COMPLIANCE / CARBIDE INSIGHTS

The FTC's CARS Rule is dead. The state disclosure laws it was modeled on are not

SHORT ANSWER

FTC CARS Rule Withdrawn: State Dealer Ad Disclosure Laws

The FTC's CARS Rule (Combating Auto Retail Scams Rule) was vacated by the Fifth Circuit Court of Appeals in January 2025 on procedural grounds, the FTC did not appeal, and the rule was formally withdrawn from the Federal Register effective February 2026. As of this writing it has not been re-proposed. That is current instead of speculative. A dealership operating on the assumption that the CARS Rule either applies now or is coming back soon is working from stale information. What has not changed is that standard FTC Act Section 5 unfair-and-deceptive-practices authority still applies to dealership advertising, and that several states have their own, independently enacted advertising and add-on fee disclosure laws that were never tied to the CARS Rule's fate at all. A dealership's actual exposure runs through federal general-purpose authority plus whichever state-specific rules apply in its own market, not through a federal rule that no longer exists.

Updated September 13, 2026

#What happened to the FTC's CARS Rule, in order

The FTC finalized the CARS Rule in late 2023, targeting deceptive advertising practices in auto retail, including bait-and-switch pricing and undisclosed add-on fees. A trade association challenge in the Fifth Circuit resulted in the rule being vacated in January 2025 on procedural grounds, specifically that the FTC had skipped a required preliminary rulemaking step.

The FTC did not appeal. That decision stands. The rule was formally withdrawn from the Federal Register effective February 2026, and as of the most recent public reporting available, it has not been re-proposed through the proper procedural steps.

FIGURE

Finalised in late 2023, vacated in January 2025, not appealed, withdrawn effective February 2026.

TABLE

The CARS Rule, start to finish

Four dates. A compliance plan built around any assumption other than 'withdrawn rather than reinstated' is out of date.

Date	Event
Late 2023	FTC finalizes the CARS Rule, targeting bait-and-switch pricing and undisclosed add-on fees
January 2025	Fifth Circuit vacates the rule on procedural grounds (FTC skipped a required rulemaking step)
2025	FTC does not appeal the decision
February 2026	Rule formally withdrawn from the Federal Register
As of this writing	Not re-proposed through the required procedural steps

Compiled 2026-09-13 from the Federal Register withdrawal notice and public reporting on the Fifth Circuit decision; not legal advice.

#What the FTC's CARS Rule withdrawal did not erase

The FTC retains its general authority under Section 5 of the FTC Act to pursue unfair or deceptive advertising practices, which is the same authority it used before the CARS Rule existed. A dealership's advertising can still draw federal scrutiny under that general standard, just not under the CARS Rule's specific, more detailed provisions.

Several states enacted their own dealer advertising and fee-disclosure requirements independently of the CARS Rule, covering similar ground (clear pricing, disclosed add-on fees, no bait-and-switch tactics) as a matter of state consumer-protection or dealer-licensing law. Those requirements were never contingent on the federal rule surviving and remain fully in force in the states that have them.

The practical result is that a dealership's actual compliance obligation runs through whichever state it operates in, plus the general federal standard, rather than through a single detailed national rule. That is a materially different compliance picture than either 'the CARS Rule applies' or 'there are no rules now,' and both of those simpler versions are wrong.

FIGURE

The general federal standard and the state requirements were never part of the rule, so both remain.

The broader set of pricing and disclosure questions this connects to is covered on the car dealer advertising hub.

Questions.

Is the CARS Rule still in effect?

No. It is dead. It was vacated by the Fifth Circuit in January 2025 and formally withdrawn from federal law effective February 2026. It has not been re-proposed as of this writing.

Does that mean dealership advertising is unregulated now?

No, far from it. General FTC Act Section 5 authority over unfair and deceptive practices still applies, and many states have their own, independently enacted advertising and fee-disclosure laws that were never tied to the CARS Rule.

Do we still need to disclose add-on fees clearly?

Probably, yes. That depends on your state's specific requirements, which vary and are worth confirming with your attorney rather than assuming either that a dead federal rule still applies or that no disclosure obligation exists at all.

Could the FTC re-propose the rule?

Possibly. It is procedurally possible, but as of this writing it has not been re-proposed. A compliance plan built around an assumption of the rule returning on a specific timeline would be speculative.

Where do our actual obligations come from right now?

Two separate layers instead of one. General FTC Act Section 5 authority at the federal level, plus whichever state-specific dealer advertising and disclosure laws apply in your operating state. That combination, not the CARS Rule, is the current picture.

Should we update advertising language that was written to comply with the CARS Rule specifically?

Probably worth a review. Worth reviewing with your attorney either way: state law may already require similar or different disclosures, so language written narrowly around the now-withdrawn federal rule may need adjustment regardless of the rule's status.

Does 'add-on' still mean anything specific now that the rule is gone?

Not as a single, uniform federal definition. The CARS Rule had its own definition of a covered add-on product; without it, what counts as an add-on requiring disclosure is set by whichever state law applies, and those definitions are not identical to each other.

A competitor's ad references the CARS Rule. Does that create a problem for us?

Not directly. It says more about their own advertising review process than about your obligations. Referencing a withdrawn federal rule as if it were still binding is its own accuracy question for whoever wrote that ad, separate from what your own store needs to disclose.

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