California Advances Car Dealer Fee Transparency Bill Reflecting Federal Efforts
California is advancing legislation that closely mirrors a previously proposed but unsuccessful federal rule aimed at limiting fees car dealers can add to vehicle sales. This bill, known as the Combating Auto Retail Scams (CARS) rule, would mandate full disclosure of vehicle prices including all fees except sales tax, require dealers to honor advertised prices, and clarify that add-on services like paint protection are optional. The proposal also aims to ban so-called 'junk fees,' which are charges for services that do not provide consumer benefits, such as nitrogen-filled tires. Additionally, it establishes a three-day return period for used vehicle purchases made through dealerships.
The bill has gained traction in the California legislature, passing the state Senate with a 27-9 vote and advancing through two Assembly committees. The California New Car Dealers Association (CNCDA), which initially opposed the bill, has shifted its stance to neutrality after negotiating language that the dealers find acceptable. This development signifies industry adaptation to regulatory changes impacting automotive retail practices.
If enacted, Governor Gavin Newsom is expected to sign the bill into law, marking a significant shift in consumer protection for car buyers in California, the state's car market being the largest in the U.S. The bill reflects regulatory efforts to increase transparency and fairness in auto retail transactions, which could influence policies beyond California given the state's market size and legislative influence.
The background context includes a stalled federal effort during the Biden administration that attempted to introduce similar protections nationwide. However, this federal initiative did not proceed under the subsequent administration due to legal and administrative obstacles. California's move appears to revive some of these regulatory intentions at a state level, addressing long-standing concerns over dealer fees and sale practices.
The legislation is positioned as a response to industry practices that have raised compliance and consumer protection issues, aligning with broader market trends towards increased regulatory oversight. Insurance professionals and automotive stakeholders should monitor the law’s implementation and its implications on dealership operations, fee structures, and consumer dispute mechanisms, particularly as the car market continues to evolve amid digital transformation and regulatory scrutiny.