On Oct. 1, the California Combating Auto Retail Scams (CARS) Act becomes operative, bringing significant changes to the way California dealers advertise, sell, finance and lease vehicles. By now, dealers have received considerable information about what the new law requires. Policies are being updated. Forms are changing. Sales and finance personnel are being trained. Dealerships are preparing for new requirements involving advertised prices, add-on products, customer communications, used-vehicle cancellation rights and record retention. But compliance is only part of the picture. Dealers should also consider the CARS Act from another perspective: How will these new requirements translate into future consumer litigation?

What Will a CARS Act Case Look Like Two Years From Now?

From a litigation perspective, new regulatory requirements should be viewed not only as compliance obligations, but also as potential sources of future claims. Today’s compliance requirement can become tomorrow’s allegation in a demand letter, lawsuit, document request or deposition. The CARS Act is unlikely to be an exception. Dealer advocacy successfully removed one of the most concerning provisions from the original legislation — an enhanced private right of action that would have made essentially every violation a deceptive practice under the Consumers Legal Remedies Act (CLRA). The enacted CARS Act contains no express private right of action. That is significant, but it does not mean that CARS Act issues will be excluded from litigation. Plaintiffs’ attorneys can be expected to pursue conduct allegedly violating the Act through existing statutes, including California’s Unfair Competition Law (UCL), False Advertising Law (FAL) and, where independently applicable, the CLRA.

“That Wasn’t the Price I Saw Online”

One area likely to receive considerable attention is the CARS Act’s new “Total Price” requirement. When a dealer advertises a specific vehicle, the advertised price generally must be the Total Price at which the dealer will sell that vehicle, subject to the exclusions permitted by law. From a litigation standpoint, the allegation practically writes itself: “The vehicle was advertised online for $32,995. When I got to the dealership, they told me it was actually $34,990 because it already had $1,995 in dealer-installed window tint, wheel locks and door edge guards.” That scenario illustrates why Total Price is likely to receive considerable attention from plaintiffs’ attorneys.

Preinstalled products are likely to be a particular area of risk. Dealers commonly install items such as wheel locks, window tint, upgraded wheels, bed liners, running boards, protection packages and other equipment before a vehicle is sold. The CARS Act does not prohibit dealers from selling vehicles with dealer-installed equipment. But if the equipment is installed before the vehicle is advertised or before the dealer’s first written price communication regarding the specific vehicle, its cost generally must be included in the Total Price.

The issue ultimately comes down to whether the advertised figure is a price at which the dealership was actually willing to sell that particular vehicle. Suppose a dealership advertises a vehicle for $42,000 but has already installed a $1,995 product on every vehicle of that model, and dealership personnel routinely tell customers that the product cannot be removed. In litigation, plaintiff’s counsel will likely focus on whether the customer could actually purchase that particular vehicle for the advertised $42,000 price, whether the product was already installed when the vehicle was advertised, whether its $1,995 cost was included in the advertised Total Price and whether customers genuinely had the option to decline the product. If the advertised vehicle could not actually be purchased for the advertised price, expect that advertisement to become Exhibit 1 to the complaint.

Whether customers genuinely had the option to decline the product could become particularly important. Federal regulators have already shown interest in high “penetration rates” for supposedly optional products. If virtually every customer purchases the same “optional” product, a plaintiff may use that pattern to argue that customers were not being given a meaningful choice. The strongest litigation file will be the one in which the advertisement, the physical configuration of the vehicle, the customer presentation and the sale contract all tell the same story.

“They Told Me the Add-On Was Required”

Optional products will remain another obvious area for litigation. Service contracts, GAP waivers, theft-deterrent devices and other add-ons already generate consumer claims involving familiar allegations: the customer was told the product was required by the lender, was led to believe the vehicle could not be purchased without it, expressly declined the product but was charged for it anyway, or did not understand that the product carried an additional charge.

The CARS Act requires written disclosures regarding optional add-ons and prohibits certain misrepresentations concerning their costs, benefits, limitations and other material terms. It also prohibits charging for an add-on that the customer would not benefit from. Some applications of that prohibition are straightforward. An oil-change product for an electric vehicle presents an obvious problem. So does catalytic-converter marking for a vehicle without a catalytic converter.

Other situations will be less obvious. That is where litigation tends to occur. Dealers should expect discovery not only about what the customer signed, but also about how the product was presented, whether the customer was eligible for its benefits, what the dealership’s penetration rate was and whether customers genuinely could decline it.

