When a federal appeals court struck down the FTC's CARS Rule earlier in 2025, it looked like a win for the auto dealer lobby. The rule would have cracked down on junk fees and deceptive pricing practices at dealerships nationwide — but it never went into effect.
California didn't wait for Washington to fix it.
On October 7, 2025, Governor Gavin Newsom signed the California CARS Act into law, making the state the first in the nation to pass its own comprehensive car buyer protection legislation. It's the most sweeping reform to California auto dealer regulations in decades, and it addresses the specific tactics that have made car buying one of the most consistently dreaded consumer experiences in the country.
What the Law Actually Does
Bans junk fees. Under the new law, dealers cannot charge fees that aren't disclosed in the advertised price of the vehicle. This targets the parade of add-ons that show up in the finance office: documentation fees, dealer prep fees, "market adjustment" charges, and other line items that buyers discover only after they've emotionally committed to a purchase. If the price in the ad says $28,000, the dealer can't hand you a contract with $3,200 in unmentioned extras.
Requires total price disclosure upfront. Dealers must present the all-in price — including all mandatory fees, taxes, and government charges — before beginning any negotiation. The days of "let's talk about monthly payments" as a way to obscure the actual cost of a vehicle are significantly curtailed under this law.
Prohibits mandatory add-ons. Paint protection. Fabric sealer. Nitrogen-filled tires. GPS tracking subscriptions. Dealers can still offer these products — but they cannot make them mandatory conditions of purchase. This has been one of the most common complaints filed with California's Department of Motor Vehicles: buyers who wanted to buy a car but were told certain add-ons were "already installed" or "required for financing."
3-day right to cancel used car purchases under $50,000. This is the provision that will have the biggest practical impact for the most people. California buyers who purchase a used vehicle priced under $50,000 will have three business days to cancel the transaction and receive a full refund. The right to cancel kicks in from the contract date, not the delivery date. There are conditions — the vehicle must be returned in the same condition, and there may be a modest cancellation fee — but the fundamental right exists.
Why This Matters Right Now
The FTC's CARS Rule was struck down by the 5th Circuit Court of Appeals in early 2025, which ruled that the FTC hadn't followed proper rulemaking procedures. The substance of the rule — protecting consumers from hidden fees and misleading advertising — was never really challenged. It was a procedural kill shot by an industry that didn't want the rule to exist.
With federal protection gone, state-level action was always the alternative path. California, which has the largest auto market in the country and a history of setting consumer protection standards that other states eventually follow, is now the leading example.
Advocates expect the 3-day right to cancel and the junk fee ban to face immediate legal challenges from dealer associations. But unlike the federal rule, California's law was passed through the standard legislative process — which gives it a stronger procedural foundation.
What California Consumers Should Do
The law applies to purchases made after its effective date. If you're buying a used car in California:
- Ask for the all-in price in writing before you start negotiating. The law requires it, and having it in writing protects you.
- Document every add-on presented to you — when it was offered, whether it was described as optional or mandatory, and the price.
- Know your cancellation window. If you have buyer's remorse in the first three days on a used vehicle under $50K, you have options.
- File complaints quickly. The California DMV and the AG's office are the enforcement mechanisms. New laws only work if the enforcement pressure is real.
For a full breakdown of California auto consumer protections, visit our avoiding-scams guide.