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 21 California New Car Dealer Quarterly
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