtaining required pre-contract signatures before contracts are executed

• Managing cancellations, refunds, trade-ins, and provider payments

• Maintaining off-platform records

To prepare now: Inventory all required fees, installed items, packages, rebates, and optional products. Confirm that each is classified correctly in your system. Review all advertising for compliance. Train staff before October 1, 2026. And consult with qualified legal counsel about your specific obligations.

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Frequently Asked Questions

How does the cooling-off period work for car purchases in California?

California's CARS Act gives used-vehicle buyers a three-day right to cancel qualifying transactions. Dealers must provide the cancellation disclosure before the contract is executed and honor the refund and trade-in process if the buyer exercises this right within three days.

What should I do if I receive an FTC car dealership complaint or an enforcement letter?

Contact qualified legal counsel immediately and audit your advertising, pricing practices, and dealership management system configuration to ensure all required fees are included in your Total Price and payment quotes show accurate totals. The FTC is actively enforcing pricing transparency rules now under existing law, so swift action is critical.

Where can I find legal resources about auto regulations and acts like the CARS Act?

Key resources include the California New Car Dealers Association (CNCDA), your state's Attorney General's office, FTC.gov, and qualified legal counsel. Your dealership management system provider can support compliance through platform controls, but legal guidance remains essential for your specific obligations.

Why is transparency in dealer pricing and financing so important right now?

Regulators expect dealers to disclose all mandatory fees upfront and clearly mark optional add-ons, as signaled by both the CARS Act and FTC enforcement activity. Transparency reduces disputes, builds consumer trust, and strengthens your auto dealer compliance posture across the automotive industry.

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Important: This post provides general information about Tekion’s product approach and does not constitute legal advice. Dealers should consult qualified legal counsel regarding their specific obligations and the facts of the transaction.

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