Yesterday, in a 2-1 vote, the U.S. Circuit Court of Appeals for the Fifth Circuit granted a petition filed by NADA and the Texas Automobile Dealers Association (TADA) to vacate the FTC Vehicle Shopping Rule (“CARS” Rule) for violating the FTC’s own procedural requirements for issuing trade regulation rules. More specifically, the court held that the FTC skipped an essential step to inform the rulemaking process requiring it to begin with an Advanced Notice of Proposed Rulemaking. As a consequence, the FTC Vehicle Shopping Rule has no force or effect.
The FTC’s Vehicle Shopping Rule would have added massive amounts of time, complexity, paperwork and cost to the car-buying and car-shopping experience for virtually every customer. Thanks to the success of this legal challenge, dealers can focus on creating the best-possible customer experience and reducing transaction times, wherever possible.
Dealers are reminded that many provisions that were in the Vehicle Shopping rule have been subject to FTC enforcement under Section 5, and dealers should continue to ensure compliance with all existing rules related to advertising, sales and financing.
In addition, New Jersey law prohibits many of the things that the Cars Rule prohibits.
If dealers have questions about this topic or any other questions, please contact Greyson P. Hannigan, NJ CAR’s Senior VP-Legal & Regulatory Affairs at (609) 883-5056 – ext. 340 or via email at [email protected].