Federal Court Vacates FTC Vehicle Shopping Rule
January 30, 2025
Monday, January 27, 2025, the Federal Court of Appeals for the Fifth Circuit issued an order vacating the Federal Trade Commission (FTC) enacted “Vehicle Shopping Rule” also known as the CARS Rule (Combating Auto Retail Scams Trade Regulation Rule), holdings that the FTC failed to follow its own rule-making process in its creation. The decision was a result of a petition filed by the Nation Automobile Dealers Association (NADA) and the Texas Automobile Dealers Association (TADA), challenging the procedures followed to enact the rule and other aspects of the rule.
Just finalized on January 4, 2025, the CARS Rule purported to target unlawful business practices such as specific misrepresentations, bait-and-switch schemes and so-called “junk fees”. However, the practical result of the CARS Rule was the creation of numerous regulatory hurdles that would have added cost, paperwork, time and complexity to the car shopping experience for consumers and dealers by the imposition of new advertising rules, complex price offering procedures, record retention requirements and disclosure obligations.
NADA President Mike Stanton called the decision a "victory for the rule of law and a great outcome for consumers."
As a result of the Fifth Circuit’s decision, the CARS Rule has been vacated and sent back to the FTC. President Trump recently appointed Andrew Ferguson as the new Chairman of the FTC, replacing the outgoing Lina Khan. The new FTC chairman will now decide whether to renew attempts to enact the CARS Rule or to abandon those efforts due to a new agenda and regulatory environment.