California Passes CARS Act to Stop Shady Car Dealer Scams and Protect Buyers

SACRAMENTO, CALIFORNIA – A sweeping new consumer protection law signed by Governor Gavin Newsom aims to bring long-awaited reform to California’s used car market by cracking down on predatory dealership practices and ensuring greater transparency for buyers.

The legislation, known as the California Combating Auto Retail Scams (CARS) Act, targets misleading add-ons, hidden fees, and unfair contracts that have long frustrated used car shoppers across the state.

New Rules Target “Valueless” Add-Ons

The CARS Act prohibits dealerships from selling unnecessary or deceptive extras — referred to as “valueless add-ons.” These include:

• Oil-change packages for electric vehicles
• Catalytic converter etching on cars that don’t have converters
• Any service or warranty that provides no real benefit to the buyer

The law broadly bans “products or services that do not provide coverage for the vehicle, the consumer, or the transaction.”

“This law makes California one of the strongest states in the nation for auto-buying protection,” a spokesperson for the Governor’s Office said. “It closes loopholes that allowed dealerships to tack on useless products to inflate prices.”

Three-Day Return Policy for Used Cars

Beginning October 1, 2026, consumers purchasing used cars priced at $50,000 or less will gain the right to cancel the sale within three days—as long as the vehicle hasn’t been driven more than 400 miles or damaged.

Dealers can still charge a restocking fee of up to 1.5% of the sale price (capped at $600) and may add $1 per mile if the car exceeds 250 miles during the trial period.

While limited, the law gives buyers a crucial “cooling-off” window—a major victory for consumers who often feel pressured into quick purchases.

“This will save people from buyer’s remorse and financial traps,” said California Attorney General Rob Bonta, who supported the measure. “It’s about giving people a fair chance to rethink before they’re locked into a bad deal.”

Transparency and Accountability Measures

The CARS Act also strengthens dealer accountability through clearer disclosure and stricter record-keeping requirements:

• Pricing and financing must be transparent, with all costs clearly disclosed up front.
• Misleading advertising and “bait-and-switch” financing offers are prohibited.
• Dealerships must keep two years of sales records for inspection to ensure compliance.

Violations of the law could result in hefty fines and license suspension, depending on the severity of the infraction.

Consumer Impact

Experts say the new law will significantly reduce common dealership scams, especially for low-income buyers who are often targeted with junk fees or high-interest financing traps.

However, some auto dealer associations have voiced concern that the regulations could increase compliance costs, potentially impacting smaller used-car businesses.

Still, supporters argue the benefits to consumers far outweigh the inconvenience.

“For too long, California drivers have paid for useless add-ons and deceptive sales tactics,” said Senator Bill Dodd (D-Napa), who sponsored the bill. “The CARS Act restores fairness and trust to one of the most significant purchases families make.”

The law takes effect in phases through 2026, giving dealerships time to adjust their systems and train employees on new compliance requirements.

For full details or to file a complaint about unfair car sales practices, visit www.dmv.ca.gov.

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