Not all scams are perpetrated by criminal gangs in Nigeria.  Sometimes the scammers are not only home-grown, but may even be companies that you consider to be legitimate, such as car dealerships.  Recognizing that many people have gotten scammed by “legitimate” car dealers using deceptive tactics to sell cars, the FTC, in 2022 first proposed a rule to protect car buyers from common scams done by “legitimate” car dealers.   After public comment and amendments to the rule, the Combating Auto Retail Scams (CARS) rule was finalized late in 2023 and will take effect on July 30, 2024.

The CARS rule (such a clever acronym)is intended to prevent bait and switch tactics and hidden junk fees charged by car dealers when selling cars.  It has been estimated that the new rule will save consumers more than 3.4 billion dollars each year.  The CARS rule prohibits car dealers from using bait-and-switch claims to lure car buyers to their dealership, including representations about the cost of the car or the terms of financing, the availability of discounts and rebates as well as the actual availability of the car being advertised.  The CARS rule also prohibits junk fees that are often hidden in lengthy and legalese filled contracts car buyers sign when purchasing a car.  Some of these junk fees are charges for warranties that duplicate the manufacturer’s warranty that the consumer already gets at no extra cost or charges for unnecessary oil changes on electric cars.

TIPS

One of the first steps in determining whether to buy a car from a particular dealer is to ask for and receive an “out-the-door” price of the car at the very start of the car buying process.  An “out-the-door price is their total purchase price of the car including taxes and fees.  Having this price in writing will allow you to compare their price to that of other dealers more directly.  It also is a way to see if any of those extra junk fees have been put into the sales price of the car.

Remember, the CARS rule does not go into effect until July 30, 2024 so if you are buying a car before then or even after that date make sure you understand all of the terms of the sale.  Review each section of the contract in detail before you sign any purchase or financing documents.  Don’t be rushed. Ask the dealer to slow down, especially if they’re moving quickly and using an electronic process on an iPad, tablet, or other device to show you the agreement. Tell them you want to see the terms clearly before you agree, especially all the fees and charges in the deal. That way, you know the dealer didn’t include charges for any extra items you don’t want. Carefully compare what you are seeing at signing to what the dealer sent you beforehand.

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