“Selling cars to the general public has been reduced to a contest of which dealership can effectively lie the best.”
“I have called no less than 15 dealerships in southern California and not a single dealership has an accurate price listed online. Not a single one. It is usually $10-$15K more than is advertised. Some won’t even give the price on the phone. They say they will only discuss price in person. We are a military family that sacrifices a lot every day. Please help us protect our hard earned money.”
“I worked as a vehicle sales person for a number of years. I left the industry due to the corrupt practices of the dealerships that I worked for. I saw people cheated, treated poorly, and taken advantage of many times over. The system in its current design MUST change, so that it provides more transparent, equitable and fair business practices….”
– Steven Adler, Vista, California
There is almost no other financial transaction where society has tolerated the antics that have become ubiquitous in car buying: forcing consumers to jump through hoops to learn the true price of a vehicle, subjecting them to aggressive pitches for worthless add-ons, burying hidden fees and kickbacks, and rushing electronic signatures on endless pages of fine print. The experience can be so awful for consumers that it has been compared—by an army veteran—to going into battle, requiring “intelligence prep” and “countermeasures” to avoid getting ripped off.
This is not by accident—it is by design.
Unscrupulous dealers carefully engineer the process of buying a car to wear consumers down at every step while siphoning their money away through inflated prices, hidden fees, and exploitative markups. The end result is wasted time, higher costs, and more auto loan debt—$1.66 trillion and growing—than at any point in history.
Last week, California struck back.
Gavin Newsom signed SB 766, the CARS Act. Introduced and championed by Senator Ben Allen, CARS takes a major step toward restoring some dignity to Californians who want reliable, affordable cars without getting the runaround from dishonest dealers. The new law is straightforward: car dealers have to be upfront and honest about the total price of the car, they cannot sell worthless add-ons, and they have to give used car buyers a three-day cooling off period post-purchase—helping to ensure that dealers can’t get away with selling consumers a lemon. These commonsense reforms are conservatively estimated to save California car buyers $234 million and 8.5 million hours each year.
This victory for Californians is also a victory for ordinary Americans over powerful lobbyists.
Few industries wield that power like car dealers.
Fifteen years ago, in the wake of the financial crisis, Congress created a new agency devoted to protecting consumers in the financial marketplace—the Consumer Financial Protection Bureau (CFPB). But after an intense lobbying campaign, auto dealers won themselves a special carve-out, despite the obvious fact that they arrange financing for car buyers. Oversight of their practices went instead to the Federal Trade Commission (FTC).
It was a savvy play. Despite years of FTC reports and lawsuits against unscrupulous dealers, the agency sat on its rulemaking authority for more than a decade, across both Democratic and Republican administrations—resulting in a game of whack-a-mole that barely made a dent in widespread illegal conduct. That did not begin to change until 2020, when Commissioners Rohit Chopra and Rebecca Kelly Slaughter urged the agency to finally use its dormant powers.
But it wasn’t until Lina Khan became Chair that this proposal actually became a reality. In 2023, the FTC finalized the Combating Auto Retail Scams (CARS) Rule to protect car buyers across the United States and save them $3.4 billion and 72 million hours each year. At the behest of auto dealers, a divided Fifth Circuit struck it down on procedural grounds in 2025—and the Trump Administration has since abandoned it.
Into that breach stepped California Senator Ben Allen, introducing his own bill modeled on the CARS Rule but even stronger, with a first-of-its-kind cooling-off period for used-car buyers. It is thanks to Senator Allen and the work of dedicated consumer advocates that 40 million Californians will soon enjoy the strongest car-buying protections in the nation.
For everyone concerned about Americans buried in debt and the government’s ability to respond effectively, this history offers a few clear lessons and maybe even a bit of optimism.
First, the FTC’s decade-long failure to act on its congressional authority reflects a troubling pattern: agencies too often leave powerful tools on the shelf. Even agencies seen as pro-consumer need to hear from advocates urging them to use the powers Congress gave them to stand up for consumers. And these agencies should be led by bold leaders willing to take on entrenched special interests to protect the public interest.
Second, boldness pays off. Despite the political risk of taking on car dealers, the FTC acknowledged the very real problems for car buyers and honest dealers and invested years of work in the CARS Rule. Although the rule was struck down by two Fifth Circuit judges, the FTC’s effort was not in vain. According to Senator Allen himself, the Rule is what inspired California’s CARS Act. Without the courage of FTC Commissioners and the outstanding work of FTC staff, this victory would not have been possible.
That brings us to the final lesson.
Even as the Trump Administration turns its back on consumers, states are stepping up.
In the last two years alone, six states have passed junk fee bans modeled on the FTC’s, with more states and cities looking to follow suit. California, New York, Maine, and Massachusetts have passed FTC-inspired Click-to-Cancel rules. Fifteen states and counting have limited the use of medical debt on credit reports, following the CFPB’s lead. In short, today we are seeing more momentum to strengthen and enforce state consumer protection laws than at any time in decades. That gives us reason to hope that last week’s victory is just the beginning.
This blog was also published on In Debt, a Protect Borrowers Substack.