Advertising MSRP or “See Dealer for Details” Is Not Enough

Dealers also should be careful about relying on MSRP. Under the CARS Act, MSRP is not a substitute for the dealer’s Total Price for a specific vehicle. Suppose the manufacturer’s suggested retail price is $38,500, but the dealership has already installed $1,485 in required accessories. An advertisement that prominently states only “MSRP $38,500” does not disclose the dealer’s Total Price. The dealership may identify MSRP separately, but it must also provide the actual Total Price.

The same principle applies to familiar phrases such as “see dealer for details” or “call for price.” The CARS Act is designed to require the price itself to be communicated, not merely provide a starting point that the customer must visit the dealership to understand. This issue is particularly important because advertisements are no longer confined to a dealership’s own website. Vehicles appear on manufacturer sites, third-party platforms and syndicated listings. Dealers will need to know not merely what price they send to those platforms, but what customers actually see. In future litigation, a dealer may hear: “Our system sent the correct price.” Plaintiff’s counsel may respond: “That isn’t what your customer saw.”

The Document Processing Charge Presents a Different Problem

The document processing charge (DPC) illustrates how dealers sometimes must navigate overlapping state and federal requirements. Under California law, including the CARS Act, the DPC may be excluded from the vehicle’s advertised Total Price if the required disclosure language is used. The Federal Trade Commission (FTC), however, has taken a more aggressive position. In March 2026, the FTC sent warning letters to 97 dealer groups stating that advertised prices must include mandatory fees and charges and may exclude only required government charges. Because the DPC is a dealer-imposed charge rather than a government charge, CNCDA has advised that the more conservative approach is to include the DPC in the advertised price. That position differs from California law, which expressly permits the DPC to be separately disclosed.

From a litigation perspective, this is important for another reason. A plaintiff’s attorney challenging an advertisement may not limit the case to the four corners of the CARS Act. Federal advertising principles, the CLRA, the UCL and other theories may also enter the case. A technically defensible interpretation of one statute does not necessarily prevent litigation under another.

Rebates Can Still Be Advertised — But They Are Not the Total Price

The CARS Act does not prohibit dealers from separately advertising rebates or incentives, but a rebate may not be deducted in calculating the vehicle’s advertised Total Price. For example, assume a vehicle’s Total Price is $30,000, and a $2,000 factory rebate is available. The dealer may separately identify the $2,000 rebate and show a $28,000 “net cost,” assuming existing advertising requirements are satisfied. But the dealer’s Total Price remains $30,000.

Conditional rebates create additional risk. A rebate available only to military members, recent college graduates, first responders or another limited group cannot be used to reduce the vehicle’s advertised Total Price as though every customer qualifies. Although a dealer may separately advertise a net price reflecting the rebate, applicable qualifications and limitations must be properly disclosed.

From a litigation standpoint, the danger is obvious: “They advertised the vehicle for $28,000, but when I arrived, they told me that price was only available if I qualified for rebates that did not apply to me.” The more conditions necessary to obtain the number prominently displayed in an advertisement, the easier it becomes for a plaintiff to argue that the advertised number was never really the vehicle’s price.

The First Email or Text Can Matter Too

The Total Price rules do not stop with formal advertisements. The CARS Act also requires disclosure of the Total Price in the dealer’s first written communication with a specific consumer that references either a specific vehicle or a monetary amount or financing term for a specific vehicle. That means an internet lead response, email or text message can become important evidence. Imagine a customer asking: “What’s your best price on the blue Tahoe?” A salesperson responds from a personal cell phone: “We can do $61,500.” If that figure does not meet the Total Price requirements, the issue may have arisen before the customer entered the showroom.

This also creates a record-retention issue. The Act requires dealers to retain first written communications for at least two years, even where the consumer never ultimately purchases or leases a vehicle. Dealers should therefore think carefully about employees communicating with customers outside systems that the dealership can preserve and retrieve. The salesperson’s personal text message may seem convenient today. Two years from now, it may be the missing piece of evidence everyone wishes the dealership had retained.

The Three-Day Right to Cancel Will Create Entirely New Fact Patterns

Beginning Oct. 1, qualifying used vehicles priced at $50,000 or less generally will carry a three-day right to cancel, subject to specific statutory conditions. This will create disputes that California dealers largely have not had to litigate before. Imagine a customer returning on the third day, saying, “I’m canceling the deal.” The dealership believes the customer has driven 425 miles, while the customer contends that the vehicle already had 40 of those miles at delivery, making the mileage recorded at delivery critical. Other disputes may arise over whether the customer attempted to cancel within the three-day period, whether the vehicle was returned with new damage, whether all items provided with the vehicle were returned or how the customer’s trade-in was handled. Even the mechanics of processing the cancellation can create problems. For example, if dealership personnel incorrectly require the customer to pay the restocking fee separately before processing the cancellation, rather than deducting the fee from the refund as generally required by the statute. These are not theoretical compliance questions; they are future factual disputes.

The best defense will be contemporaneous documentation: mileage at delivery, the exact cancellation deadline provided to the customer, mileage upon attempted return, photographs of the vehicle’s condition, documentation concerning the trade-in and a written record explaining any legitimate basis for declining the cancellation.

The Records May Become the Dealer’s Best Defense

The CARS Act requires dealers to create and retain for two years records sufficient to demonstrate compliance. Those records include information concerning Total Price advertising, signed transaction documents and written customer communications, add-on products, cancellation requests and refunds, and certain customer complaints and inquiries.

From a litigation perspective, this may be one of the most valuable parts of the Act. A lawsuit filed in 2028 concerning a 2026 transaction may involve a salesperson who has left the dealership and a finance manager who has handled hundreds of transactions since then. The customer may remember the alleged conversation perfectly. The dealership employees may remember nothing. But the records can establish what was advertised, what products were installed, what disclosures were provided, what the customer purchased and what happened if the customer later attempted to cancel. Those records effectively become witnesses.

No Express Private Right of Action Does Not Mean No Lawsuits

Dealer advocacy substantially improved the CARS Act prior to its enactment. Importantly, the final statute does not contain the enhanced private right of action included in earlier versions. However, existing California law already provides plaintiffs’ attorneys with potential avenues to challenge conduct addressed by the Act. One particularly important avenue is California’s 2024 “hidden fees” law, SB 478. Civil Code § 1770(a)(29) amended the CLRA to prohibit advertising, displaying or offering a price for a good or service that does not include all mandatory fees or charges, subject to specified exceptions. Automobile dealers obtained an exemption from that provision, but the exemption applies only when the dealer’s advertisement complies with Vehicle Code § 11713.1(b). See Vehicle Code § 11713.27.

California law permits dealers to separately disclose certain specified charges, as reflected in the familiar Vehicle Code § 11713.1(c)(2) advertising disclosure: “Plus government fees and taxes, any finance charges, any dealer document processing charge, any electronic filing charge, and any emission testing charge.” As previously discussed, although California law permits the DPC to be disclosed separately, the more conservative practice, in light of the FTC’s recent position, is to include the DPC in the advertised price.

A required dealer-added product, however, is not one of the charges that California law permits a dealer to exclude from the advertised price. That creates an important overlap with the CARS Act’s Total Price requirement. Consider a dealer that advertises a vehicle for $30,000 but has already installed $3,000 in dealer-added products that the customer must purchase. Failing to include those products in the advertised price may implicate not only the CARS Act’s Total Price requirement, but also existing Vehicle Code advertising requirements and the CLRA’s prohibition against hidden mandatory fees. As a result, conduct that violates the CARS Act may also provide the basis for a private consumer claim under existing law, even though the CARS Act itself contains no express private right of action. That is why the Total Price issue may become one of the Act’s greatest litigation risks.

Train for the Deposition, Not Just Oct. 1

Much of the work currently occurring at dealerships is understandably directed toward Oct. 1, 2026. Forms need to be ready. Websites need to be updated. Systems need to work.

But consider another date: Oct. 1, 2028. Imagine a salesperson, an internet manager or a finance manager sitting for a deposition. Plaintiff’s counsel may ask whether the customer could actually purchase the vehicle for the advertised price, why a preinstalled product was not included in that price, whether the document processing charge was included, and what rebates or incentives were necessary to obtain the price displayed online. The questioning may then turn to whether the customer was told the product was optional, whether the customer could genuinely decline it, and, if the customer attempted to exercise the three-day cancellation right, why the request was rejected. And when counsel asks for the salesperson’s first email or text message to the customer, will the dealership still have it? The strongest answers will come from dealerships whose practices and records consistently answer those questions.

Today’s Compliance Issue Is Tomorrow’s Exhibit

The CARS Act will create substantial operational changes for California dealers. Inevitably, there will be a learning curve. Plaintiffs’ attorneys will be watching that learning curve. Of all the new requirements, Total Price may deserve the greatest attention. A dealer should be able to answer a simple question about every specific vehicle it advertises: Can any customer actually buy this vehicle at the price we are advertising without being required to purchase anything not already included in that price? If the answer is no, there is a problem worth fixing before Oct. 1.

Dealers should likewise pay careful attention to optional products, rebate advertising, written customer communications, cancellation procedures and the records necessary to prove compliance. These are compliance issues today. Beginning Oct. 1, they also become litigation issues. When the CARS Act reaches the courtroom, it will not be enough to say the dealership complied. The question will be: “Can you prove it?” Two years after the transaction, when memories have faded and employees may have moved on, the dealership’s records will provide the best answer.