The regulatory landscape facing California motor vehicle dealerships today is a high-stakes environment where the rules of the road are constantly shifting. For dealership professionals, navigating this terrain requires more than a basic understanding of sales; it demands a rigorous commitment to legal compliance with federal and state statutes, administrative regulations and evolving court decisions. The complexity of this environment is only increasing with the upcoming implementation of the California Combating Auto Retail Scams (CARS) Act, set to take effect on Oct. 1, 2026. Notably, while a Federal Trade Commission (FTC) rule of a similar name was recently vacated by a federal appeals court, the California CARS Act, although much less burdensome than the FTC rule, will soon impose new obligations on dealers. This article provides a brief summary of certain advertising requirements to help dealerships with advertising compliance. The Foundation: Sources and Standards of Law To stay ahead, dealerships must recognize that advertising law is not a single set of rules but a multifaceted body of legal standards. The primary backbone of this framework consists of federal and state statutes. However, these statutes are given specificity and detail through regulations issued by government agencies, such as the FTC and state agencies. These agencies do not just write rules; they provide ongoing guidance and interpretations that reveal how they intend to enforce those laws in the real world. Furthermore, court decisions serve as essential benchmarks, interpreting how these laws apply to specific dealership scenarios. In California, two specific codes form the bedrock of advertising rules: the Business and Professions Code Section 17500 and the Vehicle Code Section 11713(a). While the former applies to all businesses in the state, the latter is a specialized statute designed specifically for DMV license holders, including automobile dealerships. Together, they establish the industry’s “Golden Rule” for advertising: Advertisements must not be untrue or misleading. The Regulator’s Perspective. When a regulator reviews your ad, they aren’t looking for your intent to deceive. It is irrelevant whether you intended to be honest or whether a consumer was actually harmed or relied on the ad. Instead, the standard is objective: Is an ordinary person likely to be misled or deceived by the advertisement? If the answer is “yes,” your dealership is at risk. The Art of the Disclosure: Clear, Conspicuous and Consistent Disclosures are the primary tool for staying compliant, but they are often misunderstood. To satisfy legal standards, every disclosure must be clear and conspicuous. In the fast-paced world of digital and print media, this means the advertisement must actively draw the reader’s attention to the fine print. For written materials, “clear and conspicuous” translates to specific visual best practices: • Size: The text must be large enough to be easily noticed and read by consumers. • Contrast: There must be sufficient contrast between the text and the background. • Purpose: A disclosure should never contradict the main message of the ad; its legal function is to clarify the offer or provide material terms, qualifiers and conditions. • Video: In a video, a disclosure should remain on the screen long enough to be easily read and understood. Price Advertising Price advertising is a cornerstone of dealership marketing, but it is also the area where many legal landmines are buried. Under current standards, when you advertise a vehicle’s price, it must be the total amount a purchaser will pay. What Is Excluded From the “Total Price?” California law is very specific about what does not have to be included in the advertised total price and allows the following to be excluded: • Taxes and vehicle registration fees, • The California tire fee, • Emissions testing charges, • Finance charges, • Dealer document processing charges (see, however, the discussion that immediately follows), and • Charges for electronic registration or transfer of the vehicle. If these items are excluded, a mandatory disclosure statement is required, namely a disclosure substantially similar to the following: “Plus government fees and taxes, any finance charges, any dealer document processing charge, any electronic filing charge and any emission testing charge.” Note, however, on March 13, 2026, the FTC sent a warning letter to many dealership groups taking the position that the exclusion of any non-governmental fees, such as the dealer document processing charge, from an advertised vehicle price is illegal. Under these circumstances, a conservative approach to avoid a compliance issue with the FTC is to include any document processing charge in advertised prices. Excluding the document processing charge with proper disclosure as permitted by California law may be defensible, but this approach carries legal risk. Dealers are advised to monitor further developments on this point, including alerts from the California New Car Dealers Association. The MSRP Trap. The advertised price is a ceiling, not a suggestion. Dealerships are legally prohibited from selling a vehicle for more than its advertised price. This can become tricky when the Manufacturer’s Suggested Retail Price (MSRP) is advertised for a specific vehicle. If you list an 13 California New Car Dealer Quarterly
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