Eight months after a court decision forced the Federal Trade Commission to vacate its Combatting Auto Retail Scams rule, California lawmakers have passed a state law with many of the same requirements of dealers.
California’s two chambers overwhelmingly passed the Senate Bill 766, the CARS Act, and it will head to Gov. Gavin Newsom’s desk for a signature with an effective date of Oct. 1, 2026.
The CARS Act makes it a violation for dealers to make misrepresentations about vehicle pricing, financing terms and the benefits of add-ons. It requires dealers to make clear and conspicuous disclosures, including the offering price, the total amount the consumer will pay, the required down payment and clarify that the purchase of any add-on is voluntary. It places a ban on “valueless” add-on products. It requires dealers to retain all records necessary to demonstrate compliance with the Act for two years.
The CARS Act also includes a three-day right to cancel period.
“So existing law grants used car purchasers the ability to return their car only if they pre-purchase the right to return it. This requirement ends up being a strong deterrent and many are unable to make the additional purchase when they’re buying a car,” said California Senator Benjamin Allen, the bill’s author, shortly before it was passed. “So as to give consumers time to review the purchase agreement carefully and fully inspect the car, this bill gives a three-day cooling-off period for consumers to return the car and get their money back.”
