23 Jun, 2024

FTC’s CARS Rule: Why a new rule to combat auto retail scams is great news for consumers and honest dealers

In the drive toward Combating Aauto Retail Scams, the FTC’s just-announced CARS Rule is a big win for consumers, who lose billions of dollars in wasted time and money each year to illegal practices like bait-and-switch tactics and junk fees. It’s also a big win for honest car dealers who strive to apply established truth-in-car-buying principles at their dealerships and shouldn’t have to compete against dealers who don’t. Why is the CARS Rule such a game changer and what compliance guidance does the FTC have for industry members? Read on for more information.

The CARS Rule is the culmination of a years-long effort to ensure truth and transparency in the process of buying and leasing cars and trucks. The FTC published a proposed rule last year and received thousands of comments from dealers, consumer groups, and others. Based on what commenters had to say and the FTC’s law enforcement efforts to combat auto retail scams, the CARS Rule restates consumer protection established principles in clear language specific to the auto industry and includes new remedies if a car dealer engages in certain deceptive or unfair practices .

By stating clear rules of the road that apply

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Car Deals Are Easier to Find but Lenders Are Tightening Their Terms

New cars are more available this spring, and manufacturers have even begun offering deals to interested buyers.

But at the same time, lenders have been tightening the terms of car loans as they deal with a rising number of delinquencies. That has made it harder for some people to get affordable loans.

Access to auto loans for both new and used cars was generally worse in January than in December and down year over year, according to Dealertrack, a Cox Automotive service that tracks credit availability based on factors like loan approvals, terms and down payments. The impact was seen at banks, credit unions and dealerships.

“We are seeing credit access tighten in all channels,” said Sean Tucker, a senior editor at Kelley Blue Book, Cox’s car research and sales website.

Subprime borrowers in particular — consumers with the lowest credit scores — may face challenges finding financing, Mr. Tucker said. The share of subprime new-car loans has fallen to about 6 percent, roughly half what it was before the pandemic.

Borrowers with strong credit are especially attractive to lenders. The average credit score for new-car shoppers taking out a loan or lease rose to 743 at the end of

